Morgan Stanley (MS) Earnings Call Transcript & Summary

All right. Perfect timing. So up next, we have Morgan Stanley and the Head of Wealth Management, Jed Finn. And I've confirmed it's the real Jed, not agentic AI Jed...

That is correct.

That's with us today. So let's just hit it head-on, okay? But before that, I have to read this piece of paper. Sorry. I didn't forget, Leslie. The discussion may include forward-looking statements, which reflect Morgan Stanley management's current estimates and subject to risks and uncertainties that may cause actual results to differ materially. Morgan Stanley does not undertake to update the forward-looking statements. This discussion, which is copyrighted by Morgan Stanley and may not be duplicated or reproduced without their consent, is not an offer to buy any security. Okay? I think AI could do that.

It seems like it's doing it.

Yes. All right. So we're going to go a little bit out of order given some of the consternation in the market. Obviously, there was an article on AI and wealth, that the market is interpreting as potentially the beginning of disruption for the wealth management business. So why don't you -- what's your response to that?

Sure. Well, obviously, I haven't seen the tool in question, but I have seen hundreds of tools like it because we have been innovating in the tech-enabled adviser space for the better part of the last 10 years. And for those of you who have been following us for a long time, you'll remember in 2016, at the height of the robocraze, we came out and we said that the future of wealth management was not going to be technology only and it was not going to be humans only, but it was going to be a best-of-breed integration of the 2. And we have been intentional in pursuing that vision ever since. And so if you recall, what started in the late teens as machine learning-based algorithms to generate next best action ideas for our advisers to help them understand what to talk about with clients next, to help our clients better achieve their goals, that has migrated into a robust suite of AI-based, prompt-based agentic solutions that our advisers are using with our clients all the time. And so today, there's, last count, just north of 3,500 individual tools and capabilities, and a number of those have to do with tax planning specifically. We just -- we don't write an article every time we release one, obviously. But the important point in all of it is that an individual tool is a tiny part of the capability ecosystem that is required to help clients achieve their goals. It has to fit as part of a platform. It has to be connected to products. There needs to be relationships with third-party managers to be able to deliver the advice. It has to be wrapped in a way that clients can understand and take action on. And we have been incredibly deliberate about orchestrating that ecosystem over the last several years, which is what has led to our outsized growth.

So let's talk about AI in context of your business, and you've spoken in the past how you've used this to empower your adviser base. How has that progression been? And what are some of the examples of how AI has improved productivity? What's your vision for how AI, for example, can empower clients, particularly those that aren't ready to shift their assets quite yet to an adviser? And do you think -- again, over the value of time, I think you gave us a preview of this answer -- that AI will diminish the value of advice, which is, I think, what the debate in the market is today?

