⚠ Technology Is Coming for the FeeModerate threat

Morgan Stanley (MS) — threat to the moat

Morgan Stanley warns in its own filing that artificial intelligence and tokenization will keep pressing on the fees that carry its wealth business.

A fee on balances survives only as long as clients believe the advice is worth it. Morgan Stanley's own annual report warns that new technologies, including "generative artificial intelligence and tokenization, will likely continue the pressure on our revenues"1. It lists "digital investing platforms" and "financial technology firms" among its competitors2.

WM asset management revenue ($M)13,966202113,872202214,019202316,501202418,6272025Morgan Stanley Forms 10-K FY2023 and FY2025
The fee line has kept rising so far.

The exposure is large. Asset management revenue in Wealth Management was $18,627 million in 2025, more than equity sales and trading's $15,631 million3.

The firm's own platform shows the trade-off. E*TRADE gives Morgan Stanley a low-cost channel, with $1,667 billion of self-directed assets at the end of 20254, but those clients do not pay an advisory fee on their balances. If advice became cheap to deliver through software, the gap between the two kinds of account could narrow from the top.

The same report names the security risks of the same technologies. The firm lists "the use of artificial intelligence and the emergence of quantum computing" among the developments that raise its exposure to cyber attacks5. A wealth firm that holds $8 trillion of client assets has to spend on defending them whatever the technology does to fees.

There is no sign of it in the numbers yet: asset management revenue rose to $5,261 million in the second quarter of 2026 from $4,411 million6. The warning would be asset management revenue growing more slowly than fee-based assets for two years running, which would mean the fee rate was falling.

References
  1. ReportedMorgan Stanley's own annual report warns that new technologies, including "generative artificial intelligence and tokenization, will likely continue the pressure on our revenues".
    Morgan Stanley Form 10-K for fiscal 2025 - Item 1A risk factors, competition and legal proceedings. — FY2025 · publ. 19 February 2026 · source ↗
  2. ReportedIt lists "digital investing platforms" and "financial technology firms" among its competitors.
    Morgan Stanley Form 10-K for fiscal 2025 - Item 1A risk factors, competition and legal proceedings. — FY2025 · publ. 19 February 2026 · source ↗
  3. ReportedAsset management revenue in Wealth Management was $18,627 million in 2025, more than equity sales and trading's $15,631 million.
    Morgan Stanley Form 10-K for fiscal 2025 - segment results, revenue lines and regional net revenues. — FY2025 · publ. 19 February 2026 · source ↗
  4. ReportedE*TRADE gives Morgan Stanley a low-cost channel, with $1,667 billion of self-directed assets at the end of 2025, but those clients do not pay an advisory fee on their balances.
    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 ↗
  5. ReportedThe firm lists "the use of artificial intelligence and the emergence of quantum computing" among the developments that raise its exposure to cyber attacks.
    Morgan Stanley Form 10-K for fiscal 2025 - Item 1A risk factors, competition and legal proceedings. — FY2025 · publ. 19 February 2026 · source ↗
  6. ReportedThere is no sign of it in the numbers yet: asset management revenue rose to $5,261 million in the second quarter of 2026 from $4,411 million.
    Morgan Stanley second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - segment results for Institutional Securities, Wealth Management and Investment Management. — Q2 2026 · publ. 15 July 2026 · source ↗
Sources
Generated September 26, 2026