By Andrew Welsch

Wealth management units at some of the nation's biggest banks performed well during the first quarter and reported strong numbers for net new assets and new clients.

Those victories were overshadowed on earnings calls by concerns about a weakening economic outlook and declining equity markets, which can depress the fees that advisors generate from managing clients assets.

Morgan Stanley's wealth management unit, which includes thousands of financial advisors and online brokerage E*Trade, said net income rose 9% to $1.5 billion. The wealth unit hauled in $93.8 billion in net new assets, up from $56.5 billion for the fourth quarter but down slightly from $94.9 billion for the first quarter of 2024.

Speaking on the company's earnings call Friday, CEO Ted Pick said recent market volatility was actually helping the company's advisor recruiting efforts because the upheaval highlights the company's capabilities and client referrals. "People are coming to the platform. Jed Finn and Vince Lumia's phone lights are blinking nonstop," he said, referring to the company's head of wealth management and its head of wealth management client segments. "People want to be on this platform and that is in part because the funnel works." When Morgan Stanley refers to its "funnel," it is talking about how it attracts new full-service wealth management clients from its self-directed brokerage platform and its workplace business.

CFO Sharon Yeshaya said that investor activity on the company's self-directed platform was at record levels. The company said daily average revenue trades jumped 19% year over year to just over one million.

She also said that Morgan Stanley's multiple channel strategy in wealth management is working and pulling in new clients and assets during the quarter. "The story there is encouraging when you look under the hood," she said.

Wells Fargo's wealth management unit reported that net income rose 3% year over year to $392 million for the first quarter. Total revenue increased 4% to $3.9 billion.

JPMorgan Chase's Consumer & Community Banking unit (which includes a large wealth management business) reported strong growth, saying it added a record 40,000 first-time investors in wealth management. The bank's wealth management business includes a self-directed brokerage, thousands of advisors who operate from bank branches, and a high-end brokerage unit that caters to wealthy investors. It has been hiring hundreds of financial advisors, seeing an opportunity to win clients and build bridges with its vast consumer banking business. The unit had 5,860 client advisors at the end of the quarter, up from 5,571 advisors for the same period last year.

Client assets, however, slipped at all three banks compared with the fourth quarter. Morgan Stanley reported total client assets of $6.015 trillion, down 3% from December. Client assets at Wells Fargo decreased 2% to $2.2 trillion. JPMorgan's client assets at its CCB unit dipped 1% to $1.079 trillion.

Bank of New York Mellon's Pershing unit reported assets of $2.7 trillion. That is unchanged from the prior quarter. Pershing serves registered investment advisory firms and other wealth managers and safeguards assets on their behalf. Pershing brought in $11 billion in net new assets. That is down from $41 billion for the fourth quarter, but up from the $2 billion in outflows Pershing reported for the first quarter of 2024.

The declines in client assets reflect market depreciation during the quarter ended March 31 but don't reflect the sharp selloff in stock prices that followed President Donald Trump's April 2 tariff announcement. A prolonged drop in equity prices could hurt fees wealth management companies earn from assets under management. Wealth management executives say it can also be a growth opportunity, however, because advisors can pick up new clients who are seeking financial advice in adverse times.

Still, the worsening economic outlook dominated earnings calls. Morgan Stanley's Pick worked to reassure analysts during his company's earnings call that the company's investment banking pipeline was strong and that while some clients were postponing dealmaking, others were proceeding. Still, he acknowledged should the uncertainty persist, it could force Wall Street's animal spirits into hibernation.

Write to Andrew Welsch at andrew.welsch@barrons.com

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April 11, 2025 16:34 ET (20:34 GMT)

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