Morgan Stanley counting fresh assets in the trillions

When it comes to reeling in net new client assets, Morgan Stanley, which has seen the number of client accounts under its roof explode with the firm's recent spate of acquisitions, expects to add $1 trillion or so every few years.

That's the thinking at the giant firm as outlined by Andy Saperstein, co-president and head of wealth management at Morgan Stanley, Tuesday at the Barclays Global Financial Services conference in New York. While recent net new asset growth has reached 11% of the current total, Saperstein said that a more realistic level would be 5% to 7% growth per year.

"Like I said, over the last six quarters, last year we brought in $438 billion of net new assets that equated to about 11%," Saperstein said. "We came out and we said, don't expect that year in, year out. If you expect somewhere in the neighborhood of 5% to 7% year in, year out through a cycle, you won't be disappointed."

"I think of it over multi-years," he said. "So if you expect that we'll bring in about $1 trillion of net new assets every three years or so, that's the way I think about it. I like to think about net new assets, if I wanted to give you a normalization, expect $1 trillion of net new assets every three years or so."

Morgan Stanley's talk about trillions of fresh client assets is striking but not new. The firm finished last year with $4.9 trillion in client assets. Earlier in 2021, James Gorman, chairman and CEO of Morgan Stanley, said the firm "saw a path to $10 trillion" and "we believe that's going to happen." And early this year, Gorman said the asset growth at the firm in 2021 was "freakish."

Where those net new assets coming from? The accounts of the clients Morgan Stanley now works with in the wake of its acquisitions of Solium Capital Inc. in 2019 and ETrade Financial a year later, both of which have strong stock plan administration capabilities, Saperstein said.

The firm now has relationships with 16.5 million clients, up from 2.5 million recently, he said. In the past, the firm's clients worked solely with financial advisers; now there is a growing online presence, as well.

"If you think about where a lot of the growth is going to come from in the future, it's the 16 million relationships that we have and will grow as we deepen relationships with them," Saperstein said. "Their lives are going to change."

Those new clients may have as much as nine to 10 times the amount of assets outside Morgan Stanley that they have with the firm, he added.

"The vested assets, while attractive, are in some respects the tip of the iceberg of what the actual opportunity is," Saperstein said. "And this again is another early phase opportunity for us."