Q1 2026 Morgan Stanley Earnings Call

April 15, 2026

Oregon, Stanleys first quarter 2026 earnings call.

On behalf of Morgan Stanley I will begin the call with the following information and disclaimers.

This call is being recorded.

During today's presentation, we will refer to our earnings release and financial supplement copies of which are available at Morgan Stanley Dot com.

Today's presentation May include forward looking statements that are subject to risks and uncertainties that may cause actual results to differ materially.

Morgan Stanley does not undertake to update the forward looking statements in this discussion.

Please refer to our notices regarding forward looking statements and non-GAAP measures that appear in the earnings release.

This presentation may not be duplicated or reproduced without our consent.

I will now turn the call over to Chairman and Chief Executive Officer, Ted pick.

Yeah.

Thank you and good morning, Thank you for joining us.

Stanley entered 2026 from a position of strength.

Amidst increased geopolitical uncertainty the firm generated a record quarter with revenues of 26 billion and EPS of $3 43.

The top and bottom line results or an ongoing demonstration of the capabilities of our integrated firm and periods when clients and markets are active.

The first quarter's return on tangible of 27% evidences the operating leverage of Morgan Stanley's business model.

A leading wealth and asset manager alongside a leading global investment bank.

The consistent execution of the last two years plus is the proof of Morgan Stanley's ability to deliver on a higher plane and performance against different many in macro backdrops of uncertainty.

Wealth management demonstrated continued momentum with growing durable fee based revenues and increasing margins or client acquisition funnel remains unrivaled and driving industry, leading growth with $118 billion of net new assets and 54 billion of fee based flows.

With longstanding relationships across banking and markets. The investment bank was well positioned to serve clients around the world underscored by a record $10 7 billion in quarterly revenues inclusive of 5 billion plus in equities.

A well diversified investment management business continues to attract strong demand for parametric.

Across wealth and investment management total client assets exceed nine trillion on the road to 10 trillion plus.

In the first quarter, we deployed resources to support client activity and Opportunistically bought back stock.

Our reported CET, one ratio of 15, 1% against the capital requirement of 11, 8% translates into a capital buffer of over 300 basis points.

We're encouraged by this period of enhanced regulatory transparency and balance as we move through rule, making comments towards the finalization of Basel.

It's worth noting that over the last nine quarters, we've accreted $15 billion of capital.

During the quarter, we also closed our acquisition of equity Zen.

As discussed in our annual letter we remain mindful of the known unknowns of 2026, the accelerating adoption of AI at the enterprise level and the ongoing military conflict in the middle East.

Against this backdrop our approach is one of measured confidence our institutional wealth clients demonstrates continued resilience and as much as ever seek the depth and breadth of content and market access that Morgan Stanley provides.

At the same time, we remain vigilant in the context of higher asset prices tight credit spreads and interest rate path uncertainty.

We will endeavor to navigate the upcoming period with the same level of intensity and execution that has defined our performance over the last nine quarters.

At the end of the end of history is now at hand, and alongside accelerating AI development, we're committed to staying in our strategic lane to execute with rigor humility and partnership and to be prepared to tactically pivot when the ongoing military disruption or technology adaptation warrant.

Morgan Stanley strategy and client centric culture is set to raise manage and allocate capital with excellence to invest in our clients and technology across the integrated firm and to grow assets and compound earnings in a capital efficient way.

Now I'll turn it over to Sharon to discuss the quarter. Thank you Charles.

Thank you and good morning, the firm produced record revenues of $20 6 billion and record EPS ex DVA of $3 43.

Our TCE was very strong at 27, 1%. The results this quarter demonstrated the strength of our integrated model and the scale of our global platform.

<unk> increasingly turned to our trusted advisors across the firm, particularly when market volatility became more pronounced.

For the quarter, our efficiency ratio was 65%, reflecting strong operating leverage and disciplined execution as we continue to invest strategically across the firm.

Improved efficiency includes $178 million of severance charges.

Now to the businesses.

Institutional securities delivered record revenues of $10 7 billion.

Strength was broad base across asset classes in both banking and markets and in all regions.

Year began with optimism supported by solid economic growth in the U S significant strategic and financial assets waiting to transact and AI driven transformational opportunities.

Themed followed by geopolitical uncertainty and market Dispersions continue just to contributed rather to strong client engagement throughout our quarter.

Our global team across the integrated investment bank led as a trusted and long standing partner to advice clients in an increasingly complex environment.

Investment banking revenues increased year over year to $2 1 billion led by growth in the Americas investments in our talent are yielding results and despite ongoing geopolitical volatility capital market activity remains resilient and boardroom dialogue remains active.

Advisory revenues of $978 million increased 74% versus the prior year driven by higher completed activity in the Americas building.

Building on the momentum in the back half of last year M&A activity broadened across sectors with notable strength in technology and industrials.

What are you underwriting revenues were solid at $396 million led by higher issuance across ipos and convertibles compared to the prior year fixed.

Fixed income underwriting revenues were $742 million outperformance was driven by record issuance in the investment grade market on the back of higher event driven activity.

Looking ahead to the remainder of the year investment banking pipelines remain steady supported by ongoing strategic activity from both corporates and sponsors and increasing needs for strategic capital formation, our integrated investment bank remains global diversified and well positioned to effectively <unk>.

Port clients.

Turning to equity revenues surpassed previous records, reaching $5 $1 billion for the first time the performance reflected year over year growth across businesses and regions on the back of very strong levels of client activity. Our continued investment in technology is supporting scale and access.

Across our global franchise.

Prime brokerage revenues increased versus the prior year, driven by higher average balances that outperformed market indices, particularly in Asia with investor interest across the region.

Edward Pick: To grow assets and compound earnings in a capital-efficient way, now I'll turn it over to Sharon to discuss the quarter. Thank you, Sharon.

Ted Pick: To grow assets and compound earnings in a capital-efficient way, now I'll turn it over to Sharon to discuss the quarter. Thank you, Sharon.

Cash results increased against the prior year, driven by higher volumes across regions derivative.

Sharon Yeshaya: Thank you, and good morning. The firm produced record revenues of $20.6 billion and record EPS ex-CVA of $3.43. Our ROTCE was very strong at 27.1%. The results this quarter demonstrated the strength of our integrated model and the scale of our global platform. Clients increasingly turned to our trusted advisors across the firm, particularly when market volatility became more pronounced. For the quarter, our efficiency ratio was 65%, reflecting strong operating leverage and disciplined execution as we continue to invest strategically across the firm. Improved efficiency includes $178 million of severance charges. Now to the businesses. Institutional Securities delivered record revenues of $10.7 billion. Strength was broad-based across asset classes in both banking and markets and in all regions. The year began with optimism, supported by solid economic growth in the US, significant strategic and financial assets waiting to transact, and AI-driven transformational opportunities.

Results were also a standout up versus the prior year, driven by robust client activity across products and regions.

Fixed income revenues were post crisis record at $3 4 billion.

Now I'll turn it over to Chiron to discuss the quarter. Thank you, Cheryl, thank you and good morning. The Firm produced record revenues of $20.6 billion and record EPS ex-D&A of $3.43.

Our performance this quarter highlights our business mix and our ability to capture market opportunities.

<unk> results increased meaningfully year over year, driven by securitized products and credit corporates macro results were solid reflecting declines in foreign exchange, which benefited from a more favorable trading environment last year.

Our ROTCE was very strong at 27.1%. The results this quarter demonstrated the strength of our integrated model and the scale of our global platform. Clients increasingly turned to our trusted advisors across the firm, particularly when market volatility became more pronounced.

Results in commodities increased significantly compared to the prior year the business navigated elevated volatility in energy markets, well benefiting from increased flow and structured client activity.

For the quarter, our efficiency ratio was 65% reflecting, strong, operating, leverage, and disciplined execution. As we continue to invest strategically across the firm.

Improved efficiency includes $178 million of severance charges.

Now, to the businesses.

Turning to wealth management.

Institutional Securities delivered record revenues of $10.7 billion.

Record revenues and robust margins in the first quarter reflected the scale of our platform that continues to drive exceptional performance.

Retail clients, we're engaged across channels net new assets of 118 billion fee based flows of $54 billion and growth of bank lending balances all showcase that our investments supporting both advisers and clients are working.

Sharon Yeshaya: AI themes, followed by geopolitical uncertainty and market dispersions, contributed to strong client engagement throughout our quarter. Our global team across the integrated investment bank led as a trusted and long-standing partner to advise clients in an increasingly complex environment. Investment banking revenues increased year-over-year to $2.1 billion, led by growth in the Americas. Investments in our talent are yielding results, and despite ongoing geopolitical volatility, capital market activity remains resilient, and boardroom dialogue remains active. Advisory revenues of $978 million increased 74% versus the prior year, driven by higher completed activity in the Americas. Building on the momentum in H2 of last year, M&A activity broadened across sectors with notable strength in technology and industrials. Equity underwriting revenues were solid at $396 million, led by higher issuance across IPOs and convertibles compared to the prior year. Fixed income underwriting revenues were $742 million.

Strength was broad-based across asset classes, in both Banking and markets, and in all regions the year. Began with optimism supported by solid economic growth in the US significant strategic and financial assets waiting to transact and AI driven transformational opportunities.

Revenues reached a record of $8 $5 billion the business delivered a PBT margin of 34%.

AI steams followed by geopolitical uncertainty and Market, dispersions continued to to strong contributed rather to strong climate engagement throughout our quarter.

Asset management revenues grew year over year to $5 $1 billion, reflecting higher market levels and the cumulative impact of consistently strong fee based flows.

Our global team across the integrated Investment Bank led as a trusted and long-standing partner to advise clients in an increasingly complex environment.

We are setting the industry standard in fee based flows generating $54 billion this quarter, a new record excluding prior acquisition.

Transactional revenues were $1 1 billion daily average trades reached the second highest level on record as clients remained active in volatile markets results were supported by ongoing demand for our diversified alternative offering which had record sales. This quarter. This was driven by.

Investment Banking revenues increased year-over-year to 2.1 billion, dollars led by growth in the Americas investments. In our talent, are yielding results. And despite ongoing geopolitical volatility Capital Market activity, remains resilient and boardroom dialogue remains active,

Advisory revenues of $978 million increased 74% versus the prior year, driven by higher completed activity in the Americas.

Significant growth in private equity and real assets, highlighting the benefits of our scaled alternatives platform.

Building on the momentum, and the back half of last year. M&a, activity broadened across sectors with notable strengths in technology and Industrials.

Bank lending balances increased $5 billion quarter over quarter to $186 billion.

Equity underwriting revenues were solid at $396 million, led by higher issuance across IPOs and convertibles compared to the prior year.

Sharon Yeshaya: Outperformance was driven by record issuance in the investment-grade market on the back of higher event-driven activity. Looking ahead to the remainder of the year, investment banking pipelines remain steady, supported by ongoing strategic activity from both corporates and sponsors, and increasing needs for strategic capital formation. Our integrated investment bank remains global, diversified, and well-positioned to effectively support clients. Turning to equity, revenues surpassed previous records, reaching $5.1 billion for the first time. The performance reflected year-over-year growth across businesses and regions on the back of very strong levels of client activity. Our continued investment in technology is supporting scale and access across our global franchise. Prime brokerage revenues increased versus the prior year, driven by higher average balances that outperformed market indices, particularly in Asia, with investor interest across the region. Cash results increased against the prior year, driven by higher volumes across regions.

Driven by Securities based lending and steady growth in mortgages.

Household penetration of lending products is now at 18%. This is up from 14% just five years ago.

Fixed income underwriting revenues were 742 million outperformance was driven by record issuance in the investment. Grade Market on the back of higher, event-driven activity.

Through ongoing investments in technology adviser and client education, and an expanded product set.

Sequentially total period end deposits grew to 419 billion and net interest income increased to $2 2 billion NII.

Looking ahead to the remainder of the year, investment banking pipelines remain steady, supported by ongoing strategic activity from both corporates and sponsors, and increasing needs for strategic capital formation. Our integrated Investment Bank remains global, diversified, and well positioned to effectively support clients.

NII growth in the quarter was supported by both lending balances and higher average suites, which more than offset the impact of the two rate cuts in the fourth quarter.

Turning to equity revenues, they surpassed previous records, reaching $5.1 billion for the first time.

Continued growth in lending has supported the steady build in NII over the past six quarters. Looking ahead, we expect NII to build over the course of the year with a modest increase in the second quarter compared to the first.

The performance reflected year-over-year growth across businesses and regions, on the back of very strong levels of client activity.

Our continued investment in technology is supporting scale and access across our global franchise.

Net new assets were very strong at $118 billion the growth showcases our diverse asset gathering capabilities, which benefited from contributions across channels.

Prime brokerage revenues increased versus the prior year driven by higher average balances, that outperformed market, indices, particularly in Asia with investor interests across the region.

Sharon Yeshaya: Derivatives results were also a standout, up versus the prior year, driven by robust client activity across products and regions. Fixed Income revenues were a post-crisis record at $3.4 billion. Outperformance this quarter highlights our business mix and our ability to capture market opportunities. Micro results increased meaningfully year-over-year, driven by securitized products and credit corporates. Macro results were solid, reflecting declines in foreign exchange, which benefited from a more favorable trading environment last year. Results in commodities increased significantly compared to the prior year. The business navigated elevated volatility in energy markets well, benefiting from increased flow and structured client activity. Turning to Wealth Management, record revenues and robust margins in Q1 reflected the scale of our platform that continues to drive exceptional performance. Retail clients were engaged across channels.

Workplace stood out as having sourced clients, who continue to aggregate assets onto our platform and benefit from stock plan vesting event.

Cash results increased against the prior year driven by higher volumes across regions.

Derivative results were also a standout up versus the prior year, driven by robust client activity across products and regions.

Finally, while driving exceptional quarterly results, we remain focused on long term growth opportunities. We closed the acquisition of equities and enhancing our leadership position in the private credit markets ecosystem and further deepening market access for clients, we launched our digital.

Fixed income, revenues were proc crisis record at 3.4 billion dollars outperformance. This quarter highlights our business mix, and our ability to capture Market opportunities,

Asset pilot through our partnership with zero harsh, enabling select clients to buy and sell several major digital currencies through E trade.

Micro results, increased meaningfully year-over-year driven by securitized products, and credit corporates.

Macro results were solid, reflecting declines in foreign exchange, which benefited from a more favorable trading environment last year.

And we are investing in the development of our <unk> infrastructure.

Most importantly, our investments in the funnel are servicing client needs and illustrating the value of advice.

Since 2020, we have generated over 400 billion.

Results in Commodities, increase significantly compared to the prior year, the business navigated elevated volatility in energy markets well benefiting from increased flow and structured client activity.

Turning to wealth management.

Of new of new advisor led assets from relationships that originated from either workplace or E trade today inclusive of workplace assets on our platform prior to the acquisition of E trade. The total value of advisor led assets sourced from workplace and E trade.

Platform, that continues to drive, exceptional performance.

Sharon Yeshaya: Net new assets of $118 billion, fee-based flows of $54 billion, and growth of bank lending balances all showcased that our investments supporting both advisors and clients are working. Revenues reached a record of $8.5 billion. The business delivered a PBT margin of 30.4%. Asset management revenues grew year-over-year to $5.1 billion, reflecting higher market levels and the cumulative impact of consistently strong fee-based flows. We are setting the industry standard in fee-based flows, generating $54 billion this quarter, a new record excluding prior acquisitions. Transactional revenues were $1.1 billion. Daily average trades reached the second highest level on record as clients remained active in volatile markets. Results were supported by ongoing demand for our diversified alternative offering, which had record sales this quarter. This was driven by significant growth in private equity and real assets, highlighting the benefits of our scaled alternatives platform.

Retail clients were engaged across channels.

Exceeds one two trillion.

This represents roughly 20% of our current five eight trillion dollars of advisor led asset.

Net new assets of $118 billion, fee-based flows of $54 billion, and growth of bank lending balances all showcase that our investments supporting both advisors and clients are working.

The scale of our client acquisition funnel is already powerful and combined with our ability to invest in the future uniquely positions us as a category of one.

Revenues reached a record of $8.5 billion. The business delivered a PBT margin of 30.4%.

Moving to investment management.

Asset Management, revenues grew year-over-year to 5.1 billion, reflecting higher market levels, and the cumulative impact of consistently strong, sea-based flows,

Revenues were solid at $1 $5 billion.

