Morgan Stanley and Raymond James executives expressed optimism at industry conferences Tuesday about their firms' ability to gather new assets after slowing down a bit in 2024.
Speaking at the Bank of America Securities Financial Services Conference in Miami Beach, Florida, Morgan Stanley co-president Andy Saperstein said the dip seen in his firm's net new assets last year obscured just how strong its growth prospects remain. Morgan Stanley
Saperstein, the head of Morgan Stanley's wealth and investment management unit, said the decline was really the result of greater outflows rather than a significant slowdown in inflows. In fact, he said, Morgan Stanley's asset inflows last year were roughly equal to what they were in 2021, when the firm reported
It's just that in 2024, clients took a lot more money out, he said.
"The 2024 net result was lower not because our ability to drive growth was weaker, but because outflows were also elevated," Saperstein said.
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Saperstein in part blamed high interest rates, which prompted many investors to use their money to pay off debts. Other clients were simply spending more to keep pace with inflation.
"There were some idiosyncratic reasons why in 2024 there was elevated outflows that wouldn't be concerning," Saperstein said. "It's part of the environment. It's part of life."
Raymond James building NNA by recruiting from wirehouses
Meanwhile at the UBS Financial Services Conference in Key Biscayne, Florida,
Shoukry, who's scheduled to step into the CEO position at Raymond James later this month, acknowledged that figure was below historic averages for his firm. He said one way he and his colleagues plan to raise it back up is through recruitment.
Raymond James has seen particular success in recruiting from Morgan Stanley and other Wall Street fixtures.
"Eighty percent of our advisors across all channels are coming from primarily the larger wirehouses," Shoukry said. "Our goal is to go to those advisors and sell them on the Raymond James culture and the Raymond James platform, the solutions, the technology, the fact that they will enjoy their work life much better at Raymond James and they will at their current place or another option and how they want to affiliate."
Like many firms, Raymond James seeks to appeal to advisors by giving them many options for how they can run their business. In 2021, Raymond James started a registered investment advisory unit that lets advisors operate on a fee-only model, charging clients a simple set rate on the assets they have under management.
Shoukry said many of the wealth managers moving over to the RIA channel were already affiliated with Raymond James in a different way. One goal is to start recruiting to it more from external sources.
"I think at our annual investor day, we said it's about 50% of the assets came from the outside and 50% are internal transitions," Shoukry said. "And our goal is, over time, to have that percentage be higher new growth from competitors."
Private equity a complicating factor
Shoukry said Raymond James could also try to achieve growth by acquiring other firms. But one complicating factor is competition from
"There's been cases, even recently, where certain private equity firms just made the deal too uneconomic for us," he said.
Private equity firms have also complicated matters by taking stakes in offices of supervisory jurisdiction — essentially large advisory practices — affiliated with Raymond James. At least two of those private-equity backed OSJs have left in recent years, taking large amounts of assets with them.
Steward Partners, a New York-based firm,
Shoukry said private equity owners often come in with a promise that they intend merely to provide capital and not interfere in management.
"As we all know, that typically changes," he said. "And over time, sometimes sooner rather than later, we start seeing that disruption and the misalignment of objectives and priorities. And so sometimes it's us going our separate ways. Sometimes it's the firm going their separate ways, just because, again, if the alignment is not there, it doesn't make a whole lot of sense for them to stay with us, or for us to have them stay with us either."
Why the emphasis on NNA
As many firms have
After 2021's bumper haul, Morgan Stanley's asset haul fell to $89 billion in 2022, then rose to $282 billion in 2023 before coming down to $252 billion last year. Yet, even with all the ups and downs, Morgan Stanley managed to increase its assets total by $1.3 trillion in 2024, ending the year with $7.9 trillion in AUM for its wealth and investment management units.
Saperstein said he's never been more bullish about the firm's prospects for organic growth — meaning gains not tied to market up or downs.
"Whether any given year or quarter is higher or lower than the previous one, that's actually not how we think about the business, and that's not how you should think about the business," Saperstein said. "The right way to think about it is: Do we have an engine that's driving meaningful organic growth over a long period of time? And is that engine continuing to grow stronger?"
Mining assets at the workplace
Morgan Stanley executives often like to compare the firm's wealth management business to a funnel that brings clients in through self-directed investing accounts on its E-Trade brokerage platform and moves them into full advisory relationships as their assets and needs grow. Another key entryway to the funnel is the
Employees of those firms are often in need of wealth management services, and Morgan Stanley at Work was able to forge more than 1 million new client relationships last year, Saperstein said. So far, he said, the unit has brought in more than $300 billion in net new assets and now boasts 19 million client relationships.
Saperstein said the ability to mine business in other parts of the firm makes Morgan Stanley a particularly appealing place to build a wealth management practice.
"You can absolutely grow faster at Morgan Stanley than you can anywhere else," he said. "Our FAs are delivering much more to their clients by tapping into those resources and the special services and the technology that we offer. And that's why you see the best FAs migrating towards our firm."
Saperstein also discussed Morgan Stanley's other long-held goal of eventually having a 30% operating margin — meaning the percentage of revenue left over after expenses are subtracted. That margin was at 27.5% at the end of 2024.
Saperstein said Morgan Stanley most likely could have already hit 30% if that
"We're investing now to make sure that we're growing in the future," he said. "That's investing in support for advisors, that's investing in technology, including AI."
