Morgan Stanley (MS) Earnings Call Transcript & Summary

Good morning. I think we'll slowly start. So I'm delighted to have Jon Pruzan with us today. He's Morgan Stanley's Chief Operating Officer. And Jon, thank you very much for taking time.

No, I'm happy to be here and I actually want to give you a shout-out. Sort of reopening the conference season. It's great to see people and interact and be in person, which is obviously critically important to us all going forward. So it's great to see everyone. Great to be here.

Thanks very much for that. Before we start, I do have to read a quick disclaimer. So our discussion may include forward-looking statements, which reflect Morgan Stanley management's current estimates and subject to risks and uncertainties that may cause the actual results to differ materially. Morgan Stanley does not undertake to update the forward-looking statements. This discussion, which is copyrighted by Morgan Stanley, may not be duplicated or reproduced without our consent, is not an offer to buy any security. So let's start.

Very apropos given the discussion that we're about to have.

So I'm done. I'm done. So let's move on. So it's -- Jon, given kind of where we are, given what's happening in Europe at the moment, kind of what are your thoughts on the kind of impacts of the Russian invasion of Ukraine, particularly in terms of kind of market behaviors and exposures to start?

First and foremost, this is clearly a humanitarian tragedy and crisis and requires global support around the world. In terms of Russia for us as a firm now, switching gears, as we -- I think we've said in the past, our direct exposure is limited. We had a bank in Russia that we gave up the license a while ago now, and our onshore business also don't have an onshore equities or FX business. So really supporting global clients in the region was our general strategy. At this point, we're not obviously doing any new business. We're helping some of our clients unwind positions and clearly trying to support the very few employees that we have in the region. But for us, it's not a major market or a major economy that we interact with other than from a global perspective. That's the easy part, which is not that easy, to be fair. But I think the sort of the second, the third, the fourth order impacts and what happens going forward is clearly what the focus is on. And as you can imagine, for us, trying to manage the volatility, being prudent around risk management, trying to support our clients, but we have clearly seen an increased [indiscernible] of volatility. I would say broadly, most markets are functioning. Clearly, we've seen significant volatility in volumes in commodities, in soft commodities and some of the metals. But broadly speaking, open and functioning markets just with significantly more volatility than we saw before.

And when you think about the kind of broader -- this kind of the invasion now, how could that impact the kind of global banking and markets business in your mind?

Well, again, I think that volatility leads...

Goes cross-border?

The volatility definitely goes cross-border, markets don't like uncertainty for sure. I think before first couple of weeks, 1.5 months of the year, what we're talking about inflation, the accommodative central banks around the world pulling out inflation, the rising rates, shape of the yield curve, and now we've added to that, obviously, a Russian-Ukrainian invasion, the sanctions that were put in extraordinarily swiftly, volatility that we hadn't seen in the commodity market. So all of those have impacts. But when we think about our global sales and trading business and our global integrated investment bank, sometimes volatility obviously will lead to opportunity in volume. So we've seen in certain markets, in certain places, increased levels of volumes. But on the other hand, that volatility also has impacts to other parts of that business. So the ECR, equity capital markets calendar, or the level of announcements of M&A given the volatility that we're seeing in the stock prices. So in one way, again, markets are open. They're functioning. We have engaged clients and we're in an activity-based model. So in many ways, activity levels are still quite healthy. Pipelines are quite healthy, but some of that activity is being delayed. Doesn't mean it won't happen, but we're sort of more in a period of sort of in certain jurisdictions, in certain markets, are open and closed windows for certain products, and that's sort of what we're helping our clients navigate at this point.

Perfect. Let's move -- let's go slightly away from the near-term volatility. As a firm, when we kind of talk about our strategy, we talk about kind of sustainability, but we also talk about kind of growth momentum across the pillars. Where do you see that kind of more structural growth momentum for us across the business?

