Morgan Stanley (MS) November 9, 2026 Conference Transcript

Hello, everybody. I'm very pleased to say, from my last fireside of the day, pleased to be joined up here with Jed Finn. Before I get started, Morgan Stanley has asked me to do a disclaimer, so the discussion may include forward-looking statements, which reflects Morgan Stanley's management's current estimates and are subject to risk and uncertainties that may cause results to differ materially. Morgan Stanley does not undertake to update any forward-looking statements. This discussion, which is copyrighted by Morgan Stanley, may not be duplicated or reproduced without consent, and it's not an offer to buy a security. Lawyers are happy. I'm really, really psyched to be here with Jed. We've known each other for a long time. Jed leads one of the most successful and scaled wealth management platforms in the world. Recently posted the third quarter results, revenues of $9.1 billion, pre-tax margin of 30.4 percent, and under Jed's stewardship, a wealth management business has grown to a massive $8.4 trillion, And most importantly, most people don't really know this, Jed was actually the architect of the funnel. Uh, something that has basically become part of the lexicon around the wealth management space. Um, and, uh, and so please give me a warm welcome for Jed Finn.

Thank you. I appreciate you having me. And, uh, there's a lot of people at Morgan Stanley involved in making the funnel work.

No doubt. Uh, I'm sure I have no doubt that that's right. I'm no doubt you're surrounded by a great team. Um, you guys had some news today. So, and I'll be honest, aside from looking at headlines, I haven't even been able to see it. So maybe could you let us know what you guys did, and maybe that can lend into a broader discussion of the funnel. But first, what's in the news and what you guys do? Sure. Thanks, Brendan.

So as we announced earlier today, we acquired Vinyl, which is a digital transfer agent. And so we're very excited about it for us. We're very excited about it for Vinyl. And most importantly, we're excited about it for our workplace clients who have been asking us to deliver this functionality now for a number of years. As I think many people are aware, a transfer agent plays an important role in equity capital markets because under federal securities law, they are responsible for maintaining the ownership record of equity. So they hold the source of truth. And in the industry today, it's dominated by a couple of legacy firms who have been doing the same thing in the same way now for a number of years. And while Vinyl is a new entrant to the space, they are digital first. It's a modern tech stack. They're cloud-based, and they figured out how to address a number of the pain points that our issuer clients have been complaining about over the last couple of years. So when you take the tech of vinyl and put it within the ecosystem of Morgan Stanley at work, it gives us the ability to address client challenges in a way that our peers are going to find it very difficult to replicate. And if helpful, I can describe some of those challenges. I'd love to hear them. So first, there's a tremendous amount of data that is exchanged back and forth. Remember, on the private side, we're the cap table manager for nine of the top 10 unicorns, for 75% of the top 100, for 50% of all of the almost 1,000 unicorns that exist, and then on the public side, we're the equity admin for more than 50% of the S&P, and the data that goes back and forth in the private to public process is intense, and it's sensitive data, it's PII, meaning personally identifiable information, And companies don't want to be sending that data externally, and so the reason they want us to be able to deliver the process is so that they can mitigate the risk, because that data sits in the four walls of Morgan Stanley as you go from cap table manager to transfer agent to public equity admin. So that's one of the demands. The second is, again, as you go through the lifecycle of private to public, the fewer external third parties you have to deal with as an issuer, the less the administrative burden, the less the cost, which is why if they're already interacting with us on the private side and on the equity admin side, they want us to deliver the transfer agent services as well. And then finally, as I mentioned, because they're digital first, because it's a modern tech stack, they can move a lot more quickly than some of the legacy firms that are mainframe based. And so if you just think about the speed at which private share investors can then get their public shares, it can be up to two weeks in the old world. And Vinyl can do it in an instant T plus one settlement, which reduces the volatility risk for employees and early investors, and you go through that experience. And so just in today's world, it helps round out our entire lifecycle offering for corporate clients. It will help us serve our existing clients better and take share. But they also have some capabilities that will set us up in the future world of agentic finance and tokenization as well.

Okay. And then, so... Is this, so you guys were sort of unique in the fact that you brought, once you bought E-Trade, that brought the public side. You had the private side with Solium, brought those together from Morgan Stanley at work. Is this the sort of last piece in order to really have it fully closed loop?