Asset management and related fees that were up 3% year over year on the back of higher AUM were offset by declines in accrued carried interest in our private funds.

We are setting the industry standard in Feebas flows, generating 54 billion dollars, this quarter, a new record excluding prior acquisitions.

Long term net flows were $3 $3 billion driven by ongoing demand for our parametric solutions and fixed income strategies, which help offset equity flows.

Transactional revenues were 1.1 billion dollars. Daily average trades reached the second highest level on record as clients remained active in volatile markets.

Total AUM now stands at one nine trillion.

Turning to the balance sheet total spot assets were one six trillion.

Results were supported by ongoing demand for our Diversified Alternative offering, which had record sales. This quarter, this was driven by significant growth in private equity and real assets.

We strategically deployed leverage based capital this quarter to help facilitate client activity in our markets franchise.

Sharon Yeshaya: Bank lending balances increased $5 billion quarter-over-quarter to $186 billion, driven by securities-based lending and steady growth in mortgages. Household penetration of lending products is now at 18%. This is up from 14% just five years ago through ongoing investments in technology, advisor and client education, and an expanded product set. Sequentially, total period-end deposits grew to $419 billion, and net interest income increased to $2.2 billion. NII growth in the quarter was supported by both lending balances and higher average sweeps, which more than offset the impact of the two rate cuts in the Q4. Continued growth in lending has supported the steady build in NII over the past six quarters. Looking ahead, we expect NII to build over the course of the year, with a modest increase in the Q2 compared to the Q1. Net new assets were very strong at $118 billion.

Highlighting. The benefits of our scaled Alternatives platform.

Standardized <unk> increased quarter over quarter as we actively supported clients.

We ended the period.

With a standardized CET one ratio of 15, 1%.

Bank lending balances increased 5 billion dollars quarter over quarter to 186 billion driven by securities-based lending and steady growth in mortgages.

During the period, we Opportunistically bought back $1 75 billion of common stock.

Household penetration of lending products is now at 18%. This is up from 14% just 5 years ago.

Our first quarter tax rate was 19, 6% the lower rate was driven by share based award conversions, which largely take place in the first quarter. We continue to expect our 2026 tax rate to be between 22 and 23%.

Through ongoing investments in technology, advisor and client education, and an expanded product set.

Sequentially total period and deposits grew to 419 billion dollars and that interest income increased to 2.2 billion dollars.

Similar to prior year will exhibit some quarterly volatility.

Our integrated firm has proven critical through this period clients are engaged relying on our advice and an increasingly complex environment. We are well positioned to continue to support clients as they navigate fast moving market and we have the capital and the resources to do so.

Knee growth in the quarter was supported by both lending balances and higher average sweeps which more than offset the impact of the 2 rate Cuts in the fourth quarter.

Continued growth in lending has supported the steady build in NII over the past six quarters.

Looking ahead, we expect knee to build over the course of the year, with a modest increase in the second quarter compared to the first.

Sharon Yeshaya: The growth showcases our diverse asset gathering capabilities, which benefited from contributions across channels. Workplace stood out as having sourced clients who continue to aggregate assets onto our platform and benefit from stock plan vesting events. Finally, while driving exceptional quarterly results, we remain focused on long-term growth opportunities. We closed the acquisition of EquityZen, enhancing our leadership position in the private credit markets ecosystem, and further deepening market access for clients. We launched our digital asset pilot through our partnership with Zero Hash, enabling select clients to buy and sell several major digital currencies through E-Trade, and we are investing in the development of our agentic infrastructure. Most importantly, our investments in the funnel are servicing client needs and illustrating the value of advice. Since 2020, we have generated over $400 billion of new advisor-led assets from relationships that originated from either Workplace or E-Trade.

With that we will now open the lineup for questions.

Net, new assets were very strong at 118 billion.

We are now ready to take any questions to get in the queue. You May press star and the number one on your Touchtone telephone.

If your question has been answered or you wish to remove yourself from the queue. You May press star and the number two on your Touchtone telephone.

The growth showcases our diverse asset gathering capabilities, which benefited from contributions across channels. Workplace stood out, as having sourced clients who continue to aggregate assets onto our platform and benefit from stock plan vesting events.

You're allowed to ask one question and one follow up and then we'll move on to the next person in the queue.

Finally, while driving exceptional quarterly results. We remain focused on long-term growth opportunities.

Please standby, while we compile our Q&A roster.

We'll take our first question from Ebrahim <unk> with Bank of America.

Hey, Bryan good morning.

We closed the acquisition of equity, Zen enhancing our leadership position in the private credit markets, ecosystem and further deepening Market access for clients.

Hey, good morning, Ted.

So.

Maybe I guess, we can start.

With <unk>.

All things private credit.

How do your prepared remarks, there were two things.

Given kind of.

We launched our digital asset pilot through our partnership with Zero Hash, enabling select clients to buy and sell several major digital currencies through E*TRADE, and we are investing in the development of our agentic infrastructure.

Morgan Stanley interacts with private credit.

You have to fund that you talked about.

Maybe you have some redemptions during the quarter, but just talk to us said.

Most importantly, our investments in the funnel are servicing client needs and illustrating the value of advice.

Your perspective on what's going on with the private credit market, how does that change or inform your view on how you deal with the business and specifically.

Sharon Yeshaya: Today, inclusive of Workplace assets on our platform prior to the acquisition of E-Trade, the total value of advisor-led assets sourced from Workplace and E-Trade exceeds $1.2 trillion. This represents roughly 20% of our current $5.8 trillion of advisor-led assets. The scale of our client acquisition funnel is already powerful and, combined with our ability to invest in the future, uniquely positions us as a category of one. Moving to Investment Management, revenues were solid at $1.5 billion. Asset management and related fees that were up 3% year-over-year on the back of higher AUM were offset by declines in accrued carried interest in our private funds. Long-term net flows were $3.3 billion, driven by ongoing demand for our Parametric solutions and fixed income strategies, which help offset equity flows. Total AUM now stands at $1.9 trillion. Turning to the balance sheet, total spot assets were $1.6 trillion.

Caused you to rethink how distribute some of these products through the retail channel.

Thanks.

Well I think what's important over the last.

Since 2020, we have generated over 400 billion dollars of new of new advisor. Le assets from relationships. That originated from either workplace or E-Trade today. Inclusive of workplace assets on our platform prior to the acquisition of E-Trade, the total value of adviser

Number of days as that.

There is more balanced in the conversation.

Blood assets sourced from Workplace and E*TRADE exceeds $1.2 trillion.

As you know our private credit.

Sub asset classes come of age over the last number of years as new set of lenders has stepped in post the financial crisis in the place of Wall Street wildly.

This represents roughly 20% of our current 5.8 trillion dollars of advisor. LED assets?

While it is still a growing class.

The scale of our client acquisition. Funnel is already powerful and combined with our ability to invest in the future. Uniquely positions us as a category of 1

It's having a learning moment I'll call it an adolescent moment, where.

Moving to investment management.

Both.

The lenders and the borrowers are being looked at carefully but the reality is.

It's credit.

And credit is going to broadly perform when the economy is in the kind of good shape. It's in right now and the fact that it's called private credit has sort of taken on a bit of it's took on a bit of a life of its own for a while but now I think now we.

Revenues were solid at 1.5 billion asset management and related fees that were up, 3% year-over-year on the back of higher AUM or offset by declines in a crude carrier to interest in our private funds.

Long-term, net flows were 3.3 billion. Dollars driven by ongoing, demand for our parametric Solutions, and fixed income strategies, which help offset Equity flows.

We're all seeing that there's a resiliency and the underlying product.

Stands at 1.9 trillion dollars.

The structures and the terms on collateral are a very well thought through and that this is a market that over the long term.

Sharon Yeshaya: We strategically deployed leverage-based capital this quarter to help facilitate client activity in our markets franchise. Standardized RWAs increased quarter-over-quarter as we actively supported clients. We ended the period with a standardized CET1 ratio of 15.1%. During the period, we opportunistically bought back $1.75 billion of common stock. Our Q1 tax rate was 19.6%. The lower rate was driven by share-based award conversions, which largely take place in Q1. We continue to expect our 2026 tax rate to be between 22% and 23%, which, similar to prior years, will exhibit some quarterly volatility. Our integrated firm has proven critical through this period. Clients are engaged, relying on our advice in an increasingly complex environment. We are well-positioned to continue to support clients as they navigate fast-moving markets, and we have the capital and the resources to do so.

Extraordinary growth potential is just a question of time and working through economic cycles.

Turning to the balance sheet. Total spot assets were $1.6 trillion. We strategically deployed leverage-based capital this quarter to help facilitate client activity in our Markets franchise.

Standardized RWA was increased quarter over quarter as we actively supported clients.

Our own.

Participation. This is in line with the Street.

We ended the period.

As a distributor.

Bear in mind Ebrahim as you know our alts are about 5% of our total F facing wealth management pile so quite small.

With a standardized, cet1 ratio of 15.1%.

During the period, we opportunistically bought back 1.75 billion dollars of common stock.

That's all all that would include real estate private equity private credit infrastructure and then our private credit is is 1% so even smaller there and in fact as you've seen spreads widen a bit are there has been an institutional bid and others from the highly sophisticated institutional community on the <unk>.

Our first quarter tax rate was 19.6%. The lower rate was driven by share-based award conversions, which largely take place in the first quarter.

We continue to expect our 2026 tax rate to be between 22 and 23%, which similar to Prior year will exhibit some quarterly volatility.

Well side have come in and stepped in and we've seen net buying across the sub asset class in the first quarter and then with respect to investment management.

Credit is less than 1% of our of our total.

Total AUM well under $20 billion of a trailing nine so our exposures or our small or modest but it is an asset class that I think there was a lot of learning around over the last couple of weeks I think that is very healthy, but we just need to sort of remember the headline point here, which is a credit should.

Sharon Yeshaya: With that, we will now open the lineup to questions.

Operator: We are now ready to take in questions. To get in the queue, you may press star and the number one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, you may press star and the number two on your touchtone telephone. You're allowed to ask one question and one follow-up, and then we'll move on to the next person in the queue. Please stand by while we compile our Q&A roster. We'll take our first question from Ebrahim Poonawala with Bank of America.

Our integrated firm has proven critical through this period, clients are engaged to relying on our advice in an increasingly complex environment. We are, well, positioned to continue to support clients. As they navigate, fast-moving markets and we have the capital and the resources to do. So with that, we will now open the lineup to questions.

We are now ready to take in questions to get in the queue. You may press star and the number 1 on your touchtone telephone,

Reform during periods when the economies performing this will be no different some portfolios maybe overloaded in a particular sector or in a particular type of name in which case there'll be winners and losers among asset managers, but credit generally is going to perform as the economy performs and right now we're not talking about.

If your question has been answered, or you wish to remove yourself from the queue, you may press star and the number 2 on your touchtone telephone.

We are allowed to ask one question and one follow-up, and then we'll move on to the next person in the queue.

Please stand by while we compile our Q&A roster.

The R word and that's positive for broad credit.

Edward Pick: Good morning, Ebrahim.

Ted Pick: Good morning, Ebrahim. Morning.

Operator: Morning.

We'll take our first question from Ibrahim Puno Walla with Bank of America.

Super clear and I guess, maybe one for.

Ebrahim Poonawala: Hey, good morning, Ted. Maybe, I guess, we can start with all things private credit. Heard your prepared remarks. There were two things. Given kind of where Morgan Stanley interacts with private credit, you had the fund that you talked about where we had some redemptions there during the quarter. Just talk to us, Ted, your perspective on what's going on with the private credit market. How does that change or inform your view on how you deal with the business? Specifically, if it's caused you to rethink how you distribute some of these products through the retail channel in Wealth. Thanks.

Good morning, Ibrahim morning.

So you shouldn't just said on liquidity management.

Hey, good morning, Dad.

To the extent you can if you can help us understand the re org that was approved by the fed.

For the.

For the German bank into the U S entity like what does that mean in terms of adding liquidity and do the things that you may be able to do going forward just how should we think about the impact of that to the P&L.

So maybe, I guess we can start with all things private credit. So I heard your prepared remarks. There were two things, given kind of where Morgan Stanley interacts with private credit. You know, you had the fund that you talked about.

where we had some redemptions during the quarter, but just talk to us about that

Sure I would say remember, it's a bank re org and in terms of the bank reorganization basically we moved over $100 billion of assets over the course of the quarter on to the bank.

When looking at that that will allow us to fund assets more effectively and make us more competitive more broadly like our like our peer set and make us sort of fit for purpose. As you think about how we play versus our peers and being able to distribute various product the 100 that.

Edward Pick: Well, I think what's important over the last number of days is that there's more balance in the conversation. As you know, private credit as a sub-asset class has come of age over the last number of years as a new set of lenders has stepped in post the financial crisis in the place of Wall Street. While it's still a growing class, it's having a learning moment. We'll call it an adolescent moment, where both the lenders and the borrowers are being looked at carefully. The reality is, it's credit. Credit is going to broadly perform when the economy is in the kind of good shape it's in right now. The fact that it's called private credit is sort of took on a bit of a life of its own for a while.

Ted Pick: Well, I think what's important over the last number of days is that there's more balance in the conversation. As you know, private credit as a sub-asset class has come of age over the last number of years as a new set of lenders has stepped in post the financial crisis in the place of Wall Street. While it's still a growing class, it's having a learning moment. We'll call it an adolescent moment, where both the lenders and the borrowers are being looked at carefully. The reality is, it's credit. Credit is going to broadly perform when the economy is in the kind of good shape it's in right now. The fact that it's called private credit is sort of took on a bit of a life of its own for a while.

Your perspective on what's going on with the private credit market—how does that change or inform your view on how you deal with the business, and specifically if it's caused you to rethink how you distribute some of these products through the retail channel, in wealth? Thanks.

We moved over over the course of the quarter you can think of about 30% of those assets at this point being able to be better funded from you can compare unsecured funding to sort of a wholesale deposit rate.

The mask and being able to think about what the opportunity is that you will see just for that asset those assets over the course say starting in 2020 oven, but it's really not just a 2027 story. This is something that over time as I said, we were formed differently is the banks and some of our peers and we're playing.

Well, I think what's important over the last, uh, number of days is that, uh, there's more balanced in the conversation, uh, as you know, a private credit, uh, as a, uh, sub-asset class has come of age over the last number of years, as a new set of lenders, has stepped in, uh, post. Uh, the financial crisis in the place of Wall Street. Uh, while it's still, uh, a growing class. Uh, it's, it's having a learning moment. Uh, we'll call it an adolescent moment where, uh, both uh, uh, the lenders and the borrowers are, uh, being looked at, uh, carefully. But the reality is, uh, it's it's credit.

Now at a different playing field with our peers and we should be able to see more assets and more growth and more competitive pricing and certain types of product sets that we offer to our clients, which should enable us to grow within our risk envelope in the same way with just a better funding structure.

Edward Pick: Now I think now we're all seeing that there's resiliency in the underlying product, that the structures and the terms on collateral are very well thought through, and that this is a market that over the long term has extraordinary growth potential. It's just a question of time and working through economic cycles. Our own participation in this is in line with the Street. As a distributor, bear in mind, Ebrahim, as you know, alts are about 5% of our total FA-facing Wealth Management pile. Quite small. That's all alts. That would include real estate, private equity, private credit, infrastructure, and then private credit is 1%. Even smaller there.

Ted Pick: Now I think now we're all seeing that there's resiliency in the underlying product, that the structures and the terms on collateral are very well thought through, and that this is a market that over the long term has extraordinary growth potential. It's just a question of time and working through economic cycles. Our own participation in this is in line with the Street. As a distributor, bear in mind, Ebrahim, as you know, alts are about 5% of our total FA-facing Wealth Management pile. Quite small. That's all alts. That would include real estate, private equity, private credit, infrastructure, and then private credit is 1%. Even smaller there.

We'll move to our next question from Dan Fannon with Jefferies.

Dan.

Morning, Sharon was hoping you could expand around your comments on organic growth within the wealth channel you highlighted workplace, but any additional context around that strength would be helpful.

Sure I think that Thats, a fantastic question, mainly because I think what you've seen is quite encouraging over the course of this quarter, sometimes they're we call out numbers over $100 billion of that.

