How Morgan Stanley’s big bet on wealth management paid off
A decade ago, the bank opted to go long on more durable sources of income – notably wealth management. Its standout 2022 financials are a clear sign of the benefits of long-term planning.
It helps to have a plan, particularly one that works.
When Morgan Stanley beat earnings expectations for the fourth quarter, it wasn’t hard to spot why.
Wealth management has become the driving force behind the Wall Street bank. In the last three months of 2022, the division generated revenues of $6.62 billion, up 5.9% year on year.
For the full year, wealth management produced pre-tax profit of $6.6 billion, on revenues of $24.4 billion – both record numbers.
Morgan Stanley hoovered up $311 billion in net new assets (NNA) in 2022, pushing total wealth-related client assets to $4.2 trillion.
It aims to generate $1 trillion in wealth-related NNA every three years and has a longer-term goal of $10 trillion in client assets.
Investors reacted approvingly – the bank’s stock jumped 6% when results were posted and is up 11.4% in the year to January 25 – but none of this should have been a surprise.
In the wake of the global financial crisis, Morgan Stanley took a good hard look at its strategy and chose to go heavy on wealth and investment management, which generates steadier income than financial trading and often locks in customers for life.