Morgan Stanley has devoted a lot of attention to further growing its Wealth Management business in recent years, and that unit delivered in the latest quarter.
Wealth Management’s profit before taxes surged 15% year over year, to $1.163 billion in the fourth quarter (although it declined 6% sequentially from the third quarter).
Fourth-quarter net revenue came in at a record $4.582 billion, up 5% from the third quarter, and up 11% from the year-earlier quarter.
Client assets stood at $2.7 trillion at year-end, up 5% from the previous quarter and up 17% from the end of 2018.
The unit’s pretax margin dipped to 25.4% in the fourth quarter from 28.4% in the previous quarter, but management said in a conference call that the margin should rebound “nicely” in the current quarter from what was a seasonal low. For the year, the margin hit a record 27.2%, but Morgan Stanley thinks it can do even better; it’s raising its objective for th next two years to 28%-30%, and longer term, it’s shooting for 30%-plus.
For all of 2019, Morgan Stanley Wealth Management set records for net revenue, profit before taxes and pretax margin.
The firm delivered those results even as its advisory ranks continued to shrink, following a broad trend among wirehouses. At the end of 2019, Morgan Stanley had 15,468 financial advisors, a decline of 85, or 0.5%, from the end of the third quarter. Year over year, the firm lost a net 226 advisors.
Morgan Stanley’s overall quarterly results swept past Wall Street’s estimates, helped by a rebound in fixed-income trading, my Barron’s colleague Carleton English reports. Shares soared on Thursday and were up more than 7% at 10:50 a.m. ET.