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Morgan Stanley’s Wealth Assets Up 48% on E*Trade Acquisition

Morgan Stanley’s wealth management client assets were nearly $4 trillion at the end of the fourth quarter 2020, up 48% year over year, according to an earnings report.

Morgan Stanley’s acquisition of E*Trade, which closed in October 2020, gave a significant lift to its total client assets in the wealth management division. The New York–based wirehouse said wealth management client assets were nearly $4 trillion at the end of the fourth quarter 2020, up 48% year over year and 40% sequentially, according to its fourth quarter earnings report.

The firm also announced plans in the fourth quarter to acquire asset management firm Eaton Vance, a deal that’s expected to close in the second quarter of 2021.

The addition of E*Trade boosted Morgan Stanley’s net new client assets for the year by $44 billion to a combined total of $206 billion on a pro forma basis, up from $98 billion in 2019.

“That's 6% of beginning period assets on a pro forma basis,” said CEO James Gorman, on a call with analysts. “We've invested heavily over the years building our modern wealth strategy, enhancing our technology, and building new businesses. And the addition of E*Trade will only help. This year's net new asset growth was remarkable. And while net new assets tend to fluctuate obviously in any year, and this was likely the high end of what is a likely range, we still expect net new assets to remain well above historic levels.

“I read about a lot of these online players that have got $20 billion in total,” Gorman said. “And we're bringing in $20 billion every five weeks, so we're effectively creating these companies every five weeks.”

2021 is a year of transition for Morgan. The firm said it will spend the year closing the Eaton Vance deal and then integrating it as well as E*Trade into its business. The firm plans to establish relationships with E*Trade clients in advice and lending and also capture the $8 trillion in held-away assets.

The firm also sees opportunities in delivering Eaton Vance’s products at scale, leveraging its U.S. and international distribution and adding more multiasset offerings to its product suite. 

Advisor head count for the quarter was 15,950, up about 3%, or 482, year over year.

Overall, Morgan Stanley reported $11 billion in income in 2020, up 22% year over year, on $48 billion in revenue, up 16% from the year-ago period.

Morgan Stanley shares were up about 1.6% to $76 near the market open, then fell to $74.80 by the end of the trading day.

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