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Morgan Stanley’s (MS) financials are broken down into three segments: institutional securities, wealth management, and investment management. The company beat analyst expectations for the third quarter of 2024, reporting a 33% jump in profit. A pick-up in investment activity after years of rising interest rates helped boost the company’s financials, although that good news was overshadowed slightly by news of slower growth in its key wealth management business.
Key Takeaways
- Morgan Stanley is a leading global investment bank and wealth management firm, employing more than 82,000 people worldwide.
- The company profits are derived from institutional securities, wealth management, and investment management.
- Institutional securities provide governments, corporations, financial institutions, and high-net-worth individuals with investment banking services, financial advice, sales and trading, lending, and research.
- Wealth management focuses on helping people, businesses, and institutions build, preserve, and manage wealth.
- Investment management specializes in assisting governments, institutions, corporations, advisors, and individuals solve complex investment challenges.
Morgan Stanley: An Overview
Morgan Stanley shares a name with JPMorgan Chase & Co. (JPM) and it is not a coincidence. The “Morgan” in Morgan Stanley is J.P. Morgan’s grandson, Henry. The company was founded by Henry S. Morgan, Harold Stanley, and others in 1935.
Morgan Stanley was created as an investment bank, but today it is considerably more. With more than 82,000 employees and offices in 42 countries, Morgan Stanley is a well-known and respected global financial services company that offers a wide range of investment banking, securities, wealth management, and investment management services to corporations, governments, institutions, and individuals.
Morgan Stanley’s commercial banking operation also competes with the likes of Wells Fargo (WFC), US Bancorp (USB), and other retail outlets.
Institutional Securities
Institutional securities is one of Morgan Stanley’s biggest moneymakers. This part of the business provides governments, corporations, financial institutions, and high-net-worth individuals (HNWIs) with investment banking services, financial advice, sales and trading, lending, research, and more.
Earning fees from helping companies to access capital, such as through an initial public offering (IPO), and mergers and acquisitions (M&A) is a key revenue driver. Another core money maker is selling and trading equities and fixed income. Morgan Stanley earns a profit by acting as a market maker for customers’ purchases and sales of financial instruments.
The business boomed in 2024 as investors traded more equities and companies got back into dealmaking and IPOs again after years of caution due to rising interest rates. In the third quarter, the institutional securities segment reported a 20% rise in net revenues to $6.82 billion.
92%
The percentage of Morgan Stanley’s net revenues generated by its wealth management and institutional securities segments.
Wealth Management
Morgan Stanley’s other core business is its wealth management segment. This part of the business provides a range of financial services and solutions to individual investors and small-to-medium-sized businesses/institutions and generally offers more stable revenue streams than investment banking and trading, which tends to be more volatile.
The following wealth management services are offered by Morgan Stanley:
- Brokerage and investment advisory services
- Market-making activities in fixed-income securities
- Financial and wealth planning services
- Annuity and insurance products
- Credit and other lending products
- Banking
- Retirement plan services
Revenue is generated in a number of ways. Sometimes a percentage of assets managed will be charged. Other times a transaction commission may be applied. Money is also made from interest.
Wealth management has been a big contributor to growth in recent years with the division being boosted by a number of acquisitions, including ETrade. More recently, however, growth has started to slow as clients invest fewer new assets in a higher interest rate environment.
Investment Management
Investment management, Morgan Stanley’s smallest department, provides asset management products and services to institutional and retail clients through third-party retail distribution channels, intermediaries, and Morgan Stanley’s institutional distribution channel.
This segment does most of its work with institutional investors. This includes endowments, government entities, sovereign wealth funds, and insurance companies.
The majority of investment management revenues come from asset management and related fees, although a small portion is also attributed to performance-based income. In the third quarter of 2024, the segment reported a 9% rise in net revenues to $1.46 billion, driven by higher fees collected from having more assets under management (AUM) and higher accrued carried interest in private funds.
What Is Morgan Stanley’s Net Worth?
Net worth is usually considered to be a company’s market capitalization. By that metric, its net worth was approximately $217.47 billion as of November 2024.
How Valuable Is Morgan Stanley?
Morgan Stanley is the 52nd most valuable company in the world, as measured by market cap.
Is Morgan Stanley Laying Off Employees?
Like many other companies, Morgan Stanley goes through periods where it lays off employees. One of the latest victims is its wealth management arm. Hundreds of jobs were reportedly cut there amid a slower-than-expected start to the year and uncertain economic outlook. That follows on the heels of 3,500 jobs cut in June 2023.
The Bottom Line
Morgan Stanley has been a well-known name in the investment community for many decades. Its main money-making operations are its wealth management and institutional securities segments. Investment banking, financial advice, and asset management are core earners for the financial services giant.
