What you need to know:
- In 2021, Morgan Stanley became the largest US wealth manager by assets managed.
- It achieved this by developing a self-sustaining asset-gathering funnel through the incorporation of 2 new channels beyond its flagship wealth management business.
- Its efforts and adherence to this strategy exemplify how wealth managers can turbocharge asset growth and retention through acquisitions and collaborative initiatives.
In the wake of the 2008 financial crisis, then-new Morgan Stanley (MS) CEO James Gorman decided to anchor the firm’s long-term growth in wealth management, where revenues — typically based on fees as a percentage of managed assets — are stable, recurring, and rise in tandem with market growth.
Over a decade later, in 2021, MS became the largest wealth manager in the US by assets managed.
Its current strategic vision is to develop a self-sustaining asset-gathering funnel by incorporating 2 new channels beyond its flagship wealth management business: accessing clients via the workplace and enabling self-directed investing channels.
This strategy allows MS to generate new client relationships, migrate them to wealth management services at the right time, and deepen existing client relationships with hard-to-replicate combinations of products and services for investing, banking, lending, and planning.
The strategy has achieved material business results beyond mere market appreciation: Asset flows into MS’ fee-based advice relationships grew at an 11% CAGR from 2018 to 2023, while its advisory revenues grew at 7% over the same period, outpacing its peers. The firm also watched the number of client relationships rise at a 12% CAGR from 2020 to 2023.
Three acquisitions — Solium Capital (now Shareworks), E*Trade, and Eaton Vance — form the cornerstone of MS’ integrated firm build-out. The company is also using partnerships with tech providers like Vestwell and OpenAI to offer non-core products and develop AI infrastructure.
Below, we explore how MS’ partnerships and acquisitions across 3 strategic priorities — channel diversification, integrated product offers, and tech enablement — have cemented its role as a leading wealth player. We also look at where it’s going next.
