The wealth management industry in the second quarter shrugged off the broad stock market malaise ignited at the start of April of President Donald Trump’s tariffs, with industry bellwethers Bank of America and Morgan Stanley reporting good results on Wednesday.
Between President Trump's "Liberation Day" tariffs, the subsequent tariff rollbacks and rollouts, the Israel-Iran conflict, and myriad other market-moving events, the S&P 500 recorded some of its biggest one- and two-day swings on record during the quarter, according to Yahoo Finance. For the year-to-date, the S&P 500 is up 6.3% near the close of trading on Wednesday.
Those combined events did not dampen results at Morgan Stanley and Bank of America, according to the companies, which both released second quarter earnings today.
Merrill Wealth Management, part of Bank of America, reported $3.7 trillion in client balances at the end of June, a year-over-year increase of 10%.
Morgan Stanley reported adding $59 billion of net new assets during the second quarter and $43 billion of fee-based flows. Total client assets across wealth and investment management reached $8.2 trillion.
“Overall we were buyers of equities in the first few weeks of April,” said Eric Schimpf, co-heads of Merrill Wealth Management, during a conference call Wednesday morning to discuss the firm’s wealth management business.
Meanwhile, Merrill’s more senior financial advisors are also staying put, despite the hotly competitive recruiting environment at the moment, he added. “Experienced financial advisor attrition at Merrill is well below historical average.”
Ted Pick, Morgan Stanley’s CEO, was equally sanguine Wednesday morning during a conference call with investors, particularly about the potential stemming from recent acquisitions.
“As you look across wealth management, the entire funnel is showing growth up and down even at this stage of uncertainty,” Pick said. “We're seeing inflows and growth in investment management across multiple pieces. We're just getting going on the growth of Parametric in investment management and the full opportunity that underlies ETRADE and wealth management.”
Parametric, which became part of Morgan Stanley when the wirehouse acquired Eaton Vance in March 2021, is a leader in direct indexing and other tailored investment solutions for clients. Morgan Stanley bought online discount broker ETRADE Financial in 2020.
Meanwhile, Merrill Lynch intends to continue building its alternative investment platform for wealth clients.
Alternative investments including nontraded real estate investment trusts and business development companies typically are more expensive than indexed mutual funds and exchange-traded funds.
Merrill Lynch has continued to expand its offering in alternative investments, a similar move that other broker-dealers have made in the past 12 to 18 months. The firm expects to make announcements in the next few months detailing the changes, Schimpf said.
“We think the opportunity for us is that for every client having some exposure to alts as we bring more advisors to the table,” he said.
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