And credit is going to broadly perform when the economy is in the kind of good shape, it's in right now. And the fact that it's called private credit, is sort of Taken on a bit of its took on a bit of a life of its own for a while. But now I think now, uh, we're, we're all seeing that there's, uh, resiliency in the underlying product, uh, that the, uh, structures and, uh, the terms, uh, on collateral are very well thought through. Uh, and that this is a market that over the long term has, uh, uh, extraordinary growth potential is just a question of time and working through, uh, economic Cycles. Um, our own, uh, participation in this is in line with the street. Um, as a distributor, uh, bear in mind, uh, Ibrahim as you know, all

And we talk about a single driver or something Thats really changed the profile of that particular quarter and this quarter. There was no. One single driver that you can really point out you still had really high levels of engagement across the advisor led platform, but what I tried to point out in my <unk>.

Edward Pick: In fact, as you've seen spreads widen a bit, there's been an institutional bid, and others from the highly sophisticated institutional community on the private wealth side have come in and stepped in, and we've seen net buying across these sub-asset classes in Q1. With respect to Investment Management, private credit is less than 1% of our total AUM, well under $20 billion of $1.9 trillion. Our exposures are small, are modest. It is an asset class that I think there was a lot of learning around over the last couple weeks. I think that is very healthy. We just need to sort of remember the headline point here, which is credit should perform during periods when the economy is performing. This will be no different.

Ted Pick: In fact, as you've seen spreads widen a bit, there's been an institutional bid, and others from the highly sophisticated institutional community on the private wealth side have come in and stepped in, and we've seen net buying across these sub-asset classes in Q1. With respect to Investment Management, private credit is less than 1% of our total AUM, well under $20 billion of $1.9 trillion. Our exposures are small, are modest. It is an asset class that I think there was a lot of learning around over the last couple weeks. I think that is very healthy. We just need to sort of remember the headline point here, which is credit should perform during periods when the economy is performing. This will be no different.

Prepared remarks is that workplace is becoming a bigger and bigger contributor and a more effective sort of thoughtful way of where we're actually seeing new client engagements specifically.

Specifically with this quarter, you'll see that often and not surprisingly that in the first quarter Youll see our invested assets best and what we saw in workplace. This quarter is greater retention of the assets invested so that's the first step right in this kind of funnel concept of what's going on with workplace.

First as we retain those assets and we will see.

In this particular quarter, we saw greater asset retention from workplace, which translated into M&A and then over time and this is what I was highlighting at the conclusion of my wealth management comments is we are seeing channel migration and Thats with technology and investment were those workplace assets are now actually seeking.

Edward Pick: Some portfolios may be overloaded in a particular sector or in a particular type of name, in which case there'll be winners and losers among asset managers. Credit generally is going to perform as the economy performs. Right now we're not talking about the R word, and that's positive for broad credit.

Ted Pick: Some portfolios may be overloaded in a particular sector or in a particular type of name, in which case there'll be winners and losers among asset managers. Credit generally is going to perform as the economy performs. Right now we're not talking about the R word, and that's positive for broad credit.

Advice and that migration is something that has helped to contribute to over one trillion of total assets and our advisor led strategy.

Ebrahim Poonawala: Super clear. Maybe one for you, Sharon, just around liquidity management. To the extent you can, if you can help us understand the reorg that was approved by the Fed for the German bank into the US entity. What does that mean in terms of adding liquidity, and there are things that you may be able to do going forward? Just how should we think about the impact of that to the P&L?

1% of our of our total, uh, uh, total AUM, uh, well under 20 billion of, uh, of a trillion 9. So our exposures are, uh, are small, our modest. Uh, but it is an asset class that I think, uh, there was a, a lot of learning around over the last couple weeks, I think that is very healthy, uh, but we just need to sort of. Remember the headline Point here, which is a credit should perform uh, during periods. When the economy is performing, uh this will be no different, some portfolios may be overloaded in a particular sector or in a particular um type of name in which case there'll be winners and losers among asset managers. Uh but credit generally is going to perform as the economy uh performs and uh right now we're not talking about the r word and that's a positive for broad credit.

Let's look here and I just maybe 1 for you Cheryl and just around liquidity management. Uh

Thanks, that's helpful and then sticking with well there's been a lot of discussion around client cash optimization and so longer term I was hoping you guys could talk about how you think about your ability to earn NII on client cash as there are more tools available to move cash around more efficiently.

Sharon Yeshaya: Sure. I would say, remember, it's a bank reorg. In terms of the bank reorganization, basically, we moved over $100 billion of assets over the course of the quarter onto the bank. When looking at that will allow us to fund assets more effectively and make us more competitive, more broadly, like our peer set, and make us sort of fit for purpose as you think about how we play versus our peers in being able to distribute various products. The 100 that we moved over the course of the quarter, you can think of about 30% of those assets at this point being able to be better funded. You can compare unsecured funding to sort of a wholesale deposit rate.

Yeah, that's a great question and certainly a very topical the wealth management team with jet and Andy at the helm of always been there are sort of thinking about ways to disrupt and continue to think about disrupting ourself in what tools will be available in the new frontier do you know for us and as you think about the current clients sweep balances those suites, we've largely.

To the extent. You can uh, if you can help us understand the REO that was approved by the FED, uh, for the your, for the German Bank, into the US entity. Like what does that mean in terms of adding liquidity, and there are things that you may be able to do going forward. Just how should we think about the impact of that to the pns?

He said.

There are certain places that are similar where they're looking for for a yield seeking behavior. But then there's also a transactional nature to that cash itself.

Thats, what <unk> seen bottom out so that's right now in the near term over the long term, we're moving towards thinking about ways that in this new world you actually have value of advice. If you talk all where do you work through a token is world. How do you think of an on chain World, where you can move assets quickly. The same way you would be able to move those.

Sure, I would say remember it's a bank reorg and in terms of the bank reorganization. Basically we moved over a hundred billion dollars of assets. Over the course of the quarter onto the bank, uh, when looking at that that will allow us to fund assets, more effectively and make us more competitive, more broadly like our con like our peer set and make us sort of fit for purpose. As you think about how we play versus our peers and being able to distribute various products, The 100

Sharon Yeshaya: The math in being able to think about what the opportunity is that you will see just for those assets over the course, say, starting in 2027. It's really not just a 2027 story. This is something that over time, as I said, we were formed differently as a bank than some of our peers. We're playing now at a different playing field with our peer set. We should be able to see more assets and more growth and more competitive pricing in certain types of product sets that we offer to our clients, which should enable us to grow within our risk envelope in the same way with just a better funding structure.

That we moved over, over the course of the quarter. You can think of about 30 percent of those assets at this point being able to be better funded—from an, you can compare unsecured funding to sort of a wholesale deposit rate.

Liabilities quickly, we would be there to offer different types of products on the asset side. So what types what kinds of things might exist on the lending side for Unchained unchanged advice and then how do you also move and think about all of those digital assets be that things that are yield seeking or like we said on the asset side that youre also.

The math, and being able to think about what the opportunity is, uh, that you will see just for that asset, uh, those assets over the course, say, starting in 2027,

but it's really not just a 2027 story. This is something that over time, as I said, we were formed differently as a bank than some of our peers and we're playing now at a different playing field with our peers set.

We're able to get advice. So how do you actually act and execute so I think that as things move on there is a lot of creative space in terms of the advice driven model and we do as you know currently also offer ways to move around cash that's currently yield seeking in nature.

And we should be able to see more assets and more growth, and more competitive pricing in certain types of product sets that we offer to our clients. Which should enable us to grow within our risk envelope in the same way, with just a better funding structure.

Operator: We'll move to our next question from Dan Fannon with Jefferies.

Edward Pick: Morning, Dan.

Ted Pick: Morning, Dan.

Dan Fannon: Good morning. Sharon, I was hoping you could expand around your comments on organic growth within the wealth channel. You highlighted Workplace, but any additional context around that strength would be helpful.

We'll move to our next question. From Dan Fannon with Jefferies.

We will move to our next question from Steven <unk> with Wolfe Research.

Morning. Dan

Hey, Steven.

Hey, good morning, and thanks for taking my questions.

Sharon Yeshaya: Sure. I think that that's a fantastic question, mainly because I think what you've seen is quite encouraging over the course of this quarter. Sometimes we call out numbers over $100 billion of NNA, and we talk about a single driver or something that's really changed the profile of that particular quarter. In this quarter, there was no one single driver that you can really point out. You still had really high levels of engagement across the advisor-led platform. What I tried to point out in my prepared remarks is that Workplace is becoming a bigger and bigger contributor and a more effective sort of thoughtful way of where we're actually seeing new client engagement. Specifically with this quarter, you'll see often and not surprisingly, that in Q1 you'll see unvested assets vest.

So.

Good morning. I'm strong—was hoping you could expand around your comments on organic growth within the Wealth channel. You highlighted Workplace, but any additional context around that strength would be helpful.

<unk> I was hoping you could speak to the fed's, New Basel III capital proposal, and giving you should benefit from the long overdue changes, notably to the G. SIB surcharge calculation removal of double counting in the stress test.

That might inform where you could be comfortable running on CET, one longer term versus say the older legacy framework.

Yes, so let's just take a step back and just talk about whats actually been proposed there are three proposals that I think about one is the one the models that obviously, we've put comments into Basel III G. SIB.

So first taking G. SIB since that's the most obvious quantitative metric if you look at the three 5% G. SIB bucket buffer that we were in at the end of the fourth quarter that number in the new framework as proposed currently would be two 2%. So it gives you a sense of just the base in terms of the Rebase from where you would be from G SIB, but as <unk>.

Sharon Yeshaya: What we saw in Workplace this quarter is greater retention of the assets that vested. That's the first step in this kind of funnel concept of what's going on with Workplace. The first is we retain those assets, and in this particular quarter, we saw greater asset retention from Workplace, which translated into NNA. Over time, and this is what I was highlighting at the sort of conclusion of my Wealth Management comments, is we are seeing channel migration, and that's with technology and investment, where those Workplace assets are now actually seeking advice, and that migration is something that has helped to contribute to over $1 trillion of total assets in our advisor-led strategy.

Sure. I think that that's a fantastic question. Um, mainly because I think what you've seen is quite encouraging over the course of this quarter. Sometimes there we call out numbers over a hundred billion dollars of nna and we talk about a single driver or something. That's really changed the profile of that particular, uh, quarter in this quarter, there was no 1 single driver that you can really point out. You still had really high levels of Engagement across the advisor, uh, LED platform, but what I tried to point out in my prepared remarks is that workplace is becoming a bigger and bigger contributor and a more effective, you know, sort of thoughtful. Way of where we're actually seeing new client engagements, uh, specifically with this quarter, you'll see that often and not surprisingly that in the first quarter you'll see on invested assets best. Uh, and what we saw in workplace, this quarter is greater Rhett.

You know very well, Steve you'd also be in a position that you'd see <unk> inflation associated with the Basel proposal and we would hope that there'll also be some comments taken from this stress testing models in terms of PNR and the way you think about income based modeling sort of a fee based assets and the wealth management business is.

Well as expenses, if you take all of that together, we would expect that we're in.

Modestly up here, either where we are today from capital neutral to modestly positive in terms of the overall amount of capital that we should have but we'll have to see to quantify that really where all three of those land and the interplay between them in terms of the actual CET one meta.

Edward Pick: Thanks. That's helpful. Sticking with Wealth, there's been a lot of discussion around client cash optimization. Longer term, I was hoping you guys could talk about how you think about your ability to earn NII on client cash as there are more tools available to move cash around more efficiently.

Dan Fannon: Thanks. That's helpful. Sticking with Wealth, there's been a lot of discussion around client cash optimization. Longer term, I was hoping you guys could talk about how you think about your ability to earn NII on client cash as there are more tools available to move cash around more efficiently.

Attention of the assets vested. So that's the first step right in this kind of funnel concept of what's going on with workplace. The first is we retain those assets and we'll see, you know, in this particular quarter we saw greater asset retention from workplace, which translated into nna and then over time. Uh and this is what I was highlighting at the sort of conclusion of my wealth management comments is we are seeing Channel migration and that's with technology and investment where those workplace assets are now actually seeking advice. And that migration is something that has helped to contribute to over 1 trillion dollars of total assets in our advisor, uh, LED you know, strategy.

Eric you will see that we are using excess capital. We did see is specifically we had the relaxation or the change I should say the overall change of SLR, we deployed SLR and leverage based capital over the course of the quarter and we continue to increase our RW ways to support our client base.

Sharon Yeshaya: Yeah, I think that's a great question and certainly very topical. The Wealth Management team with Jed and Andy at the helm have always been there sort of thinking about ways to disrupt and continue to think about disrupting ourselves and what tools will be available in the new frontier. As you know for us, and as you think about the current client sweeps balances, those sweeps we've largely said have behaved. There are certain places that are similar where they're looking for yield-seeking behavior. There's also a transactional nature to that cash itself. That's what you've seen bottom out. That's right now in the near term. Over the long term, we're moving towards thinking about ways that in this new world you actually have value of advice. If you talk all, where do you work through a tokenized world?

Yes, the only thing I would add is that.

The firm view is that we hope to work well with the regulator along with the rest of the group to get Basel finalized we have a window here.

And the Big picture is let's let's put the puck on the ice once and for all and not everyone is going to get everything they want.

That's by definition the way these things would be but that.

Take as much of the low that is reasonable to balance that which ensures ongoing stability amongst these firms, but also allows us to play the pivotal role that we do in helping to power the real economy, so with that in mind, it's absolutely critical that we keep.

Sharon Yeshaya: How do you think of an on-chain world where you can move assets quickly? The same way you'd be able to move those liabilities quickly. We would be there to offer different types of products on the asset side. What kinds of things might exist on the lending side for on-chain advice? How do you also move and think about all of those digital assets, be that things that are yield seeking or, like we said on the asset side, that you're also able to get advice? How do you actually act and execute? I think that as things move on, there's a lot of creative space in terms of the advice-driven model. We do, as you know, currently also offer ways to move around cash that's currently yield seeking in nature.

Cash around more efficiently. Yeah. I think that's a, a great question. And certainly, very topical, um, the wealth management team with jet and Andy at the helm have always been there, sort of thinking about ways to disrupt and continue to think about disrupting ourselves and what tools will be available in the New Frontier. Do you know, uh, for us and as you think about the current client sweeps balances those sweeps, we've largely said have have behaved, you know, there are certain places that are similar where they're looking for, uh, for, uh, yield seeking Behavior. But then there's also a transactional na nature to that cache itself. Uh, and that's what you've seen bottom out. So that's right now, in the near term, over the long term, we're moving towards thinking about ways that in this new world, you actually have value of advice. So if you talk all, you know, where do you work through a tokenized world, how do you think of an on-chain world where you can move assets quickly?

The same way.

The momentum going and we land this.

Yeah.

That's great and for my follow up if I could just double click a little bit more into some of the organic growth opportunities you talked about leaning more heavily into markets. We certainly saw a nice uptick in loan growth in the quarter.

Just wanted to get a better sense as we start to look under the new proposal what are some opportunities that might be more compelling just given the strength of your capital position that you might be more inclined to lean into here.

I think you just have to go to the business model as it exists.

You offer different types of products on the asset side. So what type what kinds of things might exist on the lending side for onchain, you know, onchain advice. And then how do you also move and think about all of those digital assets? Uh, be that things that are yield-seeking or like we said on the asset side that you're able uh to get advice. So how do you actually act and execute? So I think that as things move on there's a lot of creative space uh in terms of the advice driven model and we do as you know, currently also offer ways to move.

The three segments. The tamps are all growing at.

Move around cash that's currently yield-seeking in nature.

Operator: We'll move to our next question from Steven Chubak with Wolfe Research.

Two times GDP organically and our share depending on the space is somewhere between 10 and 15% so that alone knowing what we do and getting after it is critical it's interesting when Sharon gave the earlier answer with respect to how the funnel is working that's an accelerating phenomena.

Sharon Yeshaya: Hey, Steven.

Ted Pick: Hey, Steven.

We'll move to our next question from Stephen Tubac with Wolfe Research.

Steven Chubak: Hey, good morning, and thanks for taking my questions. Sharon, I was hoping you could speak to the Fed's new Basel III capital proposal. Given you should benefit from long overdue changes, notably to the GSIB surcharge calculation, removal of double counting in the stress test, how that might inform where you could be comfortable running on CET1 longer term versus, say, the older legacy framework?

Hey, Stephen.

Hey, good morning and thanks for taking my question.

And inside of well, but it also gives cause for the corporate coverage officer in investment banking to talk to the CEO or talked to CFO and ask her how these documents creation plan is going and how employees feel about that and know their coverage under the wealth manager model. So there is.

