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September 09, 2014 at 10:56 AM
Morgan Stanley CFO Ruth Porat made the case for both the wirehouses and its own advisors in a presentation Tuesday at Barclays Financial Services Conference.
First, Porat says, the wealth management industry is going through a “secular shift” as client move assets from transactional accounts into managed ones.
Clients had about $3.5 trillion in managed assets last year, up from $1.2 trillion in 2004, according to a slide shared by Morgan Stanley that cited Cerulli Associates.
The wirehouse firms are taking advantage of this trend, Porat notes. They manage about 35% of all fee-based client assets vs. 19% in 2004, Cerulli estimates.
A major way Morgan Stanley’s reps can boost their fee-based accounts and overall business, according to the executive vice president, is by leveraging bank programs and net interest income.
This represents a “significant opportunity across the wealth management franchise reflecting relative low client penetration vs. peers,” she said. (In other words, some of Morgan Stanley’s rivals—notably Bank of America-Merrill Lynch—are ahead of it right now.)
Morgan Stanley is pushing securities-based lending, mortgages and tailored lending. Judging by where its bank programs are, there is certainly room to grow. (It has 16,316 advisors who produce an annual average of about $908,000 per rep in yearly fees and commissions).
About 64% of its reps are using one of its lending products in their practices, up from 48% in late 2011. Among advisors with the highest and fastest-growing levels of fees and commissions, the use of lending products has growth to 84% from 59% over the same period.
