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Morgan Stanley Posts Growth in Advisors, New Assets

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The level of new client assets in Morgan Stanley’s wealth management business soared 144% to $66.1 billion in the fourth quarter of 2020 from the year-ago period, the firm said Wednesday. This figure includes both advisor-led and self-directed assets.

Meanwhile, the wealth unit’s total client assets grew 48% year over year to $4 trillion, encompassing $832 billion in self-directed assets. Advisor-led assets rose 21% from a year ago and 15% from the prior quarter to nearly $3.2 trillion.

Morgan Stanley’s financial advisor headcount grew by 482 from a year ago and from 481 in the prior quarter to 15,950.

Total net new assets across wealth management for the year was $206 billion, up from $98 billion in 2019. However, fee-based asset flows slid 3% in Q4 to $24.1 billion.

In comparison, net client asset flows to Bank of America’s Global Wealth & Investment Management (GWIM) unit — which includes Merrill Lynch and BofA Private Bank — fell 7% year over year to $7.60 billion in the fourth quarter. The number of net new client households for Merrill advisors also fell to 22,000 in 2020 from 35,000 in 2019 — representing a 37% decline.

Morgan Stanley is no longer releasing average 12-month fees and commissions (or production) per advisor.

In the fourth quarter, the wealth unit had a 24% year-over-year jump in revenues to $10.96 billion, while net income fell 10% to $889 million.

For the full year, the business grew sales 7% from 2019 to $10.96 billion, as profits dropped 10% to $3.42 billion.

Company Results

Firmwide, Morgan Stanley’s fourth-quarter revenue jumped 24% to $5.7 billion, while its net income fell 10% to $802 million.

For the full-year 2020, the bank had a 22% increase in net income from the prior year at $11 billion. Total revenues rose 16$ to $48.2 billion.

Despite challenges in 2020 from the COVID-19 pandemic, Morgan Stanley “delivered record results” last year, James Patrick Gorman, its CEO and chairman, told analysts in a conference call.

The company “successfully closed our acquisition of E-Trade” in 2020, “received an upgrade from Moody’s to A2, were placed on review for upgrade a second time and announced our intent to acquire Eaton Vance,” he noted.

Then last month, after the Federal Reserve’s release of its second stress test result, Morgan Stanley announced a $10 billion buyback program that “we intend to execute in 2021,” he told analysts. “Our performance and competitive position serve as hard evidence that Morgan Stanley has reached an inflection point.”

Although 2021 “will be a transition year as we absorb two major acquisitions, our focus remains on positioning Morgan Stanley to achieve our long-term strategic targets,” he went on to say.

The firm’s “long-term aspiration and frankly, our belief is that Wealth Management will generate a margin over 30% by 2022 and, in that period, we expect to range from 26% to 30% as we continue to work through the E-Trade integration,” he said.

The company plans to “invest in many aspects of our business for growth, but we’ll balance this with discipline,” Gorman told analysts.

In the company’s earnings news release, he said: “I am extremely proud of how our employees came together to support each other and our communities and deliver for our clients in an incredibly challenging year…. We enter 2021 with significant momentum, and I am very confident in our competitive position and our opportunities for continued growth.”