Sharon Yeshaya: Yeah. Let's just take a step back and just talk about what's actually been proposed. There are three proposals that I think about. One, the models that obviously we've put comments in. Two, Basel, and three, GSIB. First taking GSIB, since that's the most obvious quantitative metric, if you look at the 3.5% GSIB bucket buffer that we were in at the end of Q4, that number in the new framework, as proposed currently, would be 2.2%. That gives you a sense of just the base in terms of the rebase from where you would be from GSIB. As you know very well, Steven, you'd also be in a position that you'd see RWA inflation associated with the Basel proposal.

So um Chiron. I was hoping you could speak to the fed's new, Basel 3, Capital proposal and giving you should benefit from long overdue changes notably to the Gip surcharge calculation removal of double counting in the distress test. Um how that might inform where you could be comfortable running on ct1 longer term versus say, the older Legacy framework.

A lot of really interesting work that can be done within the frame of the integrated firm I think the decisions with respect to how we deploy capital really has to be around our client selection, where we think that there is a long term a reward and wallet.

Yeah, so let's just take a step back and just talk about what's actually been proposed. There are 3 proposals that I think about

1, the

Setup that is.

That is appropriate against our risk parameters I'd also point out that.

The investment Bank is really a global investment bank coming of age now if you see the growth that's been experienced in Asia not just.

In greater China and of course, Japan, whereas you know we have a special relationship with our partners GE, who own a quarter of the firm, but also the growth we've seen in the reactivation of India and then of course the AI.

Sharon Yeshaya: We would hope that there will also be some comments taken from the stress testing models in terms of PPNR and the way you think about income-based modeling sort of for fee-based assets in the Wealth Management business, as well as expenses. If you take all of that together, we would expect that we're modestly up here, either where we are today, from capital neutral to modestly positive, in terms of the overall amount of capital that we should have. We'll have to see to quantify that, really where all three of those land and the interplay between them. In terms of the actual CET1 metric, you'll see that we are using excess capital. We did see, specifically, we had the relaxation or the change, I should say, the overall change of SLR. We deployed SLR and leverage-based capital over the course of the quarter.

obviously, we've put comments in to Basel and 3 Gib. Um, so first taking Gibson's, that's the most obvious quantitative metric. If you look at the 3.5% gist of buck bucket buffer that we were in at the end of the fourth quarter. That number in the new framework as proposed, currently would be 2.2%. So that gives you a sense of just the the the base in terms of the rebates from where you would be from Gib. But as you know, very well, Steve you'd also be in a position that you'd see rwa inflation associated with the Basel proposal. And we would hope that there will also be some comments taken from the stress testing models in.

<unk> that exists in Korea and Taiwan.

So two we are now putting in incremental.

Our management strength in places like Germany, and the core of Continental Europe, which is looking to reindustrialize given everything that's going on so being a global firm and doing it the way we've done it but also to stick. It's why I reiterated very simply in the opening that we stick to our strategic knitting, which is that we raised manage and allocate.

Capital for institutions and individuals and that we keep it.

Keep it that way and on.

On the organic front, assuming the economy continues to grow.

Think we've got a ton of opportunity to put top line up and and continue to carry margin.

Sharon Yeshaya: We continue to increase our RWAs to support our client base.

Edward Pick: Yeah, the only thing I would add is that the firm view is that we hope to work well with the regulator along with the rest of the group to get Basel finalized. We have a window here, and the big picture is let's put the puck on the ice once and for all. Not everyone's going to get everything they want. That's by definition the way these things would be. Take as much of the loaf that is reasonable to balance that which ensures ongoing stability amongst these firms, but also allows us to play the pivotal role that we do in helping to power the real economy. With that in mind, it's absolutely critical that we keep the momentum going and we land this.

Ted Pick: Yeah, the only thing I would add is that the firm view is that we hope to work well with the regulator along with the rest of the group to get Basel finalized. We have a window here, and the big picture is let's put the puck on the ice once and for all. Not everyone's going to get everything they want. That's by definition the way these things would be. Take as much of the loaf that is reasonable to balance that which ensures ongoing stability amongst these firms, but also allows us to play the pivotal role that we do in helping to power the real economy. With that in mind, it's absolutely critical that we keep the momentum going and we land this.

We'll move to our next question from Brennan Hawken with BMO capital markets.

Terms of ppnr. And the way you think about, uh, income based modeling sort of for fee based assets and the wealth management business, as well as expenses. If you take all of that together, we would expect that. We're, you know, we modestly, uh, up here either where we are today, from Capital neutral to modestly positive, uh, in terms of the overall amount of capital that we should have, but we'll have to see to quantify that really where all 3 of those land and the interplay between them. In terms of the actual cet1 metric, you'll see that we are using exos Capital. We did see uh specifically we had the relaxation or the change I should say, the overall change of SLR, we deployed SLR and leverage based Capital over the course of the quarter uh and we continue to increase our rwas to support our client base.

Morning, Brian.

yeah, the only thing I would add is that, um, The Firm view is that we

Good morning, Ted Good morning, Sean Thanks for taking my question.

I'd like to circle back on.

Some of the comments you made on cash.

You spoke to on chain.

I don't know if you guys saw but.

A competitor.

In the annual report J P. Morgan.

Not that they are planning to reduce some of the friction on brokerage cash is it right that in your comments around on chain.

Thats the direction you guys are thinking of going as far as reducing that friction.

Hope to work. Well, uh, with the regulator along with the rest of the group to get Basel finalized, we have a window here, uh, and the big picture is, let's let's put the puck on the ice once and for all and, uh, not everyone's going to get everything they want. Um, that's by definition, the way these things would be. Uh, but that, uh, uh, take as much of the loaf that is reasonable to balance that which, uh, ensures ongoing stability amongst these firms. But also,

And then Relatedly today's 15th tax day tends.

<unk> tends to be a big.

Events seasonally for you in your wealth business, how should we think about cash and then net new and what is the expected impact is on that this year.

Steven Chubak: That's great. For my follow-up, if I could just double-click a little bit more into some of the organic growth opportunities you talked about.

Allows us to play the pivotal role that we do in helping to power the real economy. So uh with that in mind it's uh absolutely critical that we keep the momentum going and uh we land this.

Thanks, so much brennen.

First just to cash we continue to offer our clients different ways to access cash talk about cash talk about the cash management and as we've talked about before there are a lot of different places for people to think through and we have been talking to our clients around various cash management over time, just given the.

Sharon Yeshaya: Leaning more heavily into markets, we certainly saw a nice uptick in loan growth in the quarter. I just want to get a better sense, as we start to look under the new proposal, what are some opportunities that might be more compelling, just given the strength of your capital position, that you might be more inclined to lean into here?

Steven Chubak: Leaning more heavily into markets, we certainly saw a nice uptick in loan growth in the quarter. I just want to get a better sense, as we start to look under the new proposal, what are some opportunities that might be more compelling, just given the strength of your capital position, that you might be more inclined to lean into here?

Certainly saw a nice uptick in loan growth, in the corridor.

Edward Pick: I think you just have to go to the business model as it exists. The three segments, the TAMs, are all growing at two times GDP organically, and our share, depending on the space, is somewhere between 10% and 15%. That alone, knowing what we do and getting after it, is critical. It's interesting when Sharon gave the earlier answer with respect to how the funnel is working. That's an accelerating phenomenon inside of Wealth, but it also gives cause for the corporate coverage officer in Investment Banking to talk to the CEO or talk to the CFO and ask her how the stock administration plan is going and how employees feel about that, and now they're coverage under the Wealth Management model. There is a lot of really interesting work that can be done within the frame of the integrated firm.

Ted Pick: I think you just have to go to the business model as it exists. The three segments, the TAMs, are all growing at two times GDP organically, and our share, depending on the space, is somewhere between 10% and 15%. That alone, knowing what we do and getting after it, is critical. It's interesting when Sharon gave the earlier answer with respect to how the funnel is working. That's an accelerating phenomenon inside of Wealth, but it also gives cause for the corporate coverage officer in Investment Banking to talk to the CEO or talk to the CFO and ask her how the stock administration plan is going and how employees feel about that, and now they're coverage under the Wealth Management model. There is a lot of really interesting work that can be done within the frame of the integrated firm.

What's gone on over the course of the last five years, but we're obviously as you know always looking at ways to continue to enhance conversations that we have with various clients as it relates just the tax day and what we've seen so far this quarter.

Um, just want to get a better sense as we start to look under the new proposal. What are some opportunities that might be more compelling, just given the strength of your capital position, that you might be more inclined to lean into here?

So far right now taxes are as we would've expected, but it's worth noting that from an SPL perspective, we started the quarter strong lending growth that we talked about even.

Beginning this year continues.

Okay.

Sources towards London products more broadly so digital tools digital enhancements and using automd.

Automation to be able to help with paper backlog associated with some of the various lending products more broadly.

Got it thank you.

And Ted you spoke to an adolescent moment for private credit.

Edward Pick: I think the decisions with respect to how we deploy capital really has to be around client selection, where we think that there is a long-term reward and wallet setup that is appropriate against our risk parameters. I'd also point out that the investment bank is really a global investment bank coming of age now. If you see the growth that's been experienced in Asia, not just in Greater China and, of course, Japan, where as you know, we have a special relationship with our partners, MUFG, who own a quarter of the firm, also the growth we've seen in the re-equitization of India, and then, of course, the AI connectivity that exists in Korea and Taiwan. Too, we are now putting in incremental management strength in places like Germany and the core of Continental Europe, which is looking to reindustrialize, given everything that's going on.

Ted Pick: I think the decisions with respect to how we deploy capital really has to be around client selection, where we think that there is a long-term reward and wallet setup that is appropriate against our risk parameters. I'd also point out that the investment bank is really a global investment bank coming of age now. If you see the growth that's been experienced in Asia, not just in Greater China and, of course, Japan, where as you know, we have a special relationship with our partners, MUFG, who own a quarter of the firm, also the growth we've seen in the re-equitization of India, and then, of course, the AI connectivity that exists in Korea and Taiwan. Too, we are now putting in incremental management strength in places like Germany and the core of Continental Europe, which is looking to reindustrialize, given everything that's going on.

I thought it was an interesting way to put it.

You also flagged as a distributor 1% of client assets in private credit, obviously, very small, but curious, but you do have great touch points across your wealth management business.

I think, uh, you just have to go to the business model as it exists. Uh, the three segments, the TAMs, are all growing at, uh, you know, two times GDP, uh, or organically, and our share, depending on the space, is somewhere between 10% and 15%. So that alone—knowing what we do and getting after it—is critical. It's interesting, when Chiron gave the earlier answer with respect to how the funnel is working, that's an accelerating phenomenon inside of wealth. But it also gives cause for the corporate coverage officer and Investment Banking to talk to the CEO or talk to the CFO and ask her how the stock administration plan is going, and how employees feel about that, and now their coverage under the wealth management model. So there is a, uh, a lot of really interesting work that can be done, uh, within the frame of the integrated firm. I think the decisions with respect to how we deploy capital really have to be around client selection.

And clearly all the attention here is around well specifically given these vehicles and what are you hearing from the field.

Around the temperature on some of these non traded Bdcs is the concern coming from more of the FAA population or the investor side and is there any emerging signs of looking at other asset classes. Besides credit.

Yes.

I mean to say these are coming of age.

No.

Yes.

And when the.

Private lenders stepped in effectively.

Edward Pick: Being a global firm and doing it the way we've done it, but also to stick, it's why I reiterated very simply in the opening that we stick to our strategic knitting, which is that we raise, manage, and allocate capital for institutions and individuals, and that we keep it that way. On the organic front, assuming the economy continues to grow, we think we've got a ton of opportunity to put top line up and continue to carry margin.

Ted Pick: Being a global firm and doing it the way we've done it, but also to stick, it's why I reiterated very simply in the opening that we stick to our strategic knitting, which is that we raise, manage, and allocate capital for institutions and individuals, and that we keep it that way. On the organic front, assuming the economy continues to grow, we think we've got a ton of opportunity to put top line up and continue to carry margin.

Additional wall Street firms.

It was it was new and of course became part of the story for private and also public asset managers.

Where we think that there is a long-term reward and wallet set up. That is, uh, uh, that is appropriate, uh, against our risk parameters. It also point out that, uh, uh, the Investment Bank is really a global Investment Bank coming of age. Now, if you see the growth that's been experienced, uh, in Asia, not just, uh, in Greater China. And of course Japan. Whereas, you know, we have a special relationship with our partners. MFG who owned a quarter of the firm, but also the growth we've seen in the reacquisition of India. And then, of course, the AI connectivity that exists in Korea and Taiwan. Uh, so too, we are now putting in incremental management strength in places like Germany and the core of Continental Europe which is looking to reindeer everything that's going on. So being a global firm and doing it the way we've done it but also to stick, it's why?

We have to remember that this class is.

Is real it said anywhere between trailing five trillion seven high yield similar sized levered lending similar size, but the market obviously.

<unk> is enormously bigger at 13% to 15 trillion. So it's just one piece of the credit stack and the reality is that with.

Operator: We'll move to our next question from Brennan Hawken with BMO Capital Markets.

I reiterated, very simply in the opening that we stick to our strategic knitting, which is that we raise manage and allocate capital for institutions and individuals and that, uh, we keep it, uh, keep it that way. Uh, and uh, on the organic front, assuming the economy continues to grow, uh, we think, uh, we've got a ton of opportunity to put Topline up and, uh, and continue to carry margin.

Edward Pick: Morning, Brennan.

Ted Pick: Morning, Brennan.

Spreads having widened out a bit.

We'll move to our next question. From Brennan hawin with BMO Capital markets.

Brennan Hawken: Good morning, Ted. Good morning, Sharon. Thanks for taking my question. I'd love to circle back on some of the comments, Sharon, you made on cash. You spoke to sweep cash. I don't know if you guys saw, but a competitor in the annual report, JP Morgan, put out that they're planning to reduce some of the friction around brokerage cash. Is it right that in your comments around sweep cash, that that's the direction you guys are thinking of going as far as reducing that friction? Relatively, if today's 15 April 2024, Tax Day, tends to be a big event seasonally for you in your Wealth Management business. How should we think about cash and then net new and what the expected impact is on that this year?

Morning, Brandon.

There is an institutional bid and we've seen this now in the last week.

Where a number of the top asset managers have underwritten and we've been.

Very happy to act as underwriter on some benchmark issuances either been actually too over the last couple of days, where in the at the asset manager level.

The level of real capital has been raised.

Reasonable rates to help.

Yet at the refinancing.

And that will just in the years ahead.

Now the reality.

Asset managers are going to outperform other asset managers and Thats, just the nature of product selection and diversification.

Part of the.

Sharon Yeshaya: Thanks so much, Brennan. Going first just to cash, we continue to offer our clients different ways to access cash, talk about cash, talk about the cash management. As we've talked about before, there are a lot of different places for people to think through. We have been talking to our clients around various cash management over time, just given what's gone on over the course of the last five years. We're obviously, as you know, always looking at ways to continue to enhance conversations that we have with various clients. As it relates just to tax day and what we've seen so far this quarter, so far right now, taxes are as we would have expected, but it's worth noting that from an SBL perspective, we've started the quarter strong.

The reason that the phase II, such a brilliant job with our clients is that they very much preach. This idea of durably growing your portfolio in a risk managed way taking into account your liquidity needs.

Good morning, Ted. Good morning, Sean, thanks for taking my question. Um, I'd love to, uh, Circle back on on some of the comments from you made on on cash. Um, you know, you spoke to on chain. I don't know if you guys saw but, um, a competitor uh, in, in the annual report, JP Morgan, uh, put out that they're planning to reduce some of the friction on brokerage cash. Is it, is it right that in your comments around onchain, that, that that's the direction you guys are thinking of going as far as reducing that friction. Um, and then relatedly, it's today's the 15th tax day uh tends to be a big uh uh event seasonally for you in your Wellness business. How should we think about, you know, cash and then net new. And what if the expected impact is on that this year?

In every imaginable scenario and then importantly to think about how alts overtime over decades generations, and even lifetimes can be a an additive part of your portfolio and even with that through the decades of alts being introduced into the system. This is.

Thanks so much Brennan. Um, so going first just to to cash, we continue, you know, to offer our clients different ways to access cash, talk about cash, talk about the cash management. And as we've talked about before there are a lot of different places for people to think through uh and have we have been talking to our clients around various cash management over time. Just given the what's gone on over the course of The Last 5 Years? Uh but we're obviously as you know, always looking at ways to continue to enhance conversations that we have with various clients as it relates just to

Going back to the financial crisis through Covid.

