{"id":20876,"date":"2023-10-20T22:31:41","date_gmt":"2023-10-20T22:31:41","guid":{"rendered":"https:\/\/www.thinkadvisor.com\/2023\/10\/20\/high-interest-hurts-wealth-management-performance-at-wirehouses\/"},"modified":"2023-10-20T22:31:41","modified_gmt":"2023-10-20T22:31:41","slug":"whats-crushing-wealth-management-results-at-the-wirehouses","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2023\/10\/20\/whats-crushing-wealth-management-results-at-the-wirehouses\/","title":{"rendered":"What&#8217;s Crushing Wealth Management Results at the Wirehouses?"},"content":{"rendered":"<div class=\"media_block\"><a href=\"https:\/\/feeds.feedblitz.com\/-\/802620974\/0\/thinkadvisor\/\"><img decoding=\"async\" src=\"https:\/\/images.thinkadvisor.com\/contrib\/content\/uploads\/sites\/415\/2023\/10\/Wall-Street-Adobe-640x640.png\" class=\"media_thumbnail\"><\/a><\/div>\n<div><img decoding=\"async\" src=\"https:\/\/images.thinkadvisor.com\/contrib\/content\/uploads\/sites\/415\/2023\/10\/Wall-Street-Adobe-640x640.png\" class=\"ff-og-image-inserted\"><\/div>\n<div class=\"the-advisor bullet-summary\">\n<h3>What You Need to Know<\/h3>\n<ul>\n<li>In Q3, wealth units at Morgan Stanley, Bank of America and Wells Fargo all underperformed relative to 2022.<\/li>\n<li>Executives blame high interest rates encouraging retail investors to keep more of their assets in cash and cash alternatives.<\/li>\n<li>But they also see signs that things will turn around in 2024.<\/li>\n<\/ul>\n<\/div>\n<p id=\"first-para\"><span>After years of strong growth, including through last year\u2019s tumultuous market, wealth management divisions at some of the largest financial institutions have finally come up short of expectations.&nbsp;<\/span><\/p>\n<p><span>As firms reported earnings, results from the wealth businesses at Morgan Stanley, Bank of America and Wells Fargo all underperformed relative to 2022. Executives at the firms blame high interest rates encouraging retail investors to keep more of their assets in cash and higher-yielding cash alternatives.&nbsp;<\/span><\/p>\n<p><span>Morgan Stanley brought in $35.7 billion in net new assets during <a href=\"https:\/\/www.morganstanley.com\/content\/dam\/msdotcom\/en\/about-us-ir\/shareholder\/3q2023.pdf\" target=\"_blank\" rel=\"noopener\">the third quarter<\/a> of 2023, 45% less than it brought in during the year-ago period and 60% less than the previous quarter. Net revenue dipped 4% from the previous quarter and total assets under management fell 2%.<\/span><\/p>\n<p><span>While revenue and client assets are up 5% and 16% year over year, respectively, it\u2019s a far cry from October 2022, when Morgan Stanley CEO James Gorman celebrated the wealth management business continuing to perform well despite market indexes dropping more than 20%. <\/span><\/p>\n<p><span>On this year\u2019s call to discuss&nbsp;third-quarter earnings, Gorman noted that results are \u201cobviously below recent quarters.\u201d&nbsp;<\/span><\/p>\n<p><span>\u201cAs anticipated, the market environment in aggregate remained mixed continuing a pattern we\u2019ve seen over the past several quarters,\u201d Morgan Stanley\u2019s CEO said. \u201cThe concerns around a tight employment market, high commodity prices, inflationary pressures that may impact Fed policy provide additional challenges later in the quarter.\u201d<\/span><\/p>\n<h2>Rivals\u2019 Reports<\/h2>\n<p><span>The story was similar at Bank of America, which <a href=\"https:\/\/d1io3yog0oux5.cloudfront.net\/_35eb44bd1c43c7b775be9e8f61348a11\/bankofamerica\/db\/806\/9961\/earnings_release\/The+Press+Release_3Q23_ADA.pdf\" target=\"_blank\" rel=\"noopener\">reported earnings<\/a> on Tuesday. The bank\u2019s global wealth and investment management business, which includes Merrill Lynch Wealth Management, had net income of $1.0 billion in the third quarter, 13% less than same period in 2022. Revenue fell 2%&nbsp;from a year ago to $5.3 billion.<\/span><\/p>\n<p><span>Meanwhile, Wells Fargo reported that&nbsp;<a href=\"https:\/\/www08.wellsfargomedia.com\/assets\/pdf\/about\/investor-relations\/earnings\/third-quarter-2023-earnings.pdf\" target=\"_blank\" rel=\"noopener\">third-quarter&nbsp;revenue<\/a> from its wealth management business increased 1% from a year ago, while income fell 17%. Total assets fell 3% from&nbsp;the second quarter&nbsp;to $1.9 trillion&nbsp;but rose 11% from the previous year. <\/span><\/p>\n<p><span>On the company\u2019s earnings call, CEO Charlie Scharf noted that the Wells Fargo Advisors business has \u201ctreaded water for a long period of time,\u201d while CFO Mike Santomassimo said outflows from the wealth business contributed to a decline of 5% in average deposits from a year ago.&nbsp;<\/span><\/p>\n<p><span>\u201cWhile average deposits were down compared to both the second quarter and a year ago, the pace of the decline slowed in the third quarter,\u201d Santomassimo said.&nbsp;<\/span><\/p>\n<h2>The Main Problem<\/h2>\n<p><span>Executives across the three firms blame high interest rates set by the Federal Reserve, which is encouraging clients to keep more of their wealth in cash. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What You Need to Know In Q3, wealth units at Morgan Stanley, Bank of America and Wells Fargo all underperformed relative to 2022. Executives blame high interest rates encouraging retail investors to keep more&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":20877,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[1],"jetpack_featured_media_url":"https:\/\/blog.lifeinsurance-orleans.ca\/wp-content\/uploads\/2023\/10\/whats-crushing-wealth-management-results-at-the-wirehouses.png","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/20876"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=20876"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/20876\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media\/20877"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=20876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=20876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=20876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}