This spring’s market rollercoaster following President Donald Trump’s changes to U.S. trade and tariff policy led to what Morgan Stanley CEO Ted Pick called a quarter with “two distinct halves,” with volatility followed by a “steady rebound in capital markets.”
Wirehouses Morgan Stanley, Bank of America and Wells Fargo all announced second-quarter earnings this week, as well as Goldman Sachs and JPMorgan Chase, among others. Q2 started April 1, a day before Trump’s “Liberation Day” announcement changing international tariff rates.
In its quarterly earnings report, Bank of America reported that assets under management flows in its Wealth and Investment Management division dipped from $24 billion to $14.3 billion between this year’s first and second quarters; despite the drop, AUM flows still climbed approximately 32% year over year.
In a Wednesday morning earnings call, Merrill Wealth Co-Head Lindsay Hans said the firm was “big picture, very happy” with the overall pace of AUM flows. According to Hans, the quarter-over-quarter fluctuations could reflect clients’ “cash sorting,” with potentially new liquidity that they haven’t moved to the market and typical second quarter fluctuations due to tax season. But Hans stressed that the volatility could have had knock-on effects on flows.
“You do tend to see in periods such as that, you’re going to see clients wait, especially when it comes to deploying new money,” she said. “So while we didn’t see the selling … and we didn’t see clients liquidating and moving off, you see clients wait a little bit longer.”
Merrill Wealth revenue grew by $5.9 billion in the second quarter, a 7% year-over-year jump, while asset management fees jumped 9% year-over-year to $3.6 billion and net income increased by $1 billion.
According to Merrill, the firm had about 7,100 net new relationships in the second quarter, with 78% having more than $500,000; additionally, the number of net new $10 million+ relationships was up 13% since last year. Hans noted that these new relationships were growing “widely across the country, as wealth creation and transition spreads across the board.”
Hans also said the firm was in a pilot phase on several generative artificial intelligence programs for client-facing advisors and support staff, particularly around generating materials for meeting preparation that could save “hours and hours” of time advisors spend making sure client meetings are “fullsome.” She expected Merrill to “scale out” the tech for advisors in 2026.
“I still own the agenda of that meeting as the advisor, but I didn’t spend several hours gathering the information, “she said. “I can use my insight to figure out what will make sense for this meeting.”
Morgan Stanley’s second-quarter earnings showed net revenue up 6% from the first quarter to $7.76 billion in its wealth division, with net interest income flat at about $1.9 billion. Fee-based asset flows stood at $42.8 billion, up 44% from the first quarter and 65% from last year’s second quarter, and client assets stood at a record $6.49 trillion.
According to Morgan Stanley Chief Financial Officer Sharon Yeshaya, fee-based flows were robust, as clients continued “to shift assets from advisor-led brokerage accounts to fee-based accounts.”
Edward Jones Analyst Kyle Sanders attributed the positive news in Morgan Stanley’s corporate earnings partly to its wealth management division, noting that the segment reached a new record with “healthy asset inflows” despite the quarter’s market volatility.
“Stable growth in fee-based wealth management programs has led to the strongest operating profitability in the company’s history,” Sanders wrote. “This segment provides an element of stability to overall revenues given the cyclical nature of fees from investment-banking advisory and securities issuance.”
At Wells Fargo, total revenue jumped 1% year-over-year and from the first quarter, with net interest income down 2% from last year, driven by lower interest rates (though it was up 8% from the first quarter). Expenses were up 2% “on higher revenue-related compensation, partially offset by lower operating losses and the impact of efficiency initiatives.”
According to Goldman Sachs’ second quarter earnings presentation, net revenues in asset and wealth management were down 3% yearly to $3.78 billion. The firm attributed the drop to “significantly lower net revenues in both equity investments and debt investments, partially offset by higher management and other fees.”
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