Yes. Let me start at the end of the multi-layered question and say that it is the opposite. I think AI is going to enhance the quality of advice, and it's going to help advisers scale and be able to serve more clients more effectively with the same set of resources. So I think it's an efficiency play and I think it's an effectiveness play. But to just go back to the beginning of the question, you asked for examples. We had our managers in, who run our markets, last week and we were demoing a number of the tools that are usable right now. And one of them is called the Roth Conversion Analyst. It is an AI tool where it will automatically ingest all of the data we have about the client. And you can prompt it with forward-looking assumptions. And it will very cleanly lay out the recommendation: should you convert or not? And what is the rationale for that? And then in real time, you can run scenario analysis, what if I want to give a big gift, what if my income goes up, all with clients. That is being used right now today, which sounds very similar to what some of the use cases were described in that article. And that's just a narrow tool and we continue to build those all the time. Where we are heading more broadly, we think about as 3 broad buckets of functionality. We're calling them agents, but in reality, there are hundreds, in some cases, thousands of agents that are orchestrated by a super agent. And the first one is really focused on branch operations. Think of it as the companion to our client service associates. So it cannot just retrieve information like a normal bot can today, but it can take actions, so move money, open accounts, change beneficiaries. And the goal is to automate a lot of the routinized tasks, so our CSAs can spend more time on the higher value-added tasks, i.e., interacting with clients. So that is agent number one. Agent number two is the team member agent that can actually interact with clients at any time of day, on any day, in the same way that they would interact with a team member. And the first set of functionality that we are releasing is all about information retrieval and sharing. So balance availability, sending tax documents, back to the tax theme, at the end of the year, understanding performance drivers and existing exposures in the marketplace. That is phase one. Phase two is moving money, so wires, bill pay, opening margin loans. Obviously, the fraud risk goes up with number two, and so we are sequencing it because it is important to discharge our guardianship responsibilities. But what is so exciting about this agent, and would not have been available, by the way, in prior versions of the LLM that we are using, is it has the ability to ingest the entirety of the historical context with that individual client. All of the e-mails, all of the CRM notes, anything that is live in workflow right now. So its inferenceability is off-the-charts good. And it can respond back to the client in the same tone that the team has used over the course of that relationship, and even that is going to be configurable. So that's the second category: direct interaction with clients. And then the third category, think of it as Jarvis from Iron Man, but for managing money. That is the reference point. And it's designed to enable the advisers to direct the work, but not have to do the work. And so examples of what that agents are capable of include a new client comes to you and has a portfolio to invest, and you can ask it to go and build a portfolio using the investment options available at Morgan Stanley, subject to a number of constraints: asset allocation, historical performance back-tested, expense ratio, Sharpe ratio. Literally anything you would want to build the portfolio, it will go away and do its best. You get to approve it and then it gets implemented without any more clicks. Those are hundreds, thousands of clicks saved by the agentic framework that we are releasing. A less prescriptive example would be, I as an adviser, "I'm meeting with Mr. and Mrs. Smith. Give me a list of the top 5 tax efficiency ideas that would be relevant for the way their portfolio is invested today. Put it all on a simple page with the pros and cons on each, and give me an appendix that backs up the performance of each of those levers modeled over time." Another example, even less directive, would be, "I'm meeting with Mr. and Mrs. Smith. Give me a list of the top ideas I could bring to them to deepen their relationship with Morgan Stanley based on what other advisers like me have done with other clients like them." So you get this peer collaboration element to it as well. And so all of these tools in and of themselves are collections of a bunch of smaller bits of functionality, like the one that was talked about in the article. But what they are designed to do is make our top teams more efficient, because our top teams are doing or any way; it's just a lot of work and it streamlines it for them. But for our developing teams, folks who are just joining in the industry, the next generation, the steepness of their development trajectory goes up massively. And we're going to continue to build on those over the course of 2026 and beyond.

And I'm going to double-click on the productivity aspect of that later, but I did want to go back and pull up because, obviously, your targets were a big source of discussion for investors during earnings. The firm-wide goals that are related to your business, $10 trillion in client assets and a 30% pretax margin, right? You ended the year with $9.3 trillion in client assets and you posted 29% full year margin, and you achieved north of 30% in the second half of the year. Totally heard Ted loud and clear about your -- because you meet the bar, does it mean you need to raise it? But the last time you spoke publicly, you mentioned some headwinds in your business, like muted capital markets, cash on the sidelines and higher loan paydowns. So how does that all factor into how we should think about those targets and your path to, I mean, even exceeding them potentially or hitting them?