Through be read a number of years ago at these products have.

Sharon Yeshaya: The lending growth that we've talked about even at the beginning of this year continues. We've put in a lot of resources towards lending products more broadly, digital tools, digital enhancements, and using automation to be able to help with the paper backlogs associated with some of the various lending products more broadly.

Sort of sustain the test of time and even now the penetration is only 5% so on the one hand.

And the other thing again.

It is still an area of growth.

The key.

To be selective in how are you.

With that capital across different alternatives selections.

Private credit and infrastructure.

Tax day, uh, and what we've seen so far this quarter, uh, so far right now, uh, taxes are as we would have expected, but it's worth noting that from an sbl perspective, we've started the quarter strong. So the lending growth that we've talked about even um at the beginning of this year continues, uh and we've put in a lot of resources towards lending products. More broadly. So digital tools uh digital enhancements and using uh automation to be able to help with the paperback laws associated with some of the the various lending products. More broadly

Brennan Hawken: Got it. Thank you. Ted, you spoke to an adolescent moment for private credit, which I thought was an interesting way to put it. You also flagged as a distributor 1% of client assets in private credit, obviously very small. You do have great touch points across your Wealth Management business. Clearly, all the attention here is around wealth, specifically given these vehicles. What are you hearing from the field around the temperature on some of these non-traded BDCs? Is the concern coming from more the FA population or the investor side? Is there any emerging signs of looking at other asset classes besides credit?

Two are or just right straight private equity and then real estate.

Four big ones and how you have.

Selected managers on a diversified basis on the basis of where they have expertise by sector. What their history is of deployment with their history is of return on capital and that is part of the learning and I think that has been taking place in.

The data point that I would put to you, which we've heard elsewhere too is that.

During the quarter notwithstanding all of the.

The press and discussion the system was a better buyer of vaults.

And so.

That is an important indicator that folks want to be participating at the right price with the right manager.

Edward Pick: Yeah. Adolescent, I mean to say sort of coming of age. The asset class did not exist. When the private lenders stepped in effectively in the place of the traditional Wall Street firms, it was new and of course became part of the story for private and also public asset managers. We have to remember that this class is real. It's at anywhere between $1.5 to 1.7 trillion. High yield, similar size. Levered lending, similar size. The IG market, obviously, is enormously bigger at $13 to 15 trillion. It's just one piece of the credit stack. The reality is that with spreads having widened out a bit, there is an institutional bid. We've seen this now in the last week, where a number of the top asset managers have underwritten, and we've been very happy to act as underwriter on some benchmark issuances.

Ted Pick: Yeah. Adolescent, I mean to say sort of coming of age. The asset class did not exist. When the private lenders stepped in effectively in the place of the traditional Wall Street firms, it was new and of course became part of the story for private and also public asset managers. We have to remember that this class is real. It's at anywhere between $1.5 to 1.7 trillion. High yield, similar size. Levered lending, similar size. The IG market, obviously, is enormously bigger at $13 to 15 trillion. It's just one piece of the credit stack. The reality is that with spreads having widened out a bit, there is an institutional bid. We've seen this now in the last week, where a number of the top asset managers have underwritten, and we've been very happy to act as underwriter on some benchmark issuances.

At the time the asset manager.

An interesting way to put it. Um, you you also flag as a distributor, you know, 1% of client Assets in private credit, obviously very small, but curious. But you, you do have great touch points across your wealth management business. And, and um, clearly, uh, all the attention here is around, uh, wealth specifically, given these vehicles and what are you hearing from the field, uh, uh, uh, around the temperature on some of these non-traded bdcs is the concern coming from, you know, more the FAA population or the investor side. And, and is there any, uh, emerging signs of, uh, looking at other asset classes beside credit,

<unk> generated terrific results also ones that form.

Last fall.

Yeah, adolescent. Uh um. I I I mean to say sort of coming of age

Perform that becomes part of the asset manager.

Selection dynamic.

We'll move to our next question from Devin Ryan with citizens Bank.

Good morning, Devin. Thanks. Good morning. Good morning, Good morning, shrimp question on wealth management stocks, obviously sold off several times during the quarter on AI feature announcements the customer cash with optimization I think Dan's question was one of the events, but other automation tools I think.

Potential implications on revenue model. So the market seems like it's currently weighing AI as a negative for well towards the risk and I suspect you don't agree with that so just be great to hear more about your view on some of the biggest implications of AI on the business. I know you guys have been investing for a number of years here. Thank you.

You know, um, the the asset class did not exist. Uh, and when the, uh, when the private lender stepped in effectively in the place of the traditional Wall Street firms. Um, it was it was, uh, new and of course, became part of the story for private and also public asset managers. Uh, you know, we have to remember that this class um, is, is is real. It said, uh, anywhere between a trillion 5 trillion and 7, uh, high yields. Similar sized lever, lending similar size. But the IG Market obviously, is, uh, is enormously bigger at 13 to 15 trillion. So it's just 1 piece of, uh, the credit stack

I want to weigh in on that one.

AI is our friend.

Okay.

It is just the latest generation of technology that is going to be part of the ecosystem and we're at an important moment.

Edward Pick: There have been actually two over the last couple of days where at the asset manager level, at the BDC level, a real capital has been raised at quite reasonable rates to help get at the refinancing phenomenon that will exist in the years ahead. Now, the reality is, some asset managers are going to outperform other asset managers, and that's just the nature of product selection and diversification. Part of the reason that the FAs do such a brilliant job with our clients is that they very much preach this idea of durably growing your portfolio in a risk-managed way, taking into account your liquidity needs in every imaginable scenario, and then importantly, to think about how alts over time, over decades, generations, and even lifetimes, can be an additive part of your portfolio.

Ted Pick: There have been actually two over the last couple of days where at the asset manager level, at the BDC level, a real capital has been raised at quite reasonable rates to help get at the refinancing phenomenon that will exist in the years ahead. Now, the reality is, some asset managers are going to outperform other asset managers, and that's just the nature of product selection and diversification. Part of the reason that the FAs do such a brilliant job with our clients is that they very much preach this idea of durably growing your portfolio in a risk-managed way, taking into account your liquidity needs in every imaginable scenario, and then importantly, to think about how alts over time, over decades, generations, and even lifetimes, can be an additive part of your portfolio.

Sure.

We're working with.

Got it.

Yeah.

The beta version and we are looking at different places inside of it infrastructure.

We continue to.

She was improvement in afternoon, Gabon with firms that have the history that we have of cyber security infrastructure.

The number one priority. This is not a new phenomenon. What is new is that we are beginning to evolve from a pure efficiency exercises, where you could have effectively replacements of what might have been a.

And the reality is that with, uh, spreads having widened out a bit. Uh, there is an Institutional bid and we've seen this now in the last week, uh, where a number of the top asset managers have underwritten, uh, and we've been, uh, uh, very happy to, uh, act as underwriter on some, uh, Benchmark issuances. Either been actually 2 over the last couple days. We're in the, at the asset manager level at the, at the BDC level, a real Capital has been raised at, uh, quite reasonable rates to help, uh, get at the refinancing, uh, phenomenon that will exist in the years ahead. Now, the reality is some asset managers are going to outperform other asset managers and that's just the nature of product selection and diversification.

Call center or what might have been a an operational function to automate routine tasks like moving money to something that over time becomes a productivity phenomenon.

And.

That efficiency and effectiveness transom is super Super compelling.

Edward Pick: Even with that, through the decades of alts being introduced into the system, this is going back to the financial crisis, through COVID, through BREIT a number of years ago. These products have sort of sustained the test of time. Even now, the penetration is only 5%. On the one hand, it's material. On the other hand, it is still an area of growth. The key is to be selective in how you've put that capital across different alternative selections, whether it's PE, private credit, infrastructure, or just straight private equity, and then real estate, the four big ones. How you have selected managers on a diversified basis, on the basis of where they have expertise by sector, what their history is of deployment, what their history is of return on capital, and that is part of the learning.

Ted Pick: Even with that, through the decades of alts being introduced into the system, this is going back to the financial crisis, through COVID, through BREIT a number of years ago. These products have sort of sustained the test of time. Even now, the penetration is only 5%. On the one hand, it's material. On the other hand, it is still an area of growth. The key is to be selective in how you've put that capital across different alternative selections, whether it's PE, private credit, infrastructure, or just straight private equity, and then real estate, the four big ones. How you have selected managers on a diversified basis, on the basis of where they have expertise by sector, what their history is of deployment, what their history is of return on capital, and that is part of the learning.

The efficiency you talked about but what about the effectiveness, where you can have the historical context as between the financial adviser and the client where she is well aware of the.

Part of the, um, the reason that the FAS do such a brilliant job with our clients is that they very much preach. Uh, this idea of, uh, durably growing your portfolio in a risk managed way taking into account, your uh, liquidity needs and uh, in every imaginable scenario and then importantly, uh, to think about how all over time over decades generations and even lifetimes can be a, uh, an additive part of your portfolio. And even with that, through the decades of all, uh, being introduced into the system, this is

The.

The past interactions and how that might drive against certain market dynamics.

And so that co piloting I think is something that.

Jed fin under.

The leadership of Andrew Safferstein is spending a lot of time on where they effectively have corridors of super agents, they're going to be working to drive again efficiency and effectiveness across the portfolio and well I'd also say that.

This phenomenon is taking place inside of our our equities business, where as you know we have a.

Our leadership business, where we.

Are able to take some of the complex questions that are asked but sort of the of the technical type and they can be answered.

Edward Pick: I think that has been taking place. The data point that I would put to you, which we've heard elsewhere too, is that during the quarter, notwithstanding all of the press and discussion, the system was a better buyer of alts. That is an important indicator that folks want to be participating at the right price with the right manager. Over time, the asset managers that perform will generate terrific results, and the ones that perform less well will underperform, and that becomes part of the asset manager selection dynamic.

Ted Pick: I think that has been taking place. The data point that I would put to you, which we've heard elsewhere too, is that during the quarter, notwithstanding all of the press and discussion, the system was a better buyer of alts. That is an important indicator that folks want to be participating at the right price with the right manager. Over time, the asset managers that perform will generate terrific results, and the ones that perform less well will underperform, and that becomes part of the asset manager selection dynamic.

Directly by a client agent inside of the electronic trading platform and then of course there are the numerous examples inside of core infrastructure where efficiency around.

Uh, going back to the to the financial crisis, through coid uh through uh breed a number of years ago. Uh, these products have um, sort of sustained the test of time. And even now, the uh, penetration is only 5%. So, on the 1 hand, it's material on the other hand, it is still an area of growth and the key, uh, is to be selective in how you've, uh, put that Capital across different alternative selections. Whether it's PE private credit infrastructure, uh, and to, or just straight straight private Equity. Uh, and then real estate, uh, uh, the 4 big ones and how you have, uh, selected managers on a diversified basis, uh, on the basis of where they have expertise by sector, uh, what their history is of deployment, what their history is of return on Capital, and that is part of the learning. And I think that has been taking place and, uh,

Classic operational flow in.

And surveilling is a foot so there will be.

The data point that I would uh, put to you which uh we've heard elsewhere too. Is that uh during the quarter now, I was standing all of the uh the press and discussion. The uh system was a better buyer of alts.

<unk> continuous arms race of one AI platform versus another but this is not new and this is something we considered to be additive to what we have which is world class technology World class Cyber defense and then the best trusted advisers sitting with the client that is ultimately.

Again, the secret sauce, whether it's the investment banker.

And so uh that is an important indicator that uh folks want to be participating at the right price with the right manager. And then over time the asset managers that perform will generate a terrific results and the ones that perform less uh, less well will underperform and that becomes part of the asset manager. Um, selection dynamic,

Operator: We'll move to our next question from Devin Ryan with JMP Securities.

Asset manager coverage officer, or importantly, the wealth management financial adviser that is the key.

Edward Pick: Morning, Devin.

Ted Pick: Morning, Devin.

Devin Ryan: Thanks. Good morning, Ted. Good morning, Sharon. Question on Wealth Management, stocks obviously sold off several times during the quarter on AI feature announcements, the customer cash sweep optimization. I think that Dan's question was one of the events about other automation tools, I think, and just potential implications on revenue models. The market seems like it's currently weighing AI as a negative for wealth or it's a risk. I suspect you don't agree with that. Just be great to hear more about your view on some of the biggest implications of AI on the business. I know you guys have been investing for a number of years here. Thank you.

We'll move to our next question. From Devin Ryan, with Citizens Bank.

Thank you Tim I appreciate that color.

As a follow up wanted to touch on Asia at 45% of the firm sequential revenue improvement came from Asia, It's only 16% of firm wide revenues I know.

A lot of that Delta is from prime brokerage, but can you just expand a bit on the momentum in Asia, how sustainable is it further growth opportunity.

The region, just given the big step up we've been seeing here.

Well, it's a question of people.

The person who runs Asia for.

Edward Pick: Yeah, I want to weigh in on that one. AI is our friend. Okay? It is just the latest generation of technology that is going to be part of the ecosystem, and we're at an important moment. We're working with Claude Mythos, the beta version, and we are looking at different places inside of infrastructure where there'll just be continuous improvement. That's going to go on with the firms that have the history that we have of cybersecurity infrastructure as the number one priority. This is not a new phenomenon. What is new is that we are beginning to evolve from pure efficiency exercises, where you could have effectively replacements of what might have been a call center or what might have been an operational function to automate routine tasks like moving money, to something that over time becomes a productivity phenomenon.

Ted Pick: Yeah, I want to weigh in on that one. AI is our friend. Okay? It is just the latest generation of technology that is going to be part of the ecosystem, and we're at an important moment. We're working with Claude Mythos, the beta version, and we are looking at different places inside of infrastructure where there'll just be continuous improvement. That's going to go on with the firms that have the history that we have of cybersecurity infrastructure as the number one priority. This is not a new phenomenon. What is new is that we are beginning to evolve from pure efficiency exercises, where you could have effectively replacements of what might have been a call center or what might have been an operational function to automate routine tasks like moving money, to something that over time becomes a productivity phenomenon.

For Morgan Stanley is Gogo Laredo, who is a.

Plus or minus three decade veteran of the firm and.

Off several times during the quarter on AI, feature announcements, the customer cash sweep optimization. I think the Dan's question was 1 of the events but other automation tools I think and just potential implications on Revenue models. So the market seems like it's currently weighing AI as a negative for wealth or it's a risk and and I suspect, you don't agree with that. So just be great to hear more about your view on some of the biggest implications of AI, on the business. I know you guys been investing for a number of years here, thank you. Yeah, yeah, I want to weigh in on that 1. Uh, um, AI is our friend.

He is one of the trusted.

Leaders of the firm is also the co head of equities with Alan Thomas and they've done a phenomenal job in equities, but the Asia strategy has been one where we have a really integrated the the effort as between the bankers and the sales and trading unit inside of.

Inside of <unk> Securities for the last many years there is a firm that has been a leader in Hong Kong from the nineties.

Right through Sars, and the handover and through our recent years, but the game changer for US of course was during the depths of the financial crisis to be.

Effectively married to our friends at <unk> and the <unk>.

Senior management team of the firm travels Tokyo.

Three sometimes four times a year to meet with our partners. They in turn are join US. They have two seats on our board. So we are deeply askance in Japan with <unk>.

It is just the latest generation of, uh, technology that is going to be part of the ecosystem and, uh, we're at an important moment. Uh, we're, uh, we're working with, uh, uh, Claude Mythos, uh, the beta version. And we are looking at, uh, different places inside of infrastructure, where we will just continue to—there'll just be continuous improvement, and that's going to go on with the firms that have the history that we have of cybersecurity infrastructure. Um, as the number one priority, this is not a new phenomenon. What is new is that we are beginning to evolve from pure efficiency exercises, where you could have, effectively, replacements of what might have been a, um, a call center or what, what might have been a, um, an operational function to automate.

Edward Pick: That efficiency and effectiveness transformation is super compelling. The efficiency we talked about, but what about the effectiveness where you can have the historical context as between the financial advisor and the client, where she is well aware of the past interactions and how that might drive, against certain market dynamics, future action? That co-piloting, I think, is something that Jed Finn, under the leadership of Andy Saperstein, is spending a lot of time on, where they effectively have corridors of super agents. They're going to be working to drive, again, efficiency and effectiveness across the portfolio and wealth.

