Push into wealth management paying off

Tools

Banks have been yearning to diversify appropriately away from proprietary trading and investment banking into more stable sources of revenues as of late, leading many to focus on wealth management. That effort may be paying off.

Consider Bank of America. Its Merrill Lynch unit contributed $3.5 billion, or 84 percent, of the global wealth management and investment unit's revenue. Its revenue rose 9 percent from the fourth quarter of 2011 and 2.7 percent from the end of the third quarter of 2012.

Over at Morgan Stanley, the fourth quarter results were also favorable, as Morgan Stanley Wealth Management reported a 17 percent pre-tax profit margin in the fourth quarter, putting it well ahead of the 15 percent target management set for the middle of this year. Both units were able to grow profits, even as the broker head count declined in the quarter.

It would appear for now that the decision to diversify into wealth management is paying off exactly as management had hoped. The future looks bright for the industry, as lots of wealthy folks yearn for financial advice in a still uncertain climate. 

For more:
- here's the Reuters article on Merrill Lynch
- here's the article on Morgan Stanley from Investment News

Related articles:
Private banking booming amid tough times