Morgan Stanley targets $10 trillion in AUM: Gorman

Fresh off a record quarter in wealth management and the completed acquisitions of Eaton Vance and ETrade Financial Corp., Morgan Stanley's CEO James Gorman was particularly ebullient about the firm's future Friday morning during an earnings call with analysts.

Morgan Stanley would at some point in the future amass $10 trillion in client assets, he said, or a bit less than double the $5.6 trillion it currently has under its expanding wealth management and investment management business lines.

"My target is $10 trillion of money under management," Gorman said in response to a question about the integration of ETrade and Eaton Vance, both of which Morgan Stanley has acquired in the past six-and-a-half months. "I've told the team internally, they hate that."

Morgan Stanley on Friday morning reported $4.2 trillion in wealth management assets and $1.4 trillion in assets at its investment management arm.

The wirehouse for the quarter ending March 31 reported new records for net new assets of $105 billion, up 43% from the end of December and an increase of 183% from the same period a year earlier. It also reported new highs for fee-based asset flows of $37.2 billion for the first quarter. That's an increase of 54% from the end of December and up 102% from March 2020.

Referring to the 2009 acquisition of Smith Barney's wealth management business, Gorman continued. "When we started the wealth management journey 12 years ago, we had $500 billion under management, now we have $4 trillion," he said. "And so we're heading to $10 trillion. We've got all these growth verticals, and I just couldn't be more excited about it."

Gorman listed several factors behind the strong quarter, including an online and direct-to-consumer business channel in ETrade, and its burgeoning stock plan platform from both its 2019 acquisition of Solium Capital Inc. and ETrade. The firm is also recruiting financial advisers, although Morgan Stanley did not state the number of financial advisers currently employed at the firm, a break from a standard industry practice.

At the end of December, Morgan Stanley reported 15,950 registered reps and financial advisers.

"We've become a destination of choice," said Jonathan Pruzan, the firm's CFO. "We've seen higher levels of recruiting pipeline as we bring in FAs, and they are successful and they like the platform. They're obviously talking to their previous colleagues and therefore, it's sort of accelerating."

"We're bringing in bigger teams, better teams and attrition has dramatically slowed down," Pruzan said.