Morgan Stanley sees 'freakish' asset growth in 2021, Gorman says

2021 was an unusually productive year for Morgan Stanley and its close to 16,000 financial advisers, who brought in record net new assets for the year of $437.8 billion, for an annual growth rate of 11%, according to the company.

Morgan Stanley had an outstanding year when it came to acquiring new client money and now has $4.9 trillion in wealth management client assets across varied business lines, James Gorman, the chairman and CEO, said during a conference call Wednesday with analysts to discuss fourth-quarter results. Morgan Stanley typically sees a net new asset growth rate of 4% to 6%, said Gorman, who sounded somewhat astounded by the rate of growth in 2021.

"This past year, I think we grew [net new assets] at 11%, which is — I mean, it's freakish, right," he said. "You're talking about over $400 billion of new money. There are a lot of asset management companies that aren't $400 billion in size."

"I don't think that's sustainable. I'd love it, but I don't think it's sustainable," Gorman said, adding that he couldn't comment on the future other than to say he expected a "healthy" rate of asset growth.

"And you compound what is now $4.9 trillion, you get to really big numbers, which is why, combined with wealth and asset management, we put them together and currently, they're about $6.5 trillion," he said. "We can see a path to $10 trillion here, and we want to call that because we believe that's going to happen."

Despite last year’s political and social turmoil, 2021 ended up being a tremendously fat year for the broad financial advice industry, from large broker-dealers to burgeoning registered investment adviser networks.

The S&P 500 repeatedly hit record highs last year, benefitting brokerage firms immensely. It ultimately posted a total annual return, including dividends, of 28.7% — almost twice its annual median return of 15.4%.

Over the past couple of years, Morgan Stanley has acquired a variety of wealth management business, and those acquisitions appear to be paying off.

In 2019, it said it said it was buying Solium Capital Inc.’s stock plan business for $900 million. A year later, Morgan Stanley announced two large transactions, the purchase of ETrade Financial Corp. for $13 billion in stock and then the $7 billion purchase of fund manager Eaton Vance. It's also recently invested heavily in its financial adviser platform.

Morgan Stanley’s wealth management group reported net revenues for 2021 of $24.2 billion, up 27% year-over year.