⚠ The Adviser Still Owns the RelationshipModerate threat

Morgan Stanley (MS) — threat to the moat

Morgan Stanley lends billions to advisers because the client often trusts the adviser more than the firm.

The loans and deferred awards are evidence of the risk they address. A firm does not lend $4,858 million to its own employees1 unless losing them would cost more.

Net new assets in Wealth Management ($bn)437.72021311.32022282.32023251.72024356.32025Morgan Stanley Forms 10-K FY2023 and FY2025
Positive every year, uneven every year.

What a departing adviser can take is the question. The firm competes, it says, with "registered investment advisers, digital investing platforms" and others2, and an adviser who leaves for one of them can invite clients to follow. The loan is repaid or written off; the fees on those assets go with the client.

Morgan Stanley's defence is that more of the client relationship now runs through the firm itself: the E*TRADE account, the workplace stock plan and the bank deposit. Advisor-led client assets were $5,715 billion at the end of 20253, and self-directed and workplace assets sit alongside them.

Adviser deferred pay is mostly cash: awards are "generally composed of 75% cash-based awards and 25% stock-based awards"4. Cash awards hold an adviser as long as they vest, but they do not give the adviser any stake in the firm's share price, which is the tie that stock awards create.

The flow figures would show a leak first. Net new assets falling by a third while markets rose would say that advisers, and their clients, were leaving faster than the handcuffs could hold them.

References
  1. ReportedA firm does not lend $4,858 million to its own employees unless losing them would cost more.
    Morgan Stanley Form 10-K for fiscal 2025 - financial highlights, income statement, balance sheet and business description. — FY2025 · publ. 19 February 2026 · source ↗
  2. ReportedThe firm competes, it says, with "registered investment advisers, digital investing platforms" and others, and an adviser who leaves for one of them can invite clients to follow.
    Morgan Stanley Form 10-K for fiscal 2025 - Item 1A risk factors, competition and legal proceedings. — FY2025 · publ. 19 February 2026 · source ↗
  3. ReportedAdvisor-led client assets were $5,715 billion at the end of 2025, and self-directed and workplace assets sit alongside them.
    Morgan Stanley Form 10-K for fiscal 2025 - Wealth Management metrics: client assets, flows, channels, deposits and adviser loans. — FY2025 · publ. 19 February 2026 · source ↗
  4. ReportedAdviser deferred pay is mostly cash: awards are "generally composed of 75% cash-based awards and 25% stock-based awards".
    Morgan Stanley Form 10-K for fiscal 2025 - financial highlights, income statement, balance sheet and business description. — FY2025 · publ. 19 February 2026 · source ↗
Sources
Generated September 26, 2026