The more risk-averse Morgan Stanley that has emerged since the financial crisis may tell a tale of two Wall Streets. But it may also tell a tale of two businesses within the bank.
On one side is the wealth management business, which generates at least 40% of the bank’s revenues. On the other is the securities business, which includes trading, Wall Street’s golden goose that has laid fewer eggs since the financial crisis.
The divide represents the pre- and post-crisis mentalities in the financial industry’s biggest firms. As revenue from traditional lines of business like trading has slowed, the industry has had to look elsewhere for more stable, less risky lines of business — business that won’t get snared in new government regulation meant to curb Wall Street’s risk-taking.
For Morgan Stanley, the answer has come from wealth management, which has grown by leaps and bounds since the bank took full control of the Smith Barney retail brokerage from Citigroup in 2012. Gorman said that while the firm managed portfolios for households with assets under $100,000, it also dealt with many households with over $10m in assets, and 'those are growing much faster'.
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