Morgan Stanley's vaunted wealth management unit set quarterly records for revenue and asset inflows in its first quarter while also gaining ground with its pre-tax margin.
The Wall Street powerhouse announced Tuesday that it brought in nearly $7 billion in net revenue and $95 billion in net new assets in the first three months of 2024. That new asset figure didn't quite match the $110 billion the firm hauled
This year's net new assets, more than half of which came from working with wealthy families through the firm's
Morgan Stanley also showed progress toward another goal recently stated by its
"During the quarter, higher asset prices and an improved economic backdrop supported confidence with our wealth management client base," Pick said on a call with analysts.
The wealth management unit's strong results contributed heavily to the firm's $3.4 billion in total profits for all its business units. That figure was up 14% year over year.
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Wealth profit and revenue
Morgan Stanley's wealth unit brought in $6.88 billion in net revenue for the first three months of 2024. That set a quarterly record for the firm and was up by 5% from the same period last year.
The unit made nearly $3.8 billion from managing clients' assets, a figure up 13% year over year. It also made nearly $1.9 billion in interest income, down 14%, and $1 billion in transactional income, up 12%.
With its expenses and taxes subtracted, the unit was left with $1.4 billion in net income for the first quarter, up 2% year over year.
Expenses
Morgan Stanley reported more than $5 billion in costs from wealth management. Those included nearly $3.8 billion for compensation and benefits, which were up 9% year over year. Compensation and benefits ate up 55% of the wealth management unit's net revenues, up from 53% a year ago.
Morgan Stanley stopped reporting its
Client assets
Morgan Stanley's $7 trillion in assets were made up of slightly more than $1.5 trillion in holdings in the firm's investment management division and nearly $5.5 trillion in wealth management.
Of the wealth management assets, $4.3 trillion was in the firm's advisor-led channel, a figure up 20% year over year. Nearly half of those assets were in fee-based accounts, and the advisor-led channel saw $26.2 billion of inflows into those accounts in the quarter.
Morgan Stanley frequently compares its plan for building
"Within fee-based flows this quarter, we saw particular strength from the migration of assets from the advisor-led brokerage accounts to fee-based accounts," she said. "This demonstrates that over time, assets migrate through the funnel into recurring revenue-generating accounts."
Morgan Stanley's wealth management unit meanwhile oversaw nearly $1.2 trillion in self-directed trading accounts clients hold through its E-trade online brokerage. More than 8 million households use that service, the firm reported.
And the wealth unit oversaw $457 billion in its Morgan Stanley at Work workplace channel. That line of business helps employers set up things like equity compensation, retirement plans and deferred compensation for their employees. The firm reported working with 6.6 million stock plan participants through Morgan Stanley at Work in the first quarter.
Remarks
Yeshaya had a simple message for analysts: "Our strategy is working."
"We have a clear path to $10 trillion in client assets across wealth management and investment management," she said. "We remain focused on supporting clients on their path to advice, deepening existing client relationships and using our scaled platform to achieve sustainable 30% pre-tax profits over time."