Yes. Understood. So as Ted said on the earnings call, those targets are intended to be numbers that we achieve consistently through cycle in any market condition. And while we are rapidly running to and through that reality, we're not actually there yet on all of the different numbers. That said, as also mentioned on the call, we have a clear strategy and we have consistent execution and we are going to continue to deliver higher highs and higher lows. And you've seen that over the last couple of years and you will see that over the coming years. As it relates specifically to your question around the target in Wealth Management, I'll focus on the margin for a moment because I think we would stipulate we're very close to the overall client asset goal and we are continuing to drive flows. So if you focus on the margin target in Wealth Management, we were super-clear back in 2019 when we launched our multichannel client acquisition strategy that our margin expansion was going to be delivered based on investing in growth. That was how we were going to deliver it, which means leveraging our scale to invest in a set of capabilities that enable our advisers to serve their clients more effectively at Morgan Stanley than those clients could be served anywhere else, which allows us to drive more assets and take share from everybody else, which allows us to drive more revenue than anyone else, which allows us to turn around and invest back into the business to a greater extent than anyone else. It's an incredibly powerful virtuous cycle. And what is important about that cycle is that the marginal dollar of revenue that we generate from that growth-led strategy is massively accretive, right? And so that incremental return, we don't have to, when we add a new client, when we add more assets from existing clients, we don't have to open up a new branch. We don't have to invest in a new server. So that incremental return is split between margin expansion and investing in the business. And balancing that trade-off is something we spend a tremendous amount of time thinking about. Of course, we could float our margin up a couple of hundred basis points right now if we stopped making the investment. But that would be trading off near-term, medium-term growth. And we think this is actually the exact wrong time to do that because we believe we're sitting at the precipice of the largest wealth management opportunity in history. I'm not being hyperbolic. You've got an incredible convergence of a number of trends. You've got demographics, which have been well publicized in this industry, $45 trillion of new wealth created over the next 10 years. The vast majority of that is going to accrue to the clients who have more than $1 million who tend to be advice-seeking. You've got $20 trillion of intergenerational wealth transfer, which is a money motion event from the baby boomers to Gen X and, obviously, the millennials at some point. And those are the demographics. But equally important are some of the secular trends that are all converging at the same time. So we talked about AI a moment ago. Obviously, related to that, what we're seeing is increased sophistication of our clients. We are beyond the days of just wrapping a 60-40 portfolio of ETFs and being done. There's so much more that you have to deliver. We see it all the time, and it's a theme that we talk about a lot, is the institutionalization of wealth management. And by the way, that plays to our strengths given our scale and our connectivity to the investment banking business at Morgan Stanley. Third, you've got the rise of and democratization of privates, as I'm sure we'll talk about. Fourth, you've got digitization, both with assets specifically, but also with infrastructure, which is going to turn a lot of the traditional processes in this business on its head. And then fifth, and this is more unique to Morgan Stanley, you've got the increased opportunity that is presented through our ramped-up focus on the integrated firm that Ted has been driving over the last couple of years, that is leading to real outsized results in the Wealth Management business, from leads and relationships starting in institutional coming this way and going the other way as well. And so when you put that all together, firms that have scale and have the ability to execute are going to have an unbelievable run, and we are uniquely positioned against both those factors.

And speaking of those factors, let's revisit the famous funnel. The workplace and E*TRADE channels have delivered nearly $100 billion of adviser-led flows in '25, up from historical average of around $60 billion between '20 and '24. What are the key factors in terms of this higher conversion rate? And also, how have you, to use your words, accelerated the path to advice?

Sure. I mean if you put all of the other things that we've talked about, the scale, the investments, the expertise, the businesses that we've acquired aside for a second, the key factor is time. We have just had more time to understand what works and what doesn't work. And putting this infrastructure together is highly complicated. You've got data coming from different sources. You've got different systems that management -- you've got -- that manage it. You've got different consumers consuming it across the funnel. And so it just takes a lot of work. And then there's a lot of trial and error to figure out what actually works. But in terms of real improvement, I think it comes down to a couple of areas. The first is our ability to identify who is going to likely be consuming advice has gone up significantly. So we have a model now with over 200 variables that, if you back-test it, the top 3 deciles of clients, who we predict are going to want to have a relationship with a financial adviser, represent 90% of those clients who become clients of financial advisers. So we know who ultimately is going to be advice-seeking, which is very helpful as we're interacting with those clients in the workplace or within E*TRADE. Similarly, by the way, it's also helpful as we think about attracting those clients from a marketing perspective into the door of E*TRADE, which I'm sure we will talk about. So that is one big improvement that we've seen. The second is the matching algorithm, which we talk about as LeadIQ. How do you know which clients to match with which advisers? We've gotten a lot better at understanding that dynamic and understanding what is most important about the advisers when you're thinking about making that connection. And then the third is just the quality of the advisers themselves. They've gotten so much better at building these relationships and branding themselves internally on site, on campus with different types of companies and being experts in the benefits plans of those companies. And they've been really embedded as extensions of the HR team as well. And so you put that all together, and then add on top of it this consistent surround sound that we have invested in with Morgan Stanley tools and capabilities that are available on the Internet and webinar Wednesdays that anybody can log into and get information on a specific topic and on-site seminars and office hours, and it ends up being, for those clients who want advice at that company, of course, they're going to come to Morgan Stanley. Where else would they go? And so it's really been about the seasoning of that infrastructure that has led to our outperformance. And you can see it in just the results in 2025. So you quoted the $100 billion number. The biggest driver of flow through that funnel is IPOs, because it creates liquidity for the private share companies that generate second order transactions. There's just a lot of activity that happens. And even though 2025 was a fraction of 2021 from an IPO perspective, at the aggregate level, we did 100 in 2025 versus around 70 in 2021. And specifically relative to IPOs, we did more in 2025 in terms of conversion through the funnel than we did in 2021, even though the volume was significantly bigger in 2021. So we are really excited about how this is going to evolve, particularly if you believe we're heading into an IPO cycle over the next couple of years.

