Morgan Stanley's wealth management revenue up, adviser headcount down

Morgan Stanley's wealth management revenue up, adviser headcount down
Third-quarter wealth management revenue was $4.4 billion, even as adviser workforce slipped 1% from last year.
OCT 16, 2018

Morgan Stanley reported third-quarter results Tuesday, noting wealth management revenue of $4.4 billion compared with $4.2 billion a year earlier. The wealth management group had a pretax margin of 27.1% compared with 26.5% in last year's third quarter. Adviser headcount was 15,655 at the end of the quarter, down 1% from the same quarter last year, but up slightly from the end of the second quarter. Volatile markets have boosted Morgan Stanley's businesses, chief financial officer Jonathan Pruzan said in an interview. Last week, as markets fluctuated, "we saw significant client engagement, people re-positioning and hedging," he said. However, "prolonged periods of volatility lead to closing markets and weakening confidence. We haven't seen that yet." Meanwhile, Morgan Stanley's capital-markets businesses are firing on all cylinders. The bank was the only Wall Street firm to beat analyst expectations in three main businesses: fixed income, equities trading and investment banking. The firm's dealmakers posted a 15 percent jump in revenue, higher than each of Morgan Stanley's rivals. Morgan Stanley and Goldman Sachs Group Inc., Wall Street's traditional securities firms, avoided the investment-banking slump that weighed on their larger rivals. Morgan Stanley also made strides in CEO James Gorman's goal of gaining market share in fixed-income trading. The results may help reverse the firm's stock slide after falling 17% this year through Monday, the most of the five biggest U.S. banks. In investment banking, Morgan Stanley skirted a slump in debt underwriting that plagued its competitors. Fees tied to mergers and acquisitions slipped 8%. Pruzan said the pipeline is strong. Fixed-income sales and trading revenue totaled $1.2 billion, a surprise 1% increase, due to a rise in revenue in foreign exchange and commodities, while equity sales and trading revenue climbed to $2 billion from $1.9 billion. Net income was $1.17 per share, compared with the $1.01 estimate of 21 analysts in a Bloomberg survey. Morgan Stanley shares were trading at $45.02 at 10:15 a.m. in New York, after closing at $43.47 on Monday.

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