Well, I think it's a good transition because, clearly, I mean, we're going to see short-term volatility, right? Markets go up and down, volatility changes. But what we've tried to do is create a model that's, as you said, sustainable, defensible, longer term, more balanced. And I think over the last 10 years, that's what we've created. And what we've created is sort of 3 world-class businesses that worked extraordinarily well together that have been gaining share, both in terms of market share but also mind share. And that balance was sort of built for, not the geopolitical environment, but the volatility environment, the more uncertainty environment where our reliance on any given business is much more balanced. And while on the one hand, the wallet -- the size of the wallet in ISG might be different than it was last year for sure, but the momentum and growth that we have in the Wealth and Investment Management business on the backs of 2 great -- buying 2 great companies will help create that balance that we've been looking for. So we came out with our strategic deck. We highlighted what we thought our return profile will look like. And we feel, again, as a medium-term, longer-term business volatility creates uncertainty in the short term, but we're much more focused on the long-term outlook, which is -- continues to be quite good for us as a business.

Yes. So let's talk about our integration of E*TRADE and Eaton Vance. And that's particularly from the business perspective, but also operationally.

Sure. Let me make a comment about just broadly and then I'll dive a little deeper into each one. We were really lucky, smart, right place, right time, however you want to describe it. But had the opportunity to buy 2 great companies with great management teams and deep talent but also had the benefit of having great momentum in their businesses. So not only from when we announced the transactions, but from the period of time where we announced the transactions and closed the transactions, both E*TRADE and Eaton Vance continued with that great momentum in their business, which is as a buyer of businesses and as an adviser to people who buy businesses, that period of uncertainty between signing and closing usually creates some instability, but these 2 great companies were growing quite well when we closed the deal. So that's number one, which is fantastic. So now specifically on E*TRADE, when we announced the deal, we talked about deposit -- or excuse me, funding synergies and cost savings. We're going to achieve those and have achieved most of that, but that's not why we did the transactions. To us, it was about, again, filling out the capabilities of the platform. So from full-service financial advice to the workplace to the self-directed channel, so now or the scale in all 3 really important channels was critically important behind the deal. So it was really about being able to provide incremental products and services for our client base. And so this was not about the cost and the deposit funding synergies, which were very important or were helpful, but this was really about bringing the 2 companies together and being able to provide those types of services and products for our clients. So what have we been doing in a way that trying to not disrupt the client experience in either or any of the channels, trying to enhance it? So we've been pretty deliberate with our integrations. But first and foremost, investing in the capacity and resilience of the platform, right? We closed the deal. We announced the deal right before COVID. E*TRADE was doing 300,000 trades a day in 2019. In 2021, it was over 1 million trades a day. So just making sure that we had the capacity and the resilience of the platform. The platform never went down. We were open for business every day supporting our clients. So investing in the technology and the capacity and the resilience. We're now obviously going through the process of trying to integrate that client experience. So whether you're an FA client, a workplace client or a self-directed client, having that sort of consistent feel to your client experience and we're making progress on that where one of the things we've talked a lot about is the companion account. In the old days, if you are a Morgan Stanley workplace client, when your shares vested, we called you and said, what do you want to do with your stock or your proceeds. So it left the building. So we're putting with Solium and Shareworks and now with Equity Edge and E*TRADE, we've been putting companion accounts, so we don't have to chase back the client relationship, it lands in a Morgan Stanley accountant, then we can provide services for that. So again, taking it slow, being deliberate and trying to enhance the client experience so people can move across the different platforms with ease and when it's required. So going quite well. We still have some -- a little bit more work to do on the integration, mostly in the middle and back office, but early signs of, a, we got the synergies, cost and deposit funding. And on the revenue side, we're really excited about the opportunities to provide more services and products. I would say with Eaton Vance earlier, clearly, we closed that deal in 2021. But again, super excited about what we have in terms of both the management team. But again, if you think about why we bought the company, it was around a couple of things, scale as well as capabilities. And what Eaton Vance brought us was customization with Parametric, which thematically, we think, is a very important secular trend in the space. Sustainability with Calvert, value-add, fixed income. And so when you combine that with our alts platform and our concentrated equities platform, we've built out what we think is a much more balanced and complete set of products for our clients and services. And then the other excitement, and we're seeing some really early success here and excited about it was the distribution, right? Eaton Vance, predominantly a U.S.-based business model with mostly U.S. distribution, very little abroad, and ours, very complementary. So more product in the U.S. given their distribution in the U.S. We're seeing early signs of success of bringing their products into Europe. So again, earlier in the integration, but so far, I'm going to knock on wood, so far, so good. But we continue to invest in those businesses, invest in the people and invest in the stability of those franchises.

