Bank of America and Morgan Stanley beat analyst expectations in the fourth quarter.
In Merrill’s fourth-quarter earnings call for its wealth business, Merrill Wealth Co-Heads Lindsay Hans and Eric Schimpf detailed the highlights, including the firm hitting $3.6 trillion in client balances by the end of the year, a 12% year-over-year growth. The firm netted about 24,000 new relationships in 2024, with 72% of those holding more than $500,000 in assets, compared to 60% in 2023.
Hans also provided more detail on the firm’s newly announced advisory group for financial advisors who work with ultra-high-net-worth clients, which the wirehouse defined as clients with more than $10 million in assets. Hans said the firm had charted the growth in this client segment for over two decades, and advisors would benefit from another team to help them deliver personalized portfolios.
“We think about this as a single point of contact for advisors to access all of the capabilities at Merrill and Bank of America,” she said. “So think custom lending, trust and estate planning services, philanthropy, art services and more.”
Merrill advisors’ and clients’ interest in alternative investments continued unabated, with an 11% boost in advisor alts adoption by the end of 2024 compared to the conclusion of 2023. Clients with alts in their portfolios grew nearly threefold in the past five years, and the firm expected to equal its 2024 expansion of 50 new solutions into its alts platform in 2025, according to Hans.
She also briefly discussed the Los Angeles wildfires’ impact on clients and employees, noting Merrill has financial advisors and client associates (and, by extension, clients) in the impacted regions. Hans said that besides ensuring their employees and families were safe, advisors were updating client data if they were evacuated so advisors across the country could quickly contact them.
“So that sounds very basic, but again, (we’re) putting the health, safety and security of our clients and families first,” she said. “Then, as things unfold, (we’re) providing a lot to our advisors to make we are able to answer questions coming from clients at this point, which, as you can imagine … span the whole spectrum depending on the client’s situation.”
Morgan Stanley’s earnings indicated net revenue up 13% in its wealth division quarter-over-quarter. According to the earnings, the firm’s net interest income in the fourth quarter held steady, with the wirehouse reporting that “higher yields in the investment portfolio and lending growth” had outpaced lower average sweep deposits.
In an October call describing the firm’s third-quarter earnings, Morgan Stanley Chief Financial Officer Sharon Yeshaya had said the firm expected net interest income to be “modestly down” in Q4 due to lower rate expectations.
However, according to its latest earnings, NII rose from $1.77 billion to $1.88 billion quarter-over-quarter.
“Looking ahead into 2025, the combination of a more stable deposit mix, higher lending balances, and the rate outlook suggests that the first quarter should not fluctuate materially from our fourth quarter results,” Yeshaya said during the firm’s fourth-quarter earnings call on Thursday.
Morgan Stanley’s wealth management division saw net revenue of $7.5 billion, up 13% year over year. Asset management revenue hit a record high, with total net revenue up 8% from 2023. Total client assets stood at approximately $6.2 trillion, a 4% quarter-over-quarter jump and up 21% from the prior year.
Client assets led by financial advisors climbed 2% from last quarter. However, in an analysis for Wolfe Research, analyst Steven Chubak argued the firm’s Wealth key performance indicators were “more mixed” than met the eye. While sweep deposits and NII fared better than expected, overall, the net new assets ran below the firm’s target (which Chubak defined as $56 billion inflows versus a desired $80 billion per quarter target).