Ted Pick: That efficiency and effectiveness transformation is super compelling. The efficiency we talked about, but what about the effectiveness where you can have the historical context as between the financial advisor and the client, where she is well aware of the past interactions and how that might drive, against certain market dynamics, future action? That co-piloting, I think, is something that Jed Finn, under the leadership of Andy Saperstein, is spending a lot of time on, where they effectively have corridors of super agents. They're going to be working to drive, again, efficiency and effectiveness across the portfolio and wealth.

Two.

Two ventures that were formed out 20 years ago, we expanded our capability across our research integrating the research and equities trading platform now we help.

Mfg monetize through the old bank of Tokyo Foreign exchange spot flow, which is incredibly powerful. So this is one of the classic cases, where.

A great idea some somewhat out of necessity was nurtured through management teams.

Through the years of Mr. Gorman and now this management team has really gone even further to to think about what aligns 3.0 could look like which is to really tap into that.

The demography and opportunity that's inside of Japan. So the ecosystem works. We also have a world class wealth business inside of Hong Kong that caters to the Asia Pac region, that's quietly $1 billion business and then the last piece I'd say is some of this is location strategy.

Edward Pick: I'd also say that this phenomenon is taking place inside of our equities business, where, as you know, we have a leadership business where we are able to take some of the complex questions that are asked, but sort of the technical type, and they can be answered directly by a client agent inside of the electronic trading platform. Of course, there are the numerous examples inside of core infrastructure where efficiency around classic operational flow and surveilling is afoot. There will be the continuous arms race of one AI platform versus another. This is not new, and this is something we consider to be additive to what we have, which is world-class technology, world-class cyber defense, and then the best trusted advisors sitting with the client.

Ted Pick: I'd also say that this phenomenon is taking place inside of our equities business, where, as you know, we have a leadership business where we are able to take some of the complex questions that are asked, but sort of the technical type, and they can be answered directly by a client agent inside of the electronic trading platform. Of course, there are the numerous examples inside of core infrastructure where efficiency around classic operational flow and surveilling is afoot. There will be the continuous arms race of one AI platform versus another. This is not new, and this is something we consider to be additive to what we have, which is world-class technology, world-class cyber defense, and then the best trusted advisors sitting with the client.

Routine tasks, like, moving money to something that over time becomes a productivity phenomenon and you know, that that efficiency and Effectiveness transom is super, uh, super compelling. Uh, the efficiency we talked about. But what about the effectiveness where you can, uh, have the historical context as between the financial advisor and the client where she is, well, aware of the, uh, uh, the uh, the past interactions and how that might drive against certain market dynamics, uh, future action. And so that, uh, co-piloting. Um, I think is is something that, uh, uh, Jed Finn under, um, the leadership of Andy saperstein is spending a lot of time on where they effectively have corridors of super agents that are going to be working to drive again, efficiency and Effectiveness across the portfolio in. Well, I I also say that, uh, this phenomenon is

Decided years ago to exit a number of places we exited the Russia ecosystem, we lightened up on noncore parts of.

<unk>.

The emerging world, but we really double down on places like Korea, and Taiwan, and then importantly in India, where we not only have 15000 people is an infrastructure phenomenon, but we have.

Taking place inside of our, uh, our equities business, whereas, you know, we have a, a leadership business. Uh, where we, uh, are able to take some of the, uh, complex questions that are asked, but sort of of the, of the technical type, and they can be answered, uh, directly by a client agent inside of the electronic, uh, trading platform. And then, of course, there are the numerous examples inside of core infrastructure, where, uh, efficiency around, uh, classic operation.

A world class investment banking and trading business. So this is not sort of the the region do sure. This is a region where we've.

We've had a leadership position or actually I think we've attracted some incremental competition into the space. So in a way that actually makes the challenge harder now because I think people have seen the success, but that's the nature of our business and we just keep ongoing is as these countries are re echo ties they take great companies and they want it.

Edward Pick: That is ultimately, again, the secret sauce, whether it's the investment banker, the asset manager coverage officer, or, importantly, the wealth manager and financial advisor. That is the key.

Ted Pick: That is ultimately, again, the secret sauce, whether it's the investment banker, the asset manager coverage officer, or, importantly, the wealth manager and financial advisor. That is the key.

List them and they want to effectively also deal with the issues around <unk>.

Ational flow and uh, and surveilling is is a foot. So there will be, um, the uh, continuous, uh, arms race of 1 a platform versus another, but this is not new. And this is something we considered to be additive to what, uh, we have, which is world class technology, world class, cyber defense. And then the best trusted advisors sitting with the client that is ultimately again the secret sauce, whether it's the investment banker. Uh the asset manager coverage officer or importantly, the wealth management financial advisor, that is the key.

Devin Ryan: Thank you, Ted. Appreciate that color. As a follow-up, want to touch just on Asia. 45% of the firm's sequential revenue improvement came from Asia. It's only 16% of firmwide revenues. I know a lot of that delta is from prime brokerage, but can you just expand a bit on the momentum in Asia? How sustainable is it, further growth opportunity in the region, just given the big step up we've been seeing here?

Lack of energy independence, or where they sit in the AI ecosystem, you can expect us some very interesting M&A and hybrid activity and Thats right in the in.

Sweet spot for corporate finance coverage. So we like we like we like that region very much and we like the growth potential and it's of course also very closely risk managed.

Edward Pick: Well, it's a question of people. The person who runs Asia for Morgan Stanley is Gokul Laroia, who's a ± three-decade veteran of the firm. He's one of the trusted leaders of the firm. He's also the Co-Head of Equities with Alan Thomas, and they've done a phenomenal job in equities. The Asia strategy has been one where we have really integrated the effort as between the bankers and the sales and trading unit inside of Institutional Securities for the last many years. This is a firm that has been a leader in Hong Kong from the 1990s, right through SARS and the handover and through recent years.

Ted Pick: Well, it's a question of people. The person who runs Asia for Morgan Stanley is Gokul Laroia, who's a ± three-decade veteran of the firm. He's one of the trusted leaders of the firm. He's also the Co-Head of Equities with Alan Thomas, and they've done a phenomenal job in equities. The Asia strategy has been one where we have really integrated the effort as between the bankers and the sales and trading unit inside of Institutional Securities for the last many years. This is a firm that has been a leader in Hong Kong from the 1990s, right through SARS and the handover and through recent years.

Yeah.

Uh, thank you, Ted. Appreciate that, caller. Um, as a follow-up, I want to touch on Asia. Forty-five percent of the firm's sequential revenue improvement came from Asia—it's only 16% of firmwide revenues. I know a lot of that delta is from Prime, from Prime Brokerage, but can you just expand a bit on the momentum in Asia? How sustainable is it? Is there further growth opportunity in the region, just given the big step up we've been seeing here?

We'll move to our next question from Glenn Schorr with Evercore.

Good morning, Glenn Hello, there.

I Wonder if we could talk about.

ECM and.

Equity pipeline for a SEC.

Well, um, it's a question of people. Um, the the person who runs Asia for uh uh for Morgan Stanley is Goya. Who is a A plus or minus 3 decade, uh, veteran of the firm and uh,

When the markets are strong, it's a little bit better, but I know it is building and I know theres, some really big ones out there that might that are talked about coming but what was interesting.

Angles on this possible does that.

It seems like some of them are very partially.

Big retail location.

Sure.

If that's true how do you use the trade as part of your.

Selling process and then just talk about the overall pipeline in general would be helpful. So I appreciate that.

Edward Pick: The game changer for us, of course, was during the depths of the financial crisis to be effectively married to our friends at MUFG, and the senior management team of the firm travels to Tokyo three, sometimes four times a year to meet with our partners. They, in turn, join us. They have two seats on our board. We are deeply ensconced in Japan with two ventures that were formed 20 years ago. We expanded our capability across our research, integrating the research and equities trading platform. Now we help MUFG monetize through the old Bank of Tokyo foreign exchange spot flow, which is incredibly powerful. This is one of the classic cases where a great idea somewhat out of necessity was nurtured through management teams through the years of Mr. Gorman.

Yes.

Ted Pick: The game changer for us, of course, was during the depths of the financial crisis to be effectively married to our friends at MUFG, and the senior management team of the firm travels to Tokyo three, sometimes four times a year to meet with our partners. They, in turn, join us. They have two seats on our board. We are deeply ensconced in Japan with two ventures that were formed 20 years ago. We expanded our capability across our research, integrating the research and equities trading platform. Now we help MUFG monetize through the old Bank of Tokyo foreign exchange spot flow, which is incredibly powerful. This is one of the classic cases where a great idea somewhat out of necessity was nurtured through management teams through the years of Mr. Gorman.

It's a great question and I think that you continue to see the democratization sort of products more broadly.

One of the reasons when you actually think about the acquisition of equity Zen and what we're trying to do right. So we see a place where there is stuff within the private demand, it's actually already beginning to transact, we see that as a technology that can help us we have already begun to see offerings come through that platform.

I mean, we would expect that to continue so that is a market as you know it's growing there are a lot of places within the retail channel. The different companies are looking to attract and we have that channel in those capabilities. So you have it already existing on the adviser side you have an existing.

To some degree when you think about the underlying E trade side, but what you really need is to make sure that you also have the private market ecosystem, even necessarily before you see an IPO come through the marketplace that you are able to have a different access in different corporate relationships and those are the pieces that jet and Andy have.

Edward Pick: Now this management team has really gone even further to think about what Alliance 3.0 could look like, which is to really tap into the demography and opportunity that's inside of Japan. The ecosystem works. We also have a world-class wealth business inside of Hong Kong that caters to the Asia Pacific region. That's quietly a billion-dollar business. The last piece I'd say is some of this is location strategy. We decided years ago to exit a number of places. We exited the Russia ecosystem. We lightened up on non-core parts of the emerging world. We really doubled down on places like Korea and Taiwan, and then importantly, in India, where we not only have 15,000 people as an infrastructure phenomenon, but we have a world-class investment banking trading business. This is not sort of the region du jour.

Ted Pick: Now this management team has really gone even further to think about what Alliance 3.0 could look like, which is to really tap into the demography and opportunity that's inside of Japan. The ecosystem works. We also have a world-class wealth business inside of Hong Kong that caters to the Asia Pacific region. That's quietly a billion-dollar business. The last piece I'd say is some of this is location strategy. We decided years ago to exit a number of places. We exited the Russia ecosystem. We lightened up on non-core parts of the emerging world. We really doubled down on places like Korea and Taiwan, and then importantly, in India, where we not only have 15,000 people as an infrastructure phenomenon, but we have a world-class investment banking trading business. This is not sort of the region du jour.

Recent years. Uh, but the game changer for us, of course, was, uh, during the depths of the financial crisis to be, uh, um, effectively married to our friends at mufg. And, uh, the senior management team of the firm travels to Tokyo, uh, 3 sometimes 4 times a year to meet with our partners day in turn. Join us. They have 2 seats on our board. So we are, uh, deeply as sconed in Japan with, uh, 2, uh, 2 Ventures that were formed 20 years ago. Uh, we uh, expanded our capability, across our research, integrating the research and, uh, equities trading platform. Now, we help, uh, uh, MFG monetize through the old Bank of Tokyo foreign exchange spot flow, which is incredibly powerful. So, this is 1 of the classic cases where, um, a great idea. Uh, some somewhat out of necessity, uh, was nurtured, uh, through management teams, uh, uh, through, uh,

Really begun to lay the foundation and build over time. So it's not just one thing I would say that it's a build across the other and I think we have that offering to many of these companies that are looking for our ability to transact within retail.

And do you have any numbers you could throw at the pipeline are some soft details.

<unk> all been waiting for years on the sponsored led pipeline, but in general it feels like a backdrop that should be improving just curious on your take.

The years of uh, Mr Gorman. And now this management team has really uh Gone even further to uh to think about what aligns 3.0 could look at like, which is to really tap into, uh, the demography and opportunity. That's inside of Japan. So the ecosystem works. We also have a world class wealth business inside of Hong Kong that caters to the Asia Pac region. That's quietly, a billion dollar business, uh and then the last piece I'd say is some of this is location strategy. Uh we um decided years ago to exit a number of places.

Yes, Glenn what I would say on that is.

As you know the PE firms are sitting on a trillion plus of dry powder there.

There are.

500 companies plus that are privately held with an average duration of five years that are worth.

Edward Pick: This is a region where we've had a leadership position. Actually, I think we've attracted some incremental competition into the space. In a way, that actually makes the challenge harder now because I think people have seen the success. That's the nature of our business, and we just keep on going. As these countries re-equitize, they take great companies, and they want to list them, and they want to effectively also deal with the issues around lack of energy independence or where they sit in the AI ecosystem. You can expect some very interesting M&A and hybrid activity, and that's right in the sweet spot for corporate finance coverage. We like that region very much, and we like the growth potential. It's, of course, also very closely risk managed.

Ted Pick: This is a region where we've had a leadership position. Actually, I think we've attracted some incremental competition into the space. In a way, that actually makes the challenge harder now because I think people have seen the success. That's the nature of our business, and we just keep on going. As these countries re-equitize, they take great companies, and they want to list them, and they want to effectively also deal with the issues around lack of energy independence or where they sit in the AI ecosystem. You can expect some very interesting M&A and hybrid activity, and that's right in the sweet spot for corporate finance coverage. We like that region very much, and we like the growth potential. It's, of course, also very closely risk managed.

A 1 billion plus and the entire ecosystem of private companies hard to know is it are there were three trillion or five trillion, but they're they're worth multiple trillions and so the question now is.

Okay.

March.

I think the reality is.

I'll give you a bounce.

Yes, I think that on one hand.

Cedric.

Sure.

Yeah.

Cap group.

On balance sheets, and the earnings growth and of course now if the war is contained 7000 S&P.

And our NASDAQ working its way back to so pretty pretty constructive backdrop.

Places we exited the Russia ecosystem. Uh, we lightened up on non-core parts of, uh, of, uh, the emerging world. Uh, but we really doubled down on places like, uh, Korea and Taiwan, and then importantly, in India, where we not only have 15,000 people as infrastructure phenomenon, but we have, uh, a world-class Investment Banking trading business. So this is not sort of the, uh, the region du jour. This is, uh, a region where we've, um, uh, we've had a leadership position. Actually, I think we've attracted some incremental competition into the space. So, in a way, that actually makes the challenge harder now, uh, because I think people have seen the success, but that's the nature of our business, and, uh, we just keep on going as these countries re-equip them. And they want to effectively, also deal with the issues around a lack of energy independence, or where they sit in the AI ecosystem—you can expect some very interesting M&A and hybrid activity.

The fact is that the sponsors as you know we'd like to crystallize some of this portfolio, especially the publicly traded ones. So they can keep.

This process going of effectively deploying and raising.

And that's right in the, you know, in the sweet spot for corporate finance coverage. So, uh, we like, we like, we like that region very much. And, uh, we like the growth potential, and it's, of course, also, uh, very closely risk managed.

Operator: We'll move to our next question from Glenn Schorr with Evercore.

I do think that.

Edward Pick: Morning, Glenn.

Ted Pick: Morning, Glenn.

Not every company is going to be able to make it.

Glenn Schorr: Hello there. I wonder if we could talk about ECM and equity pipeline for a sec. Usually when the market's this strong, it's a little bit better, but I know it's building, and I know there's some really big ones out there that are talked about coming. I thought one of the interesting angles on this was also that it seems like some of these big IPOs are very partial towards having a big retail allocation. Just curious if you thought that's true, how you use E-Trade as part of your selling process, and then just talk about the overall pipeline in general would be helpful. Appreciate that.

We'll move to our next question from Glenn Shore with evercore.

Good morning, Glenn.

As an IPO in this environment, some there's going to be some selection.

Hello there.

And what we're seeing is that the largest asset managers the largest private equity firms.

Some of whom have very high quality companies are likely to be the first to move and the data point I'd give you is that there are.

Increased numbers of bake offs with sponsors and again think of it the way Dan sink which would describe about.

Corporates.

Public private asset managers effectively.

Competition and.

Okay.

Clear.

Yes.

Sharon Yeshaya: Yeah. It's a great question, and I think that you do continue to see the democratization sort of products more broadly. That's one of the reasons when you actually think about the acquisition of EquityZen and what we're trying to do, right? We see a place where there's stuff within the private domain that's actually already beginning to transact. We see that as a technology that can help us. We have already begun to see offerings come through that platform, and we would expect that to continue. That is a market. As you know, it's growing. There are a lot of places within the retail channel that different companies are looking to attract, and we have that channel and those capabilities. You have it already existing on the advisor side. You have it existing to some degree when you think about the underlying E-Trade side.

