Morgan Stanley is set to release its fourth-quarter earnings and share its strategy outlook, marking the first time under the leadership of new CEO Ted Pick.

Analysts' Consensus

According to Factset, analysts expect earnings per share (EPS) to come in at $1.07 for the fourth quarter, a decrease from $1.31 during the same period in the previous year. Looking ahead to the full year of 2023, analysts forecast EPS of $5.47, down from $6.36 in 2022.

Stock Performance and Investor Focus

With the stock currently trading around $90.00, it experienced a decline in October after the company reported disappointing third-quarter results. Investors will be particularly attentive to the performance of the investment banking unit in the upcoming report.

Challenges in the Investment Banking Sector

Morgan Stanley is not alone in facing challenges within the investment banking sector, which has been impacted by a slowdown in dealmaking. The upcoming report will provide insight into whether the company has overcome this slump.

Transition in Leadership

Following James Gorman's retirement, Ted Pick took on the role of CEO after heading Morgan Stanley's institutional securities business. This transition signifies a significant change for the company as Gorman previously shifted the business mix to favor wealth management.

Overall, the upcoming earnings report and strategy outlook will shed light on Morgan Stanley's performance and direction under Ted Pick's leadership.

Net New Assets: A Key Metric in Wealth Management

Morgan Stanley's wealth management unit has observed a significant decline in net new assets during the third quarter, reporting only $36 billion compared to the impressive $65 billion amassed during the same period in 2022. CEO James Gorman attributed this dip to idiosyncratic factors, but investors are eagerly awaiting signs that it was merely a temporary setback. The company's ambitious goal of reaching $10 trillion in assets within the next decade hinges on continuous growth. Currently, Morgan Stanley's wealth management unit boasts $4.8 trillion in assets, cementing its position as one of the nation's largest wealth managers.

During this period, the company's earnings call will provide valuable insights into the investment strategies deployed by retail investors. Surprisingly, Morgan Stanley revealed that its retail investors held a higher-than-usual 23% of their assets in cash during the third quarter – a 5% increase. With potential Federal Reserve rate cuts on the horizon, some clients may feel motivated to transition their funds from cash and cash equivalents into alternative assets.

Aside from the numbers, investors will be particularly interested in updates regarding Morgan Stanley's wealth management strategy. The company envisions a multitude of opportunities to foster closer ties between its workplace business and wealth management operations. By doing so, Morgan Stanley aims to establish a robust pipeline of future wealth clients.

Unveiling Insights on Retail Investors' Portfolios

During the third quarter, Morgan Stanley reported that its retail investors had allocated a noteworthy 23% of their assets towards cash holdings – a striking 5% increase from their typical allocation. With the potential of Federal Reserve rate cuts looming, clients may reconsider their investment decisions and seek alternatives instead of holding onto cash and cash equivalents.

A Glimpse Into Morgan Stanley's Wealth Management Strategy

In addition to monitoring financial performance, investors are keen to learn about Morgan Stanley's ongoing strategy within its wealth management division. Recognizing untapped potential, the company aims to cultivate stronger connections between its workplace business and wealth management operations. This synergy holds the promise of creating a steady stream of future wealth clients.

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