So we'll unpack that in a second. In '25, 48% of adviser-led assets were fee-based. You've noted in the past that you're already at a high watermark for the industry. How should investors think about where this percentage could go over the medium term?

Yes. So this has been a steady march higher, and not in a straight line, but there are a lot of secular tailwinds behind it. When we first did the MS-SB integration, we were sitting at about 22%. Now we're right around 50%. It's bounced up and down and different market dynamics can change it, but there are a couple of things that we think are going to drive it higher. So number one, product availability in advisory is going up. And a perfect example of that is the rise of alts. But not just alts in general, but evergreen or democratized alts, right, these funds with regular liquidity. It's hard to put drawdown vehicles in advisory for a number of reasons, but this new category of alts, which has been in high demand from our clients, is moving in, as well as a number of other types of products. So that's one driver. A second driver is just, back to the investment theme, we've been building out the tools and capabilities in our advisory platform to make it even easier for advisers to manage portfolios and to deliver value-add and alpha for their clients. So one example of that would be we are integrating Parametric as the tax loss harvesting algorithm in our own Wealth Management UMA. So think of it conceptually as Parametric sits on top of a bunch of sleeves of the portfolio. Those sleeves could be delivered by other third-party managers. So now we're running Parametric on third-party managers. It's this concept of active on top of active. And it is very difficult for anybody to replicate that because they don't have as robust of UMA platform and they don't have access to Parametric. And that's only available in advisory. So that would be another driver. And the last one I would point to is, for a very long time when we were in the 0 interest rate world, we had lots of fixed income migrate out of advisory because the yield and the return you get is washed away by the advisory fee. Since we've come off the lower bound, now there's much more opportunity for clients to benefit from a higher net yield, higher net return by taking advantage of some of the capabilities of our largest asset management partners. And even though it's been a couple of years, we're still seeing that flow continue. And so there's a number of drivers for the growth of the percentage, whether it's 55% or 60% or 65%. It's not going to be 100%, but we think in the medium term it's definitely going to go up.

So I wanted to follow up on your response to alternatives. Alternatives and private specifically have been one of the big themes in the conference, and it was asked during fireside chats with UBS and Goldman. The responses in the other fireside chats was really balance between opportunity and suitability. And so how is Morgan Stanley balancing the opportunity and suitability?

Well, first, I don't see that as balance. We have been in the alts game for a while and alts funds have been blowing up spectacularly for an extended amount of time, and I'm not sure that a software wobble or 2 bankruptcies in the credit side changes that calculus. But the most important thing for our clients is to make sure that the risk is managed. And we invest an incredible amount in order to do that. So the first path starts with investment due diligence, which is an analysis like anybody would do. But importantly, operational due diligence. We have people go to the actual sites of the managers. And there was a very famous blow-up post-crisis of a Ponzi scheme that we did not add to our platform because we couldn't reconcile the actual performance with what we were seeing. And so we take our gatekeeping role incredibly seriously. So to make it on our platform, and you can talk to a lot of our asset management partners that are in the room, it is very difficult to do that. Once you get on though, there's a whole another wave of risk management and client protection, which is focused on, is this the right thing for this client? And what that looks at is the client's age, their investment horizon, their risk profile and then the characteristics of the product. And in some of those combinations, a 10-year drawdown vehicle may not be the right thing for our clients. So there's that element as well. And then the final piece of it is making sure that we can get access to clients in the most efficient way possible. And alts, for all of the discussion about these blowups that happen and is it going to be here to stay or are people losing touch, for those high-quality managers, and we are partners with all of them, they have realized the illiquidity premium. They have managed uncorrelated returns. They've delivered higher IRRs. And our clients who have been participating in alts for the last 10, 15, 20 years are absolutely in a better position today than they otherwise would have been. So it's not so easy to paint the industry with a brush and say it's good, it's bad. It's a question of selecting quality and then delivering it for our clients in an effective way. And the last piece of that puzzle for us was this product called PMax that we launched last year. It's one of the fastest-growing products that we have ever launched. In just 6 months, it's close to $1 billion raised. And the reason why it's growing so fast is because it is accessible to a much broader set of clients. It's got 16 sub-managers. It's diversified. Minimums are $25,000. It's no fees for the wrapper. And it is very easy to invest in and it's 1 account, 1 1099. And we think allowing our clients who may not be at the higher end of the wealth to participate in uncorrelated returns over time is something that is a responsibility of ours as we help them achieve their goals.