Okay.

Um, I wonder if we could talk about, uh, ECM and Equity pipeline for a sec, um, usually when the markets are the strong, uh, it's a little bit better, but I know it's building and I know there's some really big ones out there that might uh, that are talked about coming. But thought 1 of the interesting uh, angles on this was also that uh, it it seems like some of these big IPOs are very partial towards having a big uh, retail allocation and uh, just curious, if you thought, if you thought that's true. How you use E Trade is part of your uh selling process. And then just talk about the overall pipeline in general, will be helpful. So appreciate that.

A number of the bake offs are to track how can we make a sale or can we list and I think if.

If we can get through a period now where we resumed some of the narrative that we had going into 2026, which was a very strong one.

I think what Youll see is effectively the.

The resumption of pipeline hitting the marketplace, whether it's through outright sales to other sponsors or likely to strategics or partial sales through ipos, which is kind of a call that we collectively made.

Going into the year.

But I do think there is some selection.

Yeah. So um it's a great question and I think that you do continue to see the democratization sort of of products, more broadly, uh, that's 1 of the reasons when you actually think about the acquisition of of equity Zen and what we're trying to do, right? So we see a place where there's stuff within the private domain, that's actually already beginning to transact. We see that as a technology that can help us, we have already begun to see offerings come through that platform and we would expect that to continue. So that is a market. As you know, it's growing, um, there are a lot of places within the retail channel that different companies

There are there are going to be mid cap or small and mid cap companies that arent going to be ready to make it as public companies because the reality is that the bar is very high for a public manager and investors as you know against the resiliency.

Sharon Yeshaya: What you really need is to make sure that you also have the private market ecosystem, even necessarily before you see an IPO come through the marketplace, that you're able to have different access and different corporate relationships. Those are the pieces that Jed and Andy have really begun to lay the foundation and build over time. It's not just one thing. I'd say that it's a build across the other, and I think we have that offering to many of these companies that are looking for ability to transact within retail.

Been demonstrated across the sector and the C suite to cope with this period so comprehensive.

Our offer.

Thanks.

John.

For private equity sponsors to begin.

Steadfastly.

To liquefy chunks of their portfolio in order to get to the next which is to deploy capital into the next leg of the cycle I think that has increased and I think what you should expect to see is a reasonable drumbeat of leading sponsor and leading companies hitting either the <unk>.

Glenn Schorr: Do you have any numbers you could throw at the pipeline or some soft details? We've all been waiting for years on the sponsor-led pipeline, but in general, it feels like a backdrop that should be improving. Just curious on your take.

And build over time. So it's not just 1 thing. I'd say that it's a build across the other and I think we have that offering to many of these companies that are looking for uh ability to transact within retail.

Private or public markets.

Edward Pick: Yeah, Glenn, what I'd say on that is, as you know, the PE firms are sitting on $1 trillion+ of dry powder. There are 1,500 companies plus that are privately held with an average duration of five years that are worth $1 billion+. The entire ecosystem of private companies, hard to know. Are they worth $3 trillion or $5 trillion? They're worth multiple trillions. The question now is, do they come, and how do the markets feel? I think the reality is, I give you a balanced answer on this. I think that on the one hand, you see the earnings power of the large-cap group, the balance sheets in the earnings growth, and of course, now if the war is contained, 7,000 S&P, and NASDAQ working its way back too, pretty constructive backdrop.

Ted Pick: Yeah, Glenn, what I'd say on that is, as you know, the PE firms are sitting on $1 trillion+ of dry powder. There are 1,500 companies plus that are privately held with an average duration of five years that are worth $1 billion+. The entire ecosystem of private companies, hard to know. Are they worth $3 trillion or $5 trillion? They're worth multiple trillions. The question now is, do they come, and how do the markets feel? I think the reality is, I give you a balanced answer on this. I think that on the one hand, you see the earnings power of the large-cap group, the balance sheets in the earnings growth, and of course, now if the war is contained, 7,000 S&P, and NASDAQ working its way back too, pretty constructive backdrop.

The macro environment our permits.

And the, and the, of any numbers you could throw at the pipeline, or, or some soft details. Uh, you know, we've all been waiting for years on the sponsored lead pipeline, but in general it feels like a backdrop that should be improving. Just curious on your take.

Okay.

We will move to our next question from Mike Mayo with Wells Fargo Securities.

Hi.

Hey, Michael brings more hey can you elaborate more on the financing business within trading.

I assume thats for both private credit and liquid markets and Thats just been growing so much.

For the last year for this decade and comment on the resiliency of that does that mean trading is less volatile than it used to be or if and when we get a bear market.

Shrink back down.

Sure. Thank you so much Mike for the question.

That is a stabilizer I would say over the course of the last 10 years and you've been covering us for nearly two decades I think the.

Yeah, Glenn. I what I say on that is, um, as you know, the, uh, PE firms are sitting on a trillion plus of dry powder. Uh, there are, uh, 1,500 companies plus that are, uh, privately held with an average duration of 5 years, that are worth, uh, a billion plus. And the entire ecosystem of private companies, you know, hard to know. Is it are they worth 3 trillion or 5 trillion but they're they're worth multiple trillions? And so the question now is, you know, do they come and and how do the markets feel? And I think the the reality is um, I I give you a balanced answer on this. I think that on the 1 hand uh you see the earnings power of the a large cap group.

The last decade, and fixed income has been marked by refocusing our business on clients and also creating durable sources of revenue where you point out too is one of those sources of revenue that is to some degree.

Edward Pick: The fact is that the sponsors, as you know, would like to crystallize some of this portfolio, especially the publicly traded ones, so they can keep this process going of effectively deploying and raising. I do think that not every company is going to be able to make it as an IPO in this environment. There's going to be some selection. What we're seeing is that the largest asset managers, the largest private equity firms, some of whom have very high-quality companies, are likely to be the first to move. The data point I'd give you is that there are increased numbers of bake-offs with sponsors.

Ted Pick: The fact is that the sponsors, as you know, would like to crystallize some of this portfolio, especially the publicly traded ones, so they can keep this process going of effectively deploying and raising. I do think that not every company is going to be able to make it as an IPO in this environment. There's going to be some selection. What we're seeing is that the largest asset managers, the largest private equity firms, some of whom have very high-quality companies, are likely to be the first to move. The data point I'd give you is that there are increased numbers of bake-offs with sponsors.

The intent is to be more stable on a balanced business, but as Ted said it is a credit risk business. So overall all of those types of products are looking at underlying credit looking at counterparty risks understanding both risk limits as well as the diversification the structural protections that you might have the various haircuts.

Uh, the balance sheets in the earnings growth and of course now if the war is contained 7,000 S&P um uh and a NASDAQ working its way back to so pretty, pretty constructive backdrop. Um the fact is that the sponsors as you know would like to crystallize some of this portfolio especially the publicly traded ones so they can keep uh this process going of effectively deploying and raising.

Well I think is important specifically about the private credit businesses. As we started the call is that you also have this ability to look down on a loan by loan basis, and we have the ability to both mark and margin across that so there is a lot there within the ecosystem, but yes that has been a stabilizing factor within our fixed income revenue result.

Edward Pick: Again, think of it the way Dan Simkowitz would describe it, is think about sort of corporates, think about public asset managers, private asset managers as effectively competition and a horizontal to see where capital clears, is the way I'd put it. A number of these bake-offs are two-track. Can we make a sale or can we list? I think if we can get to a period now where we resume some of the narrative that we had going into 2026, which was a very strong one, I think what you'll see is effectively the resumption of pipeline hitting the marketplace, whether it's through outright sales to other sponsors, or likely to strategics, or partial sales through IPOs, which is kind of the call that we collectively made going into the year. I do think there is some selection.

Ted Pick: Again, think of it the way Dan Simkowitz would describe it, is think about sort of corporates, think about public asset managers, private asset managers as effectively competition and a horizontal to see where capital clears, is the way I'd put it. A number of these bake-offs are two-track. Can we make a sale or can we list? I think if we can get to a period now where we resume some of the narrative that we had going into 2026, which was a very strong one, I think what you'll see is effectively the resumption of pipeline hitting the marketplace, whether it's through outright sales to other sponsors, or likely to strategics, or partial sales through IPOs, which is kind of the call that we collectively made going into the year. I do think there is some selection.

Add to that is I think the durability of the lending businesses.

Is good.

<unk>.

It.

It kind of speaks to the proposition around valuation is repeatable P&L, but one of the things that Sharon and I've observed.

Over the last number of quarters.

Leadership groups in both and this is I think part of your underlying question, Mike as well in equities and fixed income at both really look to try to.

Um, I do think that uh not every company is going to be able to make it uh as an IPO in this environment. Some there's going to be some selection. Uh and what we're seeing is that the largest asset managers, the largest private Equity firms. Uh, some of whom have very high quality, companies are likely to be the first to move and the data point I'd give you is that there are, um, increased numbers of big offs, uh, with sponsors and again, think of it. The way, uh, Dan Sim quotes would describe it is think about sort of corporates think about public asset, managers private asset managers, there's effectively uh competition and uh a horizontal to see where Capital clears um is the way I'd put it. And a a number of these baked offs are 2 tracks. Uh, can we make a sale uh, or can we list? And I think um, if we can get to a period now where we resume some of the narrative that we

Build.

Had going into 2026, which was a very strong 1.

A well governed.

<unk> trading business effectively the moving of inventory market, making taking the world class content that cadence you already has and getting it to clients and all kinds of different forms not just traditional.

Big conferences, but finding creative ways to get institutions to effectively act on bespoke ideas.

Edward Pick: There are going to be mid-cap or small end of mid-cap companies that aren't going to be ready to make it as public companies because the reality is that the bar is very high for public manager investors, as you know, against the resiliency that's been demonstrated across sectors in the C-suite through COVID and now this period. The comps, in a sense, are tougher. I do think that the desire for private equity sponsors to begin steadfastly to liquefy chunks of their portfolio in order to get to the next, which is deploy capital into the next leg of the cycle, I think that has increased, and I think what you should expect to see is a reasonable drumbeat of leading sponsor and leading companies hitting either the private or public markets, if the macro environment permits.

Ted Pick: There are going to be mid-cap or small end of mid-cap companies that aren't going to be ready to make it as public companies because the reality is that the bar is very high for public manager investors, as you know, against the resiliency that's been demonstrated across sectors in the C-suite through COVID and now this period. The comps, in a sense, are tougher. I do think that the desire for private equity sponsors to begin steadfastly to liquefy chunks of their portfolio in order to get to the next, which is deploy capital into the next leg of the cycle, I think that has increased, and I think what you should expect to see is a reasonable drumbeat of leading sponsor and leading companies hitting either the private or public markets, if the macro environment permits.

In a moment, where you had to take a view when we had so called good volume at the beginning of the year and we have the content available for you to.

Express that view.

Then we effectively.

Ill take that content and offer market access in that market access is.

Could be in the on the cash test, where the equity guys did a fantastic job and then importantly in the derivatives business that has really grown into a classic market, making risk management business around Morgan Stanley's content.

Uh, I think what you'll see is, effectively, uh, the resumption of pipeline hitting the marketplace, whether it's through outright sales to other sponsors, or likely to strategic or partial sales through IPOs, which is kind of the call that we collectively made, um, uh, going into the year. Uh, but I, but I do think there is some selection. I, I, there are, uh, there are going to be, uh, midcap or a small end of midcap companies that aren't going to be ready to, uh, make it as public companies because the reality is that the bar is very high for, uh, public manager investors, as you know, against the resiliency that's been demonstrated across sectors in the C-suite through COVID and now this period. So, the comps, in a sense, um, are tougher, um, but I do think that the desire for private equity sponsors to begin.

<unk> and fixed income again contained risk alongside of largely it being a financing business, but doing that around clients wanting to express a view. So one of the things we kind of look at is having enough of the durable financing revenues throughout these businesses by the <unk>.

Similarly in wealth management, there is an element of wanting to expand the lending product, but also we're looking very closely at darts and other indicators of just transaction activity, whether it's in cash form or derivatives form and the answer is we want bulb, because theyre going to be periods, where the markets are not going to be.

Steadfastly to liquify chunks of their portfolio, in order to get to the next, which is deploy capital into the next leg of the cycle. I think that has increased and I think what you should expect to see is a reasonable drumbeat of leading sponsor and leading companies hitting either the private or public markets. Uh, if, uh, the

Macro environment up permits.

Operator: We'll move to our next question from Mike Mayo with Wells Fargo Securities.

Edward Pick: Hi.

Mike Mayo: Hi.

We'll move to our next question. From Mike Mayo with Wells Fargo Securities.

Edward Pick: Hey, Mike.

Ted Pick: Hey, Mike.

Mike Mayo: Hey, can you elaborate more on the financing business within trading? I assume that's for both private credit and liquid markets. That's just been growing so much.

Hi. Um, am I more on? Hey, uh, can you elaborate more on the financing business within Trading?

So due to activity.

They're either it'll be risk off or just people sort of set and what they want to do in which case a financing revenues are the kind of durable.

Mike Mayo: For the last year, for this decade, a comment on the resiliency of that, does that mean trading is less volatile than it used to be? If and when we get a bear market, does this shrink back down? Thanks.

I assume that's for both your private credit and liquid markets, and that's just in growing so much the last year for this decade.

P&L that allow you to sort of sustain the balance of the firm, but at the same time, we want to have the right levels of activity around times when Morgan Stanley content matters. When we're delivering something that actually is differentiated and importantly can be acted upon and then we wish to try to.

Sharon Yeshaya: Sure. Thank you so much, Mike, for the question. There is a stabilizer, I would say, over the course of the last 10 years. I mean, you've been covering us for nearly two decades, I think. The last decade in fixed income has been marked by refocusing our business on clients and also creating durable sources of revenue. What you point out too is one of those sources of revenue that is to some degree, the intent is to be more stable on a balanced business. As Ted said, it is a credit risk business. Overall, all of those types of products are looking at underlying credit, looking at counterparty risk, understanding both risk limits, as well as the diversification, the structural protections that you might have, the various haircuts.

And a comment on the resiliency of that—does that mean trading is less volatile than it used to be, or if and when we get a bear market, does this shrink back down? Thanks.

And a way to express that through our liquid markets and end market access. So it's an excellent question because I think one doesn't want to go too far to one end of the continuum or the other but the fact that we really have built this financing business with some of our smartest people throughout the firm.

And that we have these credits as well structured.

And focused on as we have over the last number of years allows us to have an interesting activities based business alongside of it and that again is not just in the institutional securities business very much in the wealth business as well.

Sharon Yeshaya: What I think is important specifically about the private credit business, as we started the call, is that you also have this ability to look down on a loan-by-loan basis. We have the ability to both mark and margin across that. There's a lot there within the ecosystem, but yes, that has been a stabilizing factor within our fixed income revenue results.

Yes.

Sticking and thank you for that answer I was thinking to that topic of risk and following up on the other question.

All I have are the headlines in the paper about and traffic in the midst of model.

The question, uh, there is a stabilizer. I would say over the course of the last 10 years. I mean, you've been covering us for nearly 2 decades. I think, uh, the last decade in fixed income has been marked by refocusing, our business on clients and also creating durable sources of revenue. What you point out to is 1 of those sources of revenue. That is to some degree, you know, that the intent is to be more stable on a balanced business, but as Ted said, it is a credit risk business. So overall, all of those types of products are looking at underlying credit, looking at counterparty risk, understanding, both risk limits, uh, as well as the diversification. The structural protections that you might have, uh, the various haircuts. What I think is important specifically about the private credit businesses, as we started the call, is that you also have this ability to look down on a loan by loan basis, and we have the ability to both Mark and margin across that, so there's a lot there within the ecosystem, but yes, that has

Gives me and.

Edward Pick: What I would add to that is I think the durability of the lending businesses is good. Of course, it kind of speaks to the proposition around valuation as repeatable P&L. One of the things that Sharon and I have observed over the last number of quarters, the leadership groups in both, and this is, I think, part of your underlying question, Mike, as well, in equities and fixed income, have both really looked to try to build a well-governed, classic trading business, effectively, the moving of inventory, market making.

