Morgan Stanley says IPO rebound is feeding its wealth business
CFO Sharon Yeshaya said workplace ties with private companies are helping turn IPO activity into wealth management asset growth.
By Daniel Okafor · Business Editor
3 min read
Morgan Stanley said a stronger IPO market helped lift its second-quarter results and feed its wealth management business. CFO Sharon Yeshaya told investors the bank is using relationships built through investment banking to bring employees and executives into longer-running advisory and savings products.
The bank reported second-quarter revenue of $21.3 billion, up 27% from a year earlier, according to Morgan Stanley. Diluted earnings per share rose 58%, with the company citing growth in investment banking and trading.
Yeshaya presented the quarter as evidence of a broader strategy rather than a market upswing alone. Morgan Stanley reported a record $148 billion in net new assets, more than twice the level from the same quarter last year.
On Wednesday’s earnings call, Yeshaya said more than half of those new assets came from employees at companies that went public during the quarter. She said Morgan Stanley has invested for years in its workplace channel, which gives the bank access to employees before and after liquidity events.
“We have about 70% of the top 100 unicorns by market cap in terms of our workplace pipeline,” Yeshaya said on the call. She added that the firm has focused on serving those companies early and described the effort as “a long game.”
IPOs feed a broader wealth strategy
Fortune reported that Morgan Stanley and Goldman Sachs served as joint lead underwriters for SpaceX’s June IPO, with Goldman Sachs taking the lead-left position and Morgan Stanley banker Michael Grimes playing a major role. For Morgan Stanley, the listing fit a wider model in which an underwriting relationship can lead to wealth management accounts tied to employees, founders and executives.
Yeshaya described IPOs as the entry point into fee-based advice. According to her comments, Morgan Stanley’s route from workplace relationships into wealth management includes 401(k) plans, E*Trade, savings products and Lead IQ, a tool that connects employees with financial advisers.
The bank’s goal, Yeshaya said, is to become the “principal financial advisor” across roughly 20 million client relationships. She said retention efforts, referral models, vesting schedules, timing differences and company capital structures all affect when workplace-related assets become revenue.
Morningstar also pointed to stronger operating momentum at the bank. The research firm raised its fair value estimate for Morgan Stanley to $184 from $165, citing a better outlook for trading revenue growth and about 640 basis points of margin expansion in 2026.
CEO Ted Pick also pointed to a healthier market for listings, telling investors that “the IPO exit opportunity is real.” Morgan Stanley’s latest results show how the bank is trying to convert those capital markets events into recurring wealth management revenue after the underwriting fees are booked.
This story draws on original reporting from Fortune.