morgan stanley Morgan Stanley on Thursday said second-quarter wealth management pretax income rose 56 percent from a year earlier to $322 million, but earnings were down 7 percent from the first quarter.Net revenue climbed 13 percent from a year ago to $3.48 billion, reflecting higher asset-management fees and gains from securities sales by the division's traders. Revenue was up 1 percent from the first quarter even as market activity slowed.Yet the pretax profit margin slipped to 9 percent from 10 percent in the first quarter, well below Morgan Stanley Chief Executive James Gorman's target of 20 percent.
"We remain very focused on margins in this business," Gorman told analysts on a conference call. "Margins must improve and do so soon."Gorman was recruited in 2005 from Merrill Lynch, where he ran that firm's giant brokerage, to revive a struggling individual investor business still associated with its downscale predecessor, Dean Witter & Co.More than any other investment bank, Morgan Stanley is betting on wealth management to create a financial services company that is not just profitable but also sustainable across cycles. Private client services generated more than a third of Morgan Stanley's second-quarter revenue.Two years later, the combination of Morgan Stanley's brokerage and Smith Barney has yet to fully hit its stride.
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