Ted Pick: What I would add to that is I think the durability of the lending businesses is good. Of course, it kind of speaks to the proposition around valuation as repeatable P&L. One of the things that Sharon and I have observed over the last number of quarters, the leadership groups in both, and this is, I think, part of your underlying question, Mike, as well, in equities and fixed income, have both really looked to try to build a well-governed, classic trading business, effectively, the moving of inventory, market making.

And the articles instead of only a few players.

Players had that model it sounds like you say you have the beta version.

The anthropic knit this motto and.

It.

Again the articles.

You said that you guys were summoned down to D C and that people are extremely concerned.

And.

You say AI is your friend and you should be a beneficiary not a victim, but I'm just wondering about the cyber risk and how that may have increased and what extra steps you're taking now that youre looking to the model if you're allowed to disclose what you've learned.

Has been a stabilizing Factor within our fixed income Revenue results. Uh, what I would add to that is I think the durability of the lending businesses is, is, uh, is good, of course. Um, it, uh, it, it kind of, uh, speaks to the proposition around. Valuation is, uh, repeatable p&l. Uh, but 1 of the things that, uh, Tron and I have observed, uh, over the last number of quarters. The the leadership groups in both? Uh, and this is, I think part of your underlying question, Mike as well.

Well, we we have the we have the regular way meetings.

Edward Pick: Taking the world-class content that Katy Huberty has, and getting it to clients in all kinds of different forms, not just traditional big conferences, but finding curated ways to get institutions to effectively act on bespoke ideas in a moment where you had to take a view when we had so-called good vol at the beginning of the year, and we have the content available for you to express that view. We effectively take that content and offer market access. That market access could be on the cash desk, where the equities guys did a fantastic job. Importantly, in the derivatives business, that has really grown into a classic market-making, risk management business around Morgan Stanley's content. Similarly, in fixed income, again, contained risk alongside of largely it being a financing business, but doing that around clients wanting to express a view.

Ted Pick: Taking the world-class content that Katy Huberty has, and getting it to clients in all kinds of different forms, not just traditional big conferences, but finding curated ways to get institutions to effectively act on bespoke ideas in a moment where you had to take a view when we had so-called good vol at the beginning of the year, and we have the content available for you to express that view. We effectively take that content and offer market access. That market access could be on the cash desk, where the equities guys did a fantastic job. Importantly, in the derivatives business, that has really grown into a classic market-making, risk management business around Morgan Stanley's content. Similarly, in fixed income, again, contained risk alongside of largely it being a financing business, but doing that around clients wanting to express a view.

In Washington the.

Financial services Forum, so we happened to have been down there.

And the press has reported we all got together this is not new we've gotten together before cyber.

Cyber resiliency as you know has been a top priority at this firm and other firms and yes.

We are.

Permission on on I think it's the official name as Claude if those preview.

And certainly the.

The reality is that.

Cyber risk is.

And the ecosystem, Mike as you know.

An increasing threat broadly.

Broadly.

In equities and fixed income have both really looked to try to uh build uh a uh um a well-governed uh classic trading business effectively, the moving of inventory Market making taking the world class content that Katie huberty has, uh, and getting it to clients and all kinds of different forms, not just traditional, uh, you know, big conferences but finding curated ways to get uh, institutions uh, to effectively act on bespoke ideas. Um, in a moment where you had to take a view when we had so-called good vault at the beginning of the year and we have the content available for you to, uh, Express that view. Uh, and then we effectively, uh, take that content and offer Market access. And that market access is uh could be in the, on the cash desk, uh, where uh, the equities guys, did a fantastic job and then importantly, in a derivatives business

So.

Our ability to.

Along with others I assume continued.

Continue to act as a stalwart defense and our industry is as important so.

We will I would imagine collectively get better via that and then there will be other competitive products. This is another step in kind of the long tail technology transformation that we've been talking about that is once in a generation and now it's here.

Edward Pick: One of the things we kind of look at is having enough of the durable financing revenues throughout these businesses. By the way, similarly in Wealth Management, there is an element of wanting to expand the lending product, but also we're looking very closely at DARTs and other indicators of just transaction activity, whether it's in cash form or derivatized form. The answer is we want both because there are going to be periods where the markets are not going to be conducive to activity, where either it'll be risk-off or just people are sort of set in what they want to do, in which case the financing revenues are the kind of durable P&L that allow you to sort of sustain the balance of the firm.

Ted Pick: One of the things we kind of look at is having enough of the durable financing revenues throughout these businesses. By the way, similarly in Wealth Management, there is an element of wanting to expand the lending product, but also we're looking very closely at DARTs and other indicators of just transaction activity, whether it's in cash form or derivatized form. The answer is we want both because there are going to be periods where the markets are not going to be conducive to activity, where either it'll be risk-off or just people are sort of set in what they want to do, in which case the financing revenues are the kind of durable P&L that allow you to sort of sustain the balance of the firm.

Uh, that has really grown, uh, into a classic, uh, market-making risk management, uh, business around Morgan Stanley's content. Uh, similarly, in fixed income, again, contain risk alongside of, uh, largely, uh, it being a financing business, uh, but doing that around, uh, clients wanting to express a view. So, one of the things we kind of, uh, look at is having enough of the durable financing revenues throughout the

<unk>.

As you've heard others say cyber resiliency is a top priority at institutions like ours across all of our businesses and if the ecosystem risk is likely increasing because of the quality and muscular already of the model then we to need to get our.

<unk> is up and take it to another level and thats exactly what you'd expect.

We very much intend to do so.

But I want to say on the backend that a lot of the good.

Edward Pick: At the same time, we want to have the right levels of activity around times when Morgan Stanley content matters, when we're delivering something that actually is differentiated and, importantly, can be acted upon. We wish to try to find a way to express that through liquid markets and market access. It's an excellent question because I think one doesn't want to go too far to one end of the continuum or the other. The fact that we really have built this financing business with some of our smartest people throughout the firm, and that we have these credits as well-structured and focused on as we have over the last number of years, allows us to have an interesting activities-based business alongside of it. That, again, is not just in the Institutional Securities business, very much in the wealth business as well.

Ted Pick: At the same time, we want to have the right levels of activity around times when Morgan Stanley content matters, when we're delivering something that actually is differentiated and, importantly, can be acted upon. We wish to try to find a way to express that through liquid markets and market access. It's an excellent question because I think one doesn't want to go too far to one end of the continuum or the other. The fact that we really have built this financing business with some of our smartest people throughout the firm, and that we have these credits as well-structured and focused on as we have over the last number of years, allows us to have an interesting activities-based business alongside of it. That, again, is not just in the Institutional Securities business, very much in the wealth business as well.

That AI is going to bring both as an efficiency and effectiveness matter should not get dismissed because thats an important phenomenon that is going to continue to transform this firm.

We will take our last question from Erika Najarian with UBS.

Erica.

These businesses. And by the way, similarly, in wealth management. Uh, there is an element of wanting to expand the lending product, but also, we're looking very closely at darts and other indicators of just transaction activity, whether it's in cash form or derivatized form. And the answer is we, we want both because they're going to be periods where, uh, the markets are not going to be conducive to, to activity, uh, where, uh, either it'll be risk off or just, uh, people sort of set and what they want to do in which case the financing revenues are, the kind of durable, uh, uh, p&l that allow you to sort of sustain the balance of the firm. But at the same time, we want to have the right levels of activity around times. When Morgan Stanley content matters, when we're delivering something that actually is, differentiated and importantly can be acted upon and then we wish to try to find a way to express that, uh, through a liquid markets and, uh, and Market.

Morning, sorry to prolong an already long call, but just wanted to ask one question Erica Erica Erica Erica for you, we're very happy to take that last question.

You said.

Have you stepped in there you stepped in there what was that 25 bucks ago.

[laughter].

Hopefully some people are still listening so anyway.

So maybe my question. It may just be you and me, but I'm good I know exactly where good we're good.

Access. So it's, it's a, it's an excellent question, because I think 1 doesn't want to go too far to 1 end of the Continuum or the other, but the fact that we really have built this financing business with some of our smartest people, uh, throughout the firm. Uh, and that we have these credits, uh, as well structured. Uh, and uh, focused on. As we have over the last number of years, allows us to have an interesting activities, based business alongside of it. And that again is not just uh in the institutional Securities business.

Is very much in the well business as well.

Mike Mayo: Thank you for that answer. Sticking to that topic of risk and following up on the other question, all I have are the headlines in the paper about Anthropic and the Mythos model. Excuse me. The articles said only a few players had that model. It sounds like you say you have the beta version of the Anthropic Mythos model. Again, the articles said that you guys were summoned down to DC and that people were extremely concerned. You say AI is your friend and you should be a beneficiary, not a victim. I'm just wondering about the cyber risk and how that may have increased and what extra steps you're taking now that you're looking at the model, if you're allowed to disclose what you've learned.

Talking about organic growth opportunities any wells.

<unk> talked about.

Rod base drivers for M&A, you talked about AI being your friend and he can talk about advisers really being empowered by AI as we think about.

The pre tax margin of 30% in a quarter, where wealth comp had some upward pressure.

Should we think about the low thirties as sort of a.

of the, uh, anthropic nippes model and um,

High level, where you can sustain or.

Is there potential for upward pressure given all of the dynamics that you mentioned.

Yeah.

So much for the question Erika and thank you for noting all the places that we're investing.

We reaffirmed our targets at 30%.

And the strategy deck, and we did that for good reason, mainly because we want to be in a position that we can invest and so we've never really manage the margin quarter by quarter. We've said that multiple quarters. We always said when we were below 30% that we could cut our way very quickly to a 30%.

Edward Pick: Well, we have the regular way meetings in Washington, the Financial Services Forum. We happen to have been down there, and the press has reported, we all got together. This is not new. We've gotten together before. Cyber resiliency, as you know, has been a top priority at this firm and other firms. Yes, we are permissioned on, I think the official name is Claude Mythos Preview. Certainly, the reality is that cyber risk is, in the ecosystem, Mike, as you know, an increasing threat broadly. Our ability to, along with others, I assume, continue to act as a stalwart defense in our industry is important. We will, I would imagine, collectively get better via that, and then there will be other competitive products.

Ted Pick: Well, we have the regular way meetings in Washington, the Financial Services Forum. We happen to have been down there, and the press has reported, we all got together. This is not new. We've gotten together before. Cyber resiliency, as you know, has been a top priority at this firm and other firms. Yes, we are permissioned on, I think the official name is Claude Mythos Preview. Certainly, the reality is that cyber risk is, in the ecosystem, Mike, as you know, an increasing threat broadly. Our ability to, along with others, I assume, continue to act as a stalwart defense in our industry is important. We will, I would imagine, collectively get better via that, and then there will be other competitive products.

It, you know, again the articles, um, said that you guys were summoned down to D.C., and the people were extremely concerned, um, and, um, you say AI is your friend and you should be a beneficiary, not a victim, but I'm just wondering about the cyber risk and how that may have increased and what extra steps you're taking. Now that you're looking into the model, if you're allowed to disclose what you've learned,

Margin, but for us what's most important is that we're constantly investing and there are so many places within this business to invest in its paying off and over time, we will continue to move up the margin on its own organically, but the most important thing for US is to continue to put dollars to work to service, both our clients and advisor.

<unk> continued to be a category of one in this business.

Ladies and gentlemen. This concludes today's conference call. Thank you everyone for participating you may now disconnect and have a great day.

Well, we, uh, we have the, we have the, uh, regular way, uh, meetings, uh, in Washington, uh, the uh, Financial Services Forum. So we happen to have been down there. Uh, and the Press is reported, uh, we all got together. This is not new, we've gotten together before, uh, cyber resiliency, as you know, has been a top priority at this firm and other firms. Uh, and yes, we, uh, we are, uh, permissioned on, uh, on. I think it's the official name is Claude that, those, uh, preview and certainly, uh, the, the, the reality is that, uh, cyber risk is, uh, in the ecosystem. Mike? As you know, um, and increasing threat,

Broadly.

Edward Pick: This is another step in kind of the long tail technology transformation that we've been talking about that is once in a generation, and now it's here. As you've heard others say, cyber resiliency is a top priority at institutions like ours across all of our businesses. If the ecosystem risk is likely increasing because of the quality and muscularity of the model, then we too need to get our gloves up and take it to another level. That's exactly what you'd expect, and we very much intend to do so. I want to say on the back end that a lot of the good that AI is going to bring, both as an efficiency and effectiveness matter, should not get dismissed because that's an important phenomenon that's going to continue to transform this firm.

Ted Pick: This is another step in kind of the long tail technology transformation that we've been talking about that is once in a generation, and now it's here. As you've heard others say, cyber resiliency is a top priority at institutions like ours across all of our businesses. If the ecosystem risk is likely increasing because of the quality and muscularity of the model, then we too need to get our gloves up and take it to another level. That's exactly what you'd expect, and we very much intend to do so. I want to say on the back end that a lot of the good that AI is going to bring, both as an efficiency and effectiveness matter, should not get dismissed because that's an important phenomenon that's going to continue to transform this firm.

And so uh, you know, our ability to um along with uh others I assume uh continue to act as a stalwart defense in our industry. Uh is uh is important. So uh you know, we we we will I would imagine collectively get better via that and then there will be other competitive products. You know, this is another step in kind of the longtail technology transformation that we've been talking about that is Once in a generation and now it's here. And uh, as as you've heard others, say cyber resiliency is, uh, a top priority at institutions like ours across all of our businesses. And, uh, if the ecosystem risk is likely increasing because of the quality and muscularity of the model, then we too need to get our gloves up and take it to another level. And that's exactly what you

Expect and uh, we very much intend to do so.

Operator: We'll take our last question from Erika Najarian with UBS.

But but but but but I want to say on the back end that a lot of the good uh that AI is going to bring both as an efficiency and Effectiveness matter should not get dismissed because that's an important phenomenon that's going to continue to uh transformed uh this firm.

Edward Pick: Morning, Erika.

Ted Pick: Morning, Erika.

Erika Najarian: Morning. Sorry to prolong an already long call, but just wanted to ask one question.

We'll take our last question from Erika, najarian with UBS.

Edward Pick: Erika, for you, we're very happy to take that last question.

Ted Pick: Erika, for you, we're very happy to take that last question.

Morning, Erica.

Erika Najarian: Good. I'll make it up.

Edward Pick: You stepped in there. What was that, 25 bucks ago?

Ted Pick: You stepped in there. What was that, 25 bucks ago?

Morning. Sorry to prolong an already long call, but just wanted to ask one question, Erica. Erica, Erica, Erica, for you. We're very happy to take that last question.

You said, I'll make it.

Erika Najarian: Hopefully some people are still listening. Anyway, here's my question.

Edward Pick: It may just be you and me, but I'm good.

Ted Pick: It may just be you and me, but I'm good.

Erika Najarian: I know, exactly. We're good. You talked about organic growth opportunities in wealth. You talked about broad-based drivers for NNA. You talked about AI being your friend, and you talked about advisors really being empowered by AI. As we think about the pre-tax margin of 30% in a quarter where wealth comp had some upward pressure, should we think about the low 30s as sort of a high level where you can sustain, or is there potential for upward pressure given all of the dynamics that you mentioned?

Sharon Yeshaya: Yeah. Thank you so much for the question, Erika, and thank you for noting all the places that we're investing. We reaffirmed our targets at 30% in the strategy deck, and we did that for good reason, mainly because we want to be in a position that we can invest. We've never really managed the margin quarter by quarter. We've said that multiple quarters. We always said when we were below 30% that we could cut our way very quickly to a 30% margin. For us, what's most important is that we're constantly investing, and there are so many places within this business to invest, and it's paying off. Over time, we'll continue to move up the margin on its own organically.

You stepped in there. You stepped in there. What was that? 25 bucks ago. Um, hopefully some people are still listening. Um, so anyway, here's our. Here's my question, it may just be you and me but I'm I'm good. I know exactly we're good, we're good. Um, you talked about organic growth opportunities in wealth. You talked about, you know, broad-based um drivers for nna, you talked about AI, being your friend and you talked about advisors really being empowered by AI as we think about um the pre-tax margin of 30% in a quarter where wealth comp had some upward pressure, you know, should we think about the low 30s as sort of a, you know, high level where you can sustain or, you know, is there, you know, potential for Upward pressure? Given all of the Dynamics that you mentioned.

Sharon Yeshaya: The most important thing for us is to continue to put dollars to work to service both our clients and advisors and continue to be a category of one in this business.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you everyone for participating. You may now disconnect and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you, everyone, for participating. You may now disconnect, and have a great day.

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