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April 19, 2021 at 10:07 AM
What You Need to Know
- With the Eaton Vance and E-Trade deals done, the bank’s wealth and investment management units now have combined assets of $5.7 trillion.
- “We are more convinced than ever that both deals help position Morgan Stanley for growth in the years ahead,” said CEO James Gorman.
- “The uptake and the interest level [in crypto] has been strong, and we would expect people to continue to be interested in this space,
Morgan Stanley executives have outlined major asset growth targets, as well further cryptocurrency plans and other moves, with the aim of getting the firm across the $10 trillion asset mark.
“My target is $10 trillion of money under management. I tell the team internally — they hate that,” CEO James Gorman said during a recent call with equity analysts.
The firm reported first-quarter profits of $4.1 billion, up 143% from last year, despite its $911 million hit tied to the blowup of Archegos Capital Management.
Earnings per share, excluding costs tied to its purchase of Eaton Vance, rose 120% to $2.22 per share. Also in the quarter, its wealth management revenue in the quarter rose 47% to nearly $6 billion, and net income was up 44% to $1.24 billion.
Total assets in the wealth unit were $4.23 trillion — with $3.35 trillion tied to advisor-led accounts and the remainder in self-directed E-Trade investor accounts.
“Net new assets were $105 billion, which is easily our best ever quarterly flows and concrete evidence of the growth trajectory of this business,” Gorman said. “These flows represent an annualized increase of over 10% of beginning period assets.”
Of the wealth flows, $37 billion were of fee-based assets.
Notably, the wirehouse did not release its total advisor headcount or average 12-month fees and commissions as part of its quarterly financial statement. As of Dec. 31, 2020, its financial advisor headcount was 15,950.
“Consistent with our predominantly advice-driven business model, revenue on these [$3.35 trillion of] assets expressed in basis points … is materially higher than our three larger competitors,” the CEO said, without naming Bank of America, UBS and Wells Fargo.
Crypto Plans
During the call, Chief Financial Officer Jonathan Pruzan described the firm’s approach to cryptocurrency investing, which the firm rolled out on a limited basis a month ago for wealth clients with at least $5 million in assets.
“It’s a fast-growing space. There’s a lot of interest in the space. And we had a significant interest from our wealth clients to try to get access to this new asset class. And so we tried to facilitate that,” Pruzan said.