Brilliant. Let's dive kind of a little bit deeper into the wealth business, and of course, the last couple of years have seen kind of tremendous asset growth. And how do you see it going forward from a perspective of [indiscernible] sort of growth are you -- are we likely to see kind of medium term? And which channel kind of more structurally are you most excited about from a perspective of that marginal growth coming through?

Right. Well, again, I think we love all our channels equally, like our children. No, we're super excited about all of the opportunities. And again, I mean, as you would imagine, there's relative size differences, reasonable difference in economics across the platforms. But what we've been able to do is, I mean, first and foremost, we had a world-class FA platform. It is extraordinarily stable through the last 3 or 4 years making significant investments in the modern wealth platform and the technology that our advisers use so they can support their clients. We've seen the evolution of the sort of sole proprietor. You have an FA and they work alone to the building of teams. We have great teams at Morgan Stanley. It's a much more stable FA sort of population, if you will. We've also done a lot of work around retirement and keeping our FA population. So when we did the JV with Smith Barney, on any given week, we were losing 20 FAs a week, if you -- I get a report at the end of every week in terms of the number of FAs joining and leaving. In terms of leaving, you can -- it's one hand, in fact. So it's a much more stable platform in terms of attrition, number one. And number two, we are still attracting significantly bigger and better teams than the few that are leaving. And I think we are a destination of choice from the FA channel. And that is an extraordinarily important channel because that is, in terms of its size, in terms of the assets that we manage, and obviously, the growth what that brings to the overall net new asset contribution is quite significant. So the $430 billion in net new assets, plus with market appreciation last year, we brought in $1 trillion of assets. So that's a fantastic sort of tailwind for us as we go into the market. But the workplace and the self-directed channel is really the sort of funnel, if you will, for new clients. We went from 2.5 million or 3 million households to now having an opportunity to service, call it, 14 million or 15 million relationships. And our ability to, over time, deepen those relationships, gain the trust of those clients with things like companion accounts, but also financial wellness and education and things of that nature. And as those clients, either their complexity or their wealth or their needs grow, we want to be able to be there and sort of, again, migrate them across the different channels that we provide. The other thing I would say is we've seen, as an industry, and I think COVID, you saw an acceleration of this as sort of the convergence of all the challenge -- excuse me, of all the channels, right? Even in our FA channel, technology is critically important both in terms of how our FAs work and service to clients, but also what the clients want. The clients wanted that. The clients want to be able to see things and do things on the phone. It's not just a self-directed client who wants world-class technology. So having world-class technology across the entire platform, it's clearly scalable, which is the exciting part. We don't have to bring on thousands of people to serve incremental clients because many of the new clients we're going to have, we're going to have an electronic or a digital relationship with them for many years, potentially even before they become more personalized. But -- so the wealth channel and the wealth business is just -- it's foundational to who we are now. It creates that balance. I think we've created a category of one when you think about the breadth and scale. It is a U.S.-based business so -- but the breadth and scale of that business will be very important to our ultimate stability and success as a firm.

As firm. Absolutely. Now let's talk about the Investment Banking, particularly the kind of more structural wallet question. How do you think that kind of IB revenue wallet is going to kind of evolve over the next kind of 3 years. I know it's a crystal ball question.

Obviously, when I was the CFO, I always used to say, I do not have a crystal ball, right? So that is a classic crystal ball.

It is, it is, but we need to hear. Particularly -- I suppose particularly, I think we're all kind of trying to answer one kind of question beyond the volatility and the kind of near-term uncertainty. We've just finished 2 extraordinary years from a perspective of the entirety of the IB wallet. How do you think the normalization looks like?

I'm going to go back to my crystal ball comment. What I do know is if you look at our platform and our business, and I would say that this is something that's very important, we have a global business that we've been investing in, geographically, technology and people. And for us to continue to advise and service our clients, we need to be there consistently every day with the same risk appetite, with the same presence, with the same energy and I think that's what we've done extraordinarily well. We don't show up on Monday with one view of the world if you're a counterparty and then another view of the world the next day. We have a consistent risk appetite. We've been investing in the technology, the platforms and the to have a global business. And if you want to be in this business, you have to have a, I think, for long term, really a global business. That has allowed us to gain share in virtually almost every vertical, but also in terms of the overall share of the ISG pool at 15%, and we picked up a couple of points along the last several years, and I feel very confident that we'll be able to defend that share gain and potentially grow that share. What the ultimate wallet size will look like, certainly, in the first 2 weeks -- excuse me, first 2 months of the year this year versus last year. Last year, obviously, first quarter a very difficult comp, clearly a different dynamic, but this is a core part of our business, a core part of our franchise. We have levers to adjust as pools move and go up and down. But consistently servicing our clients for the long term will continue to help us grow and build share of whatever the ultimate wallet will be. So I didn't answer your question.

No, but it's okay. It's okay. It's about the share.

But I mean, again, you can't -- we're going to have markets that move up and down and volatility creates opportunities in some markets and closes other markets. So you're going to -- but if you want to be in this business consistently and be successful, you have to be there every day. And so some days, you're going to have less opportunity. We are a market-based business. We're an activity-driven model. And what activity is high, we do our best, right? When activity goes down, the results will show that. But we have other businesses and we have other levers that we can continue to manage for the longer term.

Absolutely. Let's talk about the hiking cycle, particularly in the U.S. and the -- its impact across the segments and also from a revenue translation perspective.

It is Wednesday, right?

Yes.

The Fed is meeting today, correct? So I would make a couple of observations. First, there's to -- well, there's a couple of things we probably know. Rates are going up. Whether they start -- I mean, I think they will start today in terms of the U.S. of going up. And the market seems to believe that's 25 basis points. If you were -- if I was in the seat 3 weeks ago, it would have been 50 basis points. But again, we think about not days and weeks and quarters, we think about multiyears. So rates going up generally for our business is a positive. And whether they go up 3, 4, 5, 6, 7, we'll let others decide in the speed and the pace. But any sort of rate movement will, for many parts of our business, set us up really well for 2023, right? In terms of when exactly you get the rate hikes is interesting. Again, I'm not a macro manager of daily P&L, but it is interesting but not as relevant for us because we're trying to manage for the medium and longer term. But the rates' movement and a debate around rates, obviously, should -- has led to more activity levels in the macro in terms of sales and trading, in terms of just the debate around that. And again, we have open and functioning markets and we have people who have different perspectives. So again, sitting in the middle of that and being activity based has been a positive for that. Also, in terms of -- within our Wealth business, we do have asset sensitivity and a very large $300 billion-plus deposit base. So generally, rising rates will be positive to that. We tried to outline some of that in our strategic deck in January as well as the impact in our Investment Management business around our money market business, positive in terms of rates. So again, we'll see what happens today. I think the 25 basis points, I think the dot plot and some of the commentary, probably more interesting than the action itself. But I think rising rates, broadly speaking, as I said, should lead to some positive outcomes in Wealth and IM. And activity levels, we'll have to see on the other side.

On the other side. Perfect. Let's talk about Europe and our European business. Could you just kind of give us a sense of how you think European business within the kind of global context? So I suppose both on the ISG side and maybe on the Investment Management side.

Sure. And again, both ISG and Investment Management for us are global businesses. And if we want to be relevant to our clients and provide services and solutions for our clients, that means we have to be in the markets that they care about. So they care about the U.S., they care about EMEA. They care about Asia. So we -- again, our global business, and we'll continue to make investments in the global franchise. From a pure EMEA perspective, last year was a record year in terms of activity levels for Europe. And again, if we were here a couple of weeks ago, we probably have a different perspective. But clearly, Russia and Ukraine, obviously, much closer to you all than when we -- from a perspective of feel from -- than from the United States. But I also think if you want to go on a more positive outlook, the speed in which the European Union and the U.K. to collectively together -- came together really potentially starts to solidify Europe the union itself, arguably the investments required around energy and infrastructure and maybe some more fiscal union in that region. So longer term, you can see, again, hopefully, the Russian-Ukraine situation resolves itself quickly. But you can see sort of a longer-term potential positive outlook for Europe. But Europe is a very important region for us for the global business because our clients care about it. We've actually recently announced making some investments in Paris and a risk and data analytics team to take advantage of some of the talent in that region to support our ISG business. So again, a very important region for us, difficult period today. But medium and longer term, an important part of the overall global franchise.

And when you think about kind of our European business evolution over years, and of course, there's -- it's also a success story from the perspective of our market shares as well. But of course, in the meantime, we had...

Breakfast? We did have breakfast this morning, the 2 of us.

We did. Brexit. And of course, a question about the fragmentation, the cost of disruption you're setting, settling legal entities and so forth. So all those years post the original event, is it still disruptive?

I don't think it's disruptive. And again, I think the reaction of the EU and how it came together so quickly, I think, is a positive sort of -- again, I don't -- there are not a lot of discussion about Brexit in the last several weeks in the U.K. and Europe coming together quite seamlessly and quite quickly. But if you step back a few minutes -- a few years or even a longer period of time, as an organization, the free flow of capital between entities, tax regime, liquidity, capital, rule of law, all of those things made -- had us and most our peer set up their regional hub in London, right? Obviously, that's -- we've all had to adjust to new rules, and that's what we've done. But some of those new rules have led to incremental legal entities, jurisdictions, the ability to move capital around or liquidity around is not frictionless anymore and having trapped liquidity more than capital in certain jurisdictions adds incremental friction to the overall model. But I would say a couple of years after the fact, what we do as managers is we adjust and we try to optimize within the rule set. And now that we understand the rule set, we've been working to continue to try to become as optimized as possible. And I would say we've done a nice job with that, but there is some incremental friction and costs related to that. And you see that in any industry. And whether it's the regulatory rules or once people establish what the rule set is, I think we've done a reasonably good job of over time adjusting and trying to optimize and that's what we'll continue to do.

And so just to summarize in terms of kind of international, how the international business fits within the overall strategy. We talked a little bit of -- on ISG, of course, on the Investment Management as well. But how do you see kind of Europe fitting into this?

Well, again, Europe is an incredibly large -- a large part of the puzzle. If you look at our revenues, a good chunk of our -- we are -- I mean with the deals that we did, Eaton Vance and E*TRADE, we're predominantly U.S.-based businesses. So the percentage coming from the U.S. and their growth rates, U.S. is still our largest market and the largest contributor to our revenue streams, but we are in global businesses. And if you want to be in global businesses, you have to have knowledge, capabilities, people, technology in those markets. And so again, international is critically important. We've been in many markets for 50 years, 70 years. And so we will continue to be present because our clients want to know about the region, we have clients in the region. But again, globally, people want to understand what's going around the world, and that's part of, I think, what makes -- differentiates Morgan Stanley is, again, our commitment to the global footprint we have and scale back.

I've got a good few more questions, but I just wanted to check out -- to check for the questions from the audience. There we go. Can I please have a mic, fourth row on my right-hand side, please?

[indiscernible]. So just on capital, the SCB is still quite high at 5.7%. And I know you used to, when you were CFO, used to talk a lot about how regulators don't really -- and same thing with the CEO, used to say that regulators really don't get your business small. And just...

I think we were nice for them.

You were a bit nicer than that, yes. I mean, are we -- I suppose, are we any closer to them getting the business model and for you to have a lower SCB?

It's a great question. I think they clearly like our business model today versus where our business model was 10 or 12 years ago. They understand and appreciate the stability and the balance from the sort of less capital intensive, less balance sheet, less volatile sources of revenue. As it comes to CCAR and the models, we still don't think we're getting the credit for the, effectively, the comp model in wealth. The FA grid is very structural. And as revenues go down, expenses go down, and I don't think the models recognize that. That being said, I will say a couple of things. One, with our SCB, which is made up of 2 things. One is the peak to trough, decline, the other dividend add-on. We doubled our dividend, right? We did see much better results in the peak to trough, and that's before some of the benefits that we get from, a, the integrations of the deals, but Eaton Vance wasn't even in the CCAR submission last year. So we think, over time, if everything else was equal, given our business and our mix of businesses, our SCV should naturally trend down over time. That's number one. Number two, we do spend time with our regulators trying to, again, explain what we think is the value of the wealth business and how it moves in periods of stress. And hopefully, some of that longer term might get reflected in the models that they've built and they've looked at us. It is clear they like the businesses and they want us to invest in the businesses. And then I think one of the most -- or one of the biggest differentiating factors for us right now regardless of the size of our SCB is the size of our capital cushion, right? It's 16% at the end of the year, 200-plus. Even before our internal buffer, 200-plus basis points gives us lots of flexibility with our capital position for sure. And then we'll see what the new SCB is in, I guess, the last week of June. We haven't submitted our CCAR but we'll get there. But I think we have a lot of capital flexibility.

Davide, did you just...

Who is that?

Davide Serra.

Oh my God, excuse me for 1 second. Are we on camera?

Yes.

Stop it. He's my friend. I haven't seen him in 2 years. Over 2 years. No, that's not true. I saw you in New York. I saw you in New York. I saw you in New York. I take that back, but I got very excited. Please ask an easy question.

Exactly, fair enough. Jon, can I ask you the -- let's say, first of all, it's remarkable over the last 15 years what you and James and the leadership have achieved is probably the best transformation ever of the financial in terms of multiple profitability and global scale. No one has achieved this. And so congratulations.

Thank you very much. Is that the question? Okay.

And the second question is for now in the States, you're basically becoming the #1 household. You take various leverage, the brand, the number of customer. You can probably do the same elsewhere thanks to the actions because something has changed in the world, which is Switzerland moved for the first time ever, aligned to the rest of Europe. And that's the biggest change. Because basically, as long as you have places where people can loan their, yes, it's going to be hard to hold people accountable. And they moved, they had no choice because the land lock across Europe. And I think the DOJ may declare and the rest of Europe may declare. So now the Morgan Stanley brand can actually become a household brand, as we should because of scale, because of the U.S., because of rule of law also across. And I noticed one thing that Gorman did right, in my view, was to put [ 2 billion ] in NN, in the Netherlands, acquiring a midsized asset manager. I was very surprised with what was a brilliant deal. I actually didn't understand why so many European CEOs didn't do it, big mistakes on their side. So can we see tomorrow Morgan Stanley buying an Eaton Vance in Europe, assuming there was one, out of the insurance or an asset manager. Because on the other side here, you don't commit balance sheet, you get fees. And if a tax authority get angry, you don't care. And basically, from a U.S. perspective, you're not adding capital risk, you're just getting fee. But the brand could really do what an Airbnb has done in Europe, yes. So Paris survived, thanks to Airbnb. I mean it's a U.S. brand. Pays probably -- more people in Paris mainly living with Airbnb than ever.

So the short answer, yes. The longer answer, we bought 2 companies effectively last year. We have to integrate those. We have to make sure we have the infrastructure and the resiliency around those businesses. But when we think about global businesses, I am clearly a global business and opportunity to do more things. I think the -- again, I've been at Morgan Stanley for 27 years. We're clearly in a difficult geopolitical environment today. But in terms of the strength of the brand of Morgan Stanley today, the strength of the balance sheet, the credit ratings, just the whole profile, really front footed. So our ability, to your point, very fragmented market. I mean I think we have actually some very good distribution capabilities in Europe and Asia. So leveraging the brand, leveraging the capabilities and incrementally adding over time, absolutely.

Okay. Do we have any more questions from the audience? Okay. Let me continue and I'll give you a chance in a couple of minutes. We haven't talked about Asia. And of course, it is a significant part of our business, both on the ISG side do we have a successful wealth business there. Could you give us a context what you're seeing and where -- and how kind of strategically we're likely to position also within the kind of other kind of policy question marks around this?

And again, I think that in any given day, year, we -- I mean, geopolitical relation or political relationships, geopolitical tensions sort of go up and down. But Asia as a region is a very important region of the world from a GDP growth perspective, but also percentage of capital markets. And again, our clients are interested in that part of the world. So we need to have a presence. We need to have talent and insights into what's going on in that part of the world. So we'll continue to do that. And then obviously, whether our wealth business is a fantastic business offshore, we'll continue to try to grow that business, but how we interact onshore/offshore. Again, long term, we need to be in that part of the world. We need to be able to service our clients with solutions for that part of the world. So we'll continue to be there and to have a real presence. And again, we've been in many of these markets years for 20, 40, 50 years.

Yes, absolutely. And kind of slightly differently, we've touched upon the topic a little bit kind of earlier, but let's talk about the technologies differentiator. It's a part of your portfolio kind of now it's a very kind of -- it's a big discussion in the industry as well. Where do you -- and of course, we've invested for a very long time in kind of various platforms across businesses and ensuring kind of that -- the IT stack kind of gets modernized. But where is the differentiation? How do you kind of see technology kind of fitting into that kind of overall growth plan?

Right. Well, I mean, I think we've seen a long-term trend for sure, but I think that, again, the pandemic accelerated the sort of adoption rate, the digitalization, all the things that we talk about. And so I think more so than ever, technology is strategic. It's for many, including ourselves, a competitive advantage, and we will continue to make significant investment. Now you use a very interesting term in terms of modernization. We have been investing significantly around operationally resilient and the infrastructure to make sure that we can be open and service our clients every day around the world and protect what they give us. And so when we think about technology, what we're thinking about is how do we improve both the client and/or employee experience with Morgan Stanley using technology by modernizing our technology. We've talked a lot about historically, data and cloud as enablers to do that. But ultimately, what we're trying to do is deliver business outcomes in a secure and properly sort of controlled frame. And we're going to do that through innovation. I think we've been extremely innovative. If you look at our trading platforms. If you look at some of the stuff we're doing in our Wealth Management business around LeadIQ, about matching FAs with clients, around Project Genome, which is really a big data analytics exercise to try to be -- try to draw insights that we can use with our clients and provide services that they're looking for. And so continue to be innovative. So number one. Number two, resilient, right? We have to be open every day, operating, can't go down, have to protect the quality and the security of our data and do all the things around resilience. And then we want to be effective. We want to be able to optimize. We want to modernize the plant. We want to try to continue to get more value out of the investments that we're making. So like many things, we've -- at Morgan Stanley, we've been very good at technology for a long time. We never really talked about it. I think the acceleration of the adoption rates and the fintech and all the things that and see every day is sort of drawn a lot more attention. But we've been very focused on, again, investing in the technology to provide insights so we can support our clients and our employees in a way that they want to be supported. So a big emphasis and focus for us, but it always has been.

Of course. And let's just touch upon resilience. Of course, yesterday, we had a session with Andrea Enria, who kind of talked about, of course, the kind of the very, very heightened cybersecurity risks and how the industry where 1 is paying attention and 2 should be paying attention. Of course, it was a big deal for us for quite some time. But can you just kind of give us a context how you think about this?

