Profits at Morgan Stanley Wealth Management fell in the second quarter — but not as dramatically as it did at its wirehouse competitors.
Net income slid 10% year-over-year to $853 million at Morgan Stanley.
Transactional income and advisory flows buoyed Morgan Stanley’s wealth management business in the second quarter, the firm
Profits from trading and other transactions soared by 48% year-over-year in the second quarter to $1 billion. Fee-based asset flows reached $11.1 billion, and client assets rose 4% to $2.6 trillion.
“We saw clients continue to consolidate assets with their advisors,” CEO James Gorman said in a call with analysts.
Credit loss provisions display another area of difference between Gorman’s firm and its competitors. Wells Fargo’s wealth unit set aside $257 million, which
“Overall there were not many positive data points to hang your hat on,” according to analysts. Advisor headcount, net interest income and assets were down.
Still, Gorman noted it’s been a challenging year given the rate environment, economic upheaval and coronavirus pandemic. Ninety-percent of Morgan Stanley’s employees are working from home, according to the CEO. Net interest income for wealth management, typically a growth area for many firms in recent years, was flat. CFO Jonathan Pruzan told analysts that the firm anticipates the amount will be driven lower in 2020.
That said, Gorman pointed to the strengths of the business, namely its technology, brand and positioning within the marketplace. The wirehouse is also expected to close on its
Morgan Stanley’s overall profit soared 50% year-over-year to approximately $3 billion due to a nearly $2.8 billion revenue jump in the firm’s other main business, Institutional Securities.