Morgan Stanley (NYSE:MS)’s top executive exuded confidence for its wealth management unit at the recent Credit Suisse Group AG (NYSE:CS) 2014 Financial Conference.
Gregory J. Fleming, President of Morgan Stanley Wealth Management and Morgan Stanley Investment Management struck a confident note on the growth potential for Morgan Stanley (NYSE:MS) in the wealth management space.
Maverick Capital's flagship hedge fund lost -22.9% in the first quarter of 2022 according to a copy of the firm's quarterly update, which ValueWalk has been able to review. The firm's flagship fund, Maverick Fundamental Hedge, accounts for $3.7 billion of the group's $8.1 billion of assets under management. Even after losses in the first Read More
Substantial AUM growth projected
During his presentation at the Credit Suisse 2014 Financial Conference, Gregory J. Fleming anticipates AUM to grow to about $500 billion by the end of 2016 from $373 billion clocked at the end of 2013. Exuding confidence, he terms the target is ‘very achievable’.
The following table captures the top 10 asset managers by Global AUM as of December 2012, indicating plenty of headroom for Morgan Stanley (NYSE:MS) to grow:
The following graph highlights wealth management’s contribution to Morgan Stanley (NYSE:MS), both in terms of net revenues and profit before tax:
As can be deduced from the above graph, Wealth Management contributed to 43% of Morgan Stanley’s net revenues, while it contributed 49% of Morgan Stanley (NYSE:MS)’s profit before tax for FY2013.
Morgan Stanley’ key strength in Wealth Management
Some of the key strengths that Morgan Stanley (NYSE:MS) possesses in its Wealth Management are revenue and earnings consistency. Gregory J. Fleming in his presentation at the conference highlighted that Morgan Stanley is well positioned for growth in Wealth Management, besides benefiting from higher deposits.
He also highlighted that Morgan Stanley is aiming to achieve margin target to 22-25% by 4Q15.
Morgan Stanley (NYSE:MS) can also advantageously leverage its strength of nearly 17,000 financial advisors at its Wealth Management for enhanced deal sourcing.
Fleming’s commendable track record
Gregory J. Fleming was brought in four years ago to help repair the asset management unit of Morgan Stanley amid losses and investor withdrawals.
The following table highlights how Morgan Stanley (NYSE:MS) is strongly placed to achieve its targets, considering its strong performance during the past few years.
BOA too is confident in Wealth Management
In the Financial Services forum hosted by Credit Suisse Group AG (NYSE:CS), Bank of America Corp (NYSE:BAC)’s John Thiel and Andy Sieg too struck a confident note on the opportunities for wealth management. The bank looks to leverage its size and platform to maintain client assets, strengthen existing relationships and acquire new clients. Bank of America Corp (NYSE:BAC) also aims to tailor products and capabilities based on wealth management client segment.