So going back to the strategy update, Ted listed 3 avenues for future opportunities for your business: workplace, product capability expansion and institutionalization of wealth. So maybe let's start with workplace and maybe help investors sort of -- give a little bit of context and detail in terms of the opportunity.

Sure. So we talked about the second half of the workplace, which is the funnel, the B2B2C, maybe I'll just focus on the B2B part to start. And we are really excited about the pipeline in the workplace. Yes, we have 50% of the S&P by market cap as clients, but that means we don't have the other 50%. And given the investments that we have made in our platform, we have continued to prioritize this, we have a feature set that is differentiated. And there are things that we can deliver to clients that are difficult for our competitors to match. And so just as a matter, of course, of new opportunities coming up for RFP, we are there and we are winning more than our share, meaning that 50% is continuously marching up. That is one avenue for growth. The second avenue for growth is, as part of the Solium acquisition, which I referenced before, in 2019, which started our multichannel client acquisition strategy, we got access to Solium private, which is a cap table manager, which today has 8 of the top 10 unicorns in the U.S. as cap table clients and 70% of the top 100 by market value. And as the IPO cycle goes, we go from private to public, and suddenly with a push of a button, they become public equity admin clients with regular liquidity that go directly into that funnel where we can help them meet their wealth management goals. That is the second avenue. And then the third, as we've talked about before, is we established the relationship with Carta. So while we focus on the late-stage part on the private markets, Carta focuses on everything else. And there's some overlap, of course. But as Carta's clients start to mature, they become early pipeline candidates to move to Shareworks or direct to E*TRADE or Morgan Stanley at Work on the public equity admin side. And so all 3 of those channels are firing right now, and there's examples of wins from all of them that are going to continue to work its way through the system.

And what about the second piece, which is product capability expansion, what are you focused on here?

Sure. We touched on a number of them. But as we've said before and as I started out with, to be able to really help our clients achieve their goals, we need to deliver across the board, right? It's not just alts, it's not just private. It's not just international, it's not just lending. It's not just planning, it's not just tax advice. You have to put everything together in a wrapper that is accessible and usable. And so we are constantly investing in the platform. One of the things we're launching this year, which I'm incredibly excited about, is OCIO, but for retail, which will be the first of its kind in the industry. So OCIO, Outsourced Chief Investment Office, is designed to take the fiduciary responsibility away from institutions. And it was dedicated towards institutions that have hundreds of millions of dollars. We're now bringing it to high net worth clients who have $25 million, which means they will get institutional pricing and an institutional product lineup and an investment officer who can add support to the financial adviser in managing that relationship. You cannot do this without having the scale. And it's going to lead to a differentiated, sticky experience for our clients. So that's one example of a product that we are launching. On the alts side, I talked about PMax, we're also continuing to invest in the platform itself. Part of how we differentiate is we get our high net worth clients access to managers who typically don't award capacity to retail, but because we have $280 billion of assets in alts and we are driving $40-plus billion a year, that is an attractive pool of assets for any of the managers. And so we use our scale and we wield that deliberately for the benefit of client access. So that part of the platform continues to grow. A third area I would call out, and we started with this, is tax management, right? Given where we are in the cycle, so many of our clients are sitting on gains across so many different asset classes. And so it's not just the tax advice, back to what the analytics was saying, but it's also how do you implement that advice. And I talked about Parametric in UMA as one example. Another example is more streamlined access to the long-short SMAs that have recently come to market that generate losses quicker. Another example is building out exchange fund capacity and creating single-stock exchange funds for our clients. Again, something that we can manufacture in partnership with MSIM because we have scale. A fourth example would be on the private side, which is clearly growing in interest and focus for a number of people. We launched a couple of years ago a program where we get our clients co-investment access, and that has exploded over the last couple of years. We did a couple of billion dollars of investments into all of the private names that you would think about as being attractive to retail or high net worth clients. So that's one element of it. The other element of it is obviously the EquityZen acquisition. Because again, while we differentiate at the high end, we need to be able to help all of our clients achieve their financial goals, whether they are self-directed at E*TRADE or whether they are advised by a team or focused on family office side of the world. And so EquityZen brings that capability to a more democratized view of clients. And so that integration has started. The other piece I'll just mention on EquityZen is less about serving the client's immediate need for access, but that's part of it, but it's about building a differentiated value proposition for the issuer, right? We have, within the 4 walls of Morgan Stanley, all of the demand we need for privates at 20 million clients and $7.5 trillion of assets. We have supply in the form of cap table management from Shareworks and then we also have the relationship with Carta. So what we were missing was a marketplace that can connect those 2 in an efficient, scalable way, and that's what EquityZen brings to the table. And they have a modern order book and they have an SPV infrastructure and workflow that can connect buyer and seller and issuer. Because remember, in privates land, at least for now, the issuer has to sign off on every transaction. But what was so important about EquityZen was their operating philosophy of putting the issuer first, the company first, which is a shared value of Morgan Stanley. Our heritage is institutional. And so when you combine our demand and supply and the supply we get from Carta and the connectivity of EquityZen, we can start to build out this ecosystem that is going to be very difficult for others to replicate, because making it easier for the issuer means you have to have direct access to the cap table to update those entries and make it so it's not work on the part of the company. And so rather than looking at private share transactions as an annoyance, we're building a real value proposition for companies where they can have controlled trading programs for employees as a benefit, not something that is a chore for them to do, and lending against those private shares for those employees who want liquidity but don't want to sell down what they view as their most valuable asset class. And research coverage from our partners in institutional securities and, of course, IPO readiness from our partners in the investment bank. And then tokenization, which we're working on with one of our core partners in the infrastructure space. And so this combination of company-first value proposition is going to be unique. And in the space, liquidity begets liquidity, and over time, it's going to continue to serve our corporate clients and it will serve our wealth management clients who can now participate in the space that was previously only addressable by or accessible by institutional investors.