Yeah, it's a great point. So if you think about the evolution of a company, when it's two people in the garage, you need a cap table manager. Well, you probably just need an Excel sheet. But as you get more complicated, you need a cap table manager to track who owns what with what voting rights. And that's obviously what we do on the share work side. If you need 409A valuations on the option side, we can do that. As you get bigger and you need liquidity, we ran 27 billion of tender offers. We're the market leader in doing that year to date. When it's time to go public, and this is a core part of Ted's integrated firm strategy, we show up as one Morgan Stanley, both what we're doing in the workplace on the wealth side and what we're doing through the bankers on the investment banking side. So we take the company public. We can do the DSP through E-Trade. It's a push-button convergence from private cap table manager to public equity admin. We can do the 401k, the cash management, and, of course, manage the wealth of the individual employees up to and through retirement. The one gap we had in that entire story was also serving as the transfer agent as well, and so this closes that loop and allows us to be a differentiated capital markets partner to our important issue of clients.

Yep, makes a ton of sense. So here we are. We're about halfway through the quarter, so there's definitely a lot going on. Given how markets have moved lately, you know, how should we think about the near-term outlook from Warren?

Sure. So you said this a little bit in your intro, but I would start by acknowledging that this has been a record-breaking year on a number of different fronts, right? Through three quarters, we're at a half a trillion in net new assets. That is a record. We are at almost $175 billion in fee-based flows, which is not yet an annual record, but will be when we get through Q4. When we talk about path to advice assets, and remember, that's just the funnel in action. So path to advice assets are assets from clients whose first relationship with Morgan Stanley was either in the workplace or in E-Trade. And then through the infrastructure that we've built, we connect them to a financial advisor to help them achieve their long-term financial goals. At the beginning of the year, we said that last year, 2025, was a record of $100 billion in those path to advice assets, as you'll recall. We are far in excess of that this year. Our lending is up $20 billion. Our deposits are up $60 billion. We're having a record year in alts. We're integrating equities in, and we're releasing a ton of functionality on the AI side to help our advisors serve their clients more effectively. So by any stretch, we are in the middle of a record-breaking, successful year. That said, Q4 is going to be noisy, and it's going to be noisy for a couple of different reasons. Number one, you've got seasonally higher expenses that always happen in the end of the year. Number two, we're exiting some real estate as we optimize our footprint, so we'll be taking a charge there. Number three, we're going to have severance from some streamlining that we've done on the headcount side. Number four, there are a couple of idiosyncratic expenses that are smaller, but whether it's moving towards close on the vinyl side, Whether it's integrating the broker-dealer of EquityZen and Morgan Stanley and a handful of other things that are going to position us to continue to take share in the future, like I said, it's going to be noisy. Putting it all together, though, you can expect that our 2026 margin will be close to the 30% goal, even with all of that expense embedded in it, and ahead of where we were in 2025 as we continue to drive operating leverage across the business. Okay.

And all of those noisy items, that was all contained within the wealth business narrowly, right? Yeah. Okay. Great. So speaking of margin, recruiting costs have been a very serious focus for the street. They're elevated. We understand that growth from recruiting is a relatively smaller part of. Morgan Stanley's net new assets, given all of the workplace goodness that we just spoke about. But given that, why aren't you seeing more margin expansion than peers, if you guys don't have to pay for that? Like, if we look over the last six quarters, Morgan Stanley's generated stronger revenue and client asset growth in both B of A and Wells, but yet less pre-tax margin expansion. I know. It's not all about margin, but could you help us understand why that would be? Sure.

First, I would say, I guess, if you go back six quarters at the end of Q1 2025, which is a bit of an arbitrary place to start the story. I mean, the way we think about the strategy is we spent a couple years in the late teens repositioning the business for this multi-channel client acquisition strategy. We bought Solium in 2019, we bought E-Trade in 2020, and closed in Q4 of 2020. So if you start from the new fighting form in 2021, since then we've had 500 basis points of margin expansion, which I think would compare favorably to the types of firms that we typically compete against. And we are laser-focused in making the appropriate trade-off between continuing to invest in the business and building differentiated capabilities, and also delