Morgan Stanley’s wealth management business added close to 500 advisors and saw client assets soar during the fourth quarter, but its net income was down year-over-year.
The unit ended 2020 with $4 trillion in client assets, which was a 40% increase from the end of September and a 48% increase year-over-year, Morgan Stanley says in its fourth-quarter earnings release. The unit saw healthy flows in net new assets, posting $66.1 billion in the fourth quarter, which was 28% higher than in the third quarter and 144% higher year-over-year, the company says.
Fee-based asset flows made up $24.1 billion during the fourth quarter, up slightly from the $23.8 billion the unit saw in the third quarter but down from the $24.9 billion posted in the last quarter of 2019, Morgan Stanley says.
Fee-based client assets stood at $1.47 trillion by the end of 2020, which was 10% higher than at the end of the third quarter and 16% higher year-over-year, the company says.
Loans in the unit rose to $98.1 billion in the fourth quarter, which was 7% higher from the previous quarter and 22% higher year over year, Morgan Stanley says.
Moreover, the firm managed to add 481 wealth management representatives during the last quarter of 2020, bringing its total to 15,950 by the end of the year, which was also 3% higher year-over-year, the company says.
And net revenues from wealth management was $5.68 billion in the fourth quarter, up 22% from the prior quarter and 24% year-over-year, Morgan Stanley says. Asset management revenues were higher year-over-year due to both market appreciation as well as solid fee-based flows, the company says. Transaction revenues were 37% higher year-over-year when “excluding the impact of mark-to-market gains on investments associated with certain employee deferred compensation plans,” which Morgan Stanley attributes to robust client activity in both the advisor-led and the self-directed channels.
Revenues for 2020 were $19.06 billion, which was a 7% increase from 2019, the company says.
Total non-interest expenses, however, was $4.61 billion in the last quarter of 2020, which was 30% higher than in the third quarter and 35% higher year-over-year, Morgan Stanley says. The company attributes the rise to “incremental compensation as a result of the E*Trade acquisition and integration-related expenses, increases in the fair value of deferred compensation plan referenced investments and higher compensable revenues.”
As a result, net income applicable to Morgan Stanley dropped 5% during the fourth quarter of 2020, to $802 million, which was also 10% lower year-over-year, the company says. And net income for all of 2020 was $3.36 billion, a 10% drop from 2019, Morgan Stanley says.
Do you have a news tip you’d like to share with FA-IQ? Email us at email@example.com.