So finally, just to wrap up this part of the discussion, and you've already alluded to this, the last piece is the institutionalization of wealth. Obviously, you referred to it, you have a world-class investment bank. And all of the commentary today and yesterday was very bullish in terms of liquidity events. How should we think about how you're positioned to take advantage of just this capital markets renaissance and the liquidity event? And how close your investment bank is to these founders?

Sure. So the first thing we need to make sure that we have is a credible mousetrap for those clients as they come into liquidity. We talk about all the time now, clients have gotten so big in some cases that they're like walking institutions. And the traditional set of wealth management tools that you might use for your average high net worth client are not going to cut it for clients who look like walking institutions. So how do you build that value proposition? One of the things that I would call out is just the growth of our family office business, which a lot of people have different businesses they call family office, it means a lot of different things. To us, whether we are acting as the family office or we're serving family office, we've built a robust infrastructure that can ingest the complexity of that family's relationship and bring a single general ledger for that family with ability for them to have differentiated access to invest away from us to leverage Morgan Stanley's due diligence. So it's bringing all the best capabilities of the firm into one single service model. And it is resonating with clients. We went from 0 in 2020 when we launched it to several hundred billion of assets and over 90 families and full 100% retention of clients. So we've obviously struck a nerve in the space in terms of meeting a need. And that is really important when you think about, well, can you be there with the investment bank as a wealth solution for their really important institutional clients? And as we've built up that credibility, there's more comfort on the part of our colleagues. And we've got an organization in the middle called Integrated Firm Management, which is quarterbacking the entire thing. So now when we show up to an IPO or an M&A, it's not just the institutional side of the firm showing up, but they are bringing wealth management capabilities as part of that integrated value proposition. And everybody is talking to each other, so the client knows that they truly are facing off against one firm.

So given how topical wealth is today, I just wanted to remind everybody some housekeeping comment. If you wanted to submit a question for me to ask Jed, you could scan the QR code and I'll receive it on this iPad. Alternatively, we do also have mics in the room if you wanted to ask a question the old-fashioned way. So just quickly switching gears to the self-directed channel, maybe just a quick update on how the E*TRADE platform fits in terms of your growth plans and initiatives.