Sure. I'll make a couple of comments. One, immediately after the invasion, as you know, we're highly regulated around the world. A lot of inquiry around direct exposure to Russia, sanctions, how are you dealing with all those things. That was sort of day 1, day 2, day 3, day half, and then it immediately shifted to cyber. What is going on in the cyber space? What are you seeing? How are you behaving? My favorite question was we got a question, are we on heightened alert? And my Head of Cyber, Katherine Wetmur, who is a fantastic executive said, "We're always on heightened alert." This idea about like sometimes we let our guard down versus other times is silly. So we are clearly being very mindful around we're seeing and what we're doing around the world. And obviously, there are patterns that you see in certain geographies that we're clearly looking for more today than we might have been yesterday. But we are clearly on heightened alert with the right level of urgency and focus. The one other comment I would make is this is one of those areas where there's actually really good collaboration. Both industry, talking to industry, industry talking to government, people passing information. What are you seeing? What are you hearing? What are you doing? And so there is no sort of secrecy around that effort. So I think, again, everyone is very focused on what will happen. To be frank, I think people are surprised that more hasn't happened. It's actually been quite quiet, but we are being very diligent.

Yes. Absolutely. Are there any questions? Any more questions from the audience? First row on the left-hand side, Patrick, just here, please.

[ Patrick Clemens ] from [indiscernible]. Well, you talked about -- the question was asked about great transformation as a company and you've moved to where you've moved and successfully. And all large, especially U.S. banks, have moved in quite different ways. I mean, JPMorgan is spending a lot of money buying whatever fintech is available. And then Goldman is doing its thing. But Morgan Stanley hasn't been really active in buying fintechs, unless I've missed some. I mean, so what is sort of the next phase, right? I mean you've done a couple of very interesting things. What is the long-term winning model of financial?

So what have you done for me lately? Listen, first of all, I would argue -- I wouldn't argue, I don't like to argue with investors. I would make the observation E*TRADE was a fintech company. I'd make the observation that Solium was a SaaS company. So we had been buying technology. I noticed you mentioned one of our peers bought something yesterday in a space that we clearly think is great, which is the workplace or the stock plan business, and that's why we're investing in that business between Shareworks, between Equity Edge and our own -- our historical business. And that business for us, as you know, almost over 5 million participants and 4,000-plus corporate. So we have a very big scaled business in area. And then you heard my comments around technology. We continue to invest. I think we've done a much better job in the last 5 years and maybe even the last 10 years of doing more -- sort of having a real debate around buying versus building and partnering versus building. Historically, we were sort of a build-only shop, and now we have a lot of service providers as well as buying some of the stuff, as I mentioned, E*TRADE and Solium. So we're not about strategy by envy. You've heard James talk about that a lot. We think that we have the right business model. We have world-class, scaled, defensible 3 businesses that work very well together, and we'd like to continue to build within those -- within that framework. So you'll see more of what you saw over the last decade going forward. And it's really for us now to execute around that strategy. As I mentioned, we've got integrations to finish. We'd love to do some more stuff. But again, we are Morgan Stanley. We're in the businesses that we want to be in, and we think that we provide some real value and services to our clients globally.

There's -- we've got one more question. We probably have a couple of minutes, but one more question at the back.

I'm [ Mike Lukembe ] from Oliver Wyman. You're clearly my favorite bank.

Excellent. Because we hire you to do lots of stuff for us.

The best on The Street when it comes to equities, but I've got a question. As we've normalized on the FIC revenues, have you got a growth strategy around your FIC platform? Because I remember a couple of years back, you were talking about the electronification of the FIC platform. Following on from your equities platform, do you see any growth around it?

Well, again, I think just like the transformation of the entire firm, I think, has been a great success story. I think the transformation of our fixed income business has been a great success story -- in '19. In 2015, we restructured that business. It was a 5- or 6-year business. It's a 10-share business today with less resources and less people. So really did a really good job under that leadership, Sam Kellie Smith and Ted Pick, really a fantastic journey. And so that business is important to us. It's relevant. And I think we can continue to see gains from electronification, slower than the electronification of the equities markets given the complexities and all the dynamics around that business. But at a 10-share business, we are an important player in that business. The market share -- or excuse me, the wallets will go up and down, but we feel very good about really the progress that we've made in that business.

Brilliant. Now it's really flashing at us. So Jon, thank you very much. Hugely appreciating, yes, for you to be here. Thank you.

It's great to be here and see everyone in person. Thank you.

Thank you.