Sure. It's an incredibly important part of the overall channel integration. Keep in mind, number one, all of the workplace assets vest into an E*TRADE account. So it's kind of the place where people who are coming into liquidity first go. And then number two, we have a very engaged active trader population that we view as -- the same way we view as our wealth management advice clients. And so Power E*TRADE Pro, which we launched last year, is the next generation in terms of charting functionality, algos, et cetera, that we have launched, that is getting rave reviews from our active user community. And in general, we are enriching the self-directed investor experience with Morgan Stanley content and capabilities. And we're doing that because, A, it helps us differentiate from what other firms can deliver. But B, as they think about ultimately needing advice, when it's appropriate to make that introduction, we introduce them to a financial adviser and they're already familiar with the research or the products or some of the tools and capabilities. And so E*TRADE is an incredibly important part of our growth strategy, and it is pointed in the right direction.

So you talked about continuously investing into the business. And it's no secret that you had behind you a very heavy lift from a technology standpoint. Where are your investment priorities going forward? And going back to the AI question, do you think that you can keep those AI productivity gains potentially in terms of enhancing the pretax margin? Or is that going to be competed away, as some of your peers have discussed in terms of the productivity gains that could be achieved through some of these AI tools?

Yes. Look, at the end of the day, our business model is based around the adviser-client relationship. And we think that that is going to persist long past new AI interaction tools that get created. So that is the core of our business and it has continued to be the correct North Star when we went through this trade the first time and there was all the robo hysteria and it's asymptotically approached as an industry maybe $800 billion in assets, which is the size of like 3 of our markets, right? So it's a very complicated, emotional, personal relationship that clients have with advisers. And even when the technology becomes as good as what anybody can do on their own, and it's not going to be too long before that happens, clients are still going to want advisers to leverage that technology. We've got the benefit though of having the scale and the resources to be able to make sure that that technology is best-in-class and most effective and unlocks the most doors, right? So I'll give you an example. We haven't talked about this yet, but we've got 2 minutes left. There is a whole sea change happening now in the blockchain-based operational system of the banking infrastructure. And there's a lot of debate back and forth about how it's ultimately going to evolve. But you could probably stipulate with almost 100% certainty that, over the next 5 years, we're not going to go all the way one way or all the way another way, right? We're going to live in this hybrid world, which means clients are going to need access in real time to all of the traditional financial assets and capabilities, but also be able to tap into the DeFi, the decentralized finance world, blockchain, distributed lending protocols, tokenized assets, real-world assets issued on-chain. For anyone who's ever tried to interact on-chain, it is massively complicated and terrifying, in terms of like are you sending your money to the right place. And so as a trusted provider of 20 million clients and $7.5 trillion of assets, we uniquely have the ability to abstract away all that complexity so clients can interact the way they want to interact, but still tap into all of these new ecosystems that are developing. There isn't like an AI bot that's going to solve that for firms that don't have the ability to invest, right? This has absolutely been a scale business over the last 15 years as we have demonstrated, and it's going to become even more of a scale business over the next 15 years provided that we make those investments in the right place. And we're committed to doing that because we talk to our clients every day and we know what they want and we know what they're being offered in other places and they help us co-create the solutions that have been differentiated. It's not that complicated of a strategy. We're listening to what our clients want and investing behind it. And it's served us well to date.

And maybe just are there any questions from the audience? I don't have any from my iPad. So 20 seconds, Jed, any final words in terms of what you want investors to take away from your business?

Look, I'll double down on the last point that I made. This is a scale business. It is going to be very, very difficult even with the slickest, well-thought-through agents to build the distribution, to build the credibility, to have the experience for doing this in a regulated way, putting the clients' interests first. And we've got the scale. And what's unique about us is not just the scale, but we are part of a world-class global investment bank where we're half of the business, right? So my partners on the other side care deeply about how this business does. And so when we need expertise, when we need access to balance sheet, when we need access to trading strategies, that's really easy to deliver for our clients. And we're doing it against the backdrop of a team that has been together for a really long time. I mentioned the managers meeting last week, we had about 300 of our market managers in. The average length of service there is 19 years. 80% of them have been here for more than 10 years. When you combine scale with the global resources of an investment bank, with an experienced team that has a track record of execution, our setup, given this next wave of wealth creation and all of these trends that we talked about is really, really strong, and we're excited to continue to deliver.

Well, I think that's a perfect way to end. Thank you, Jed. Thank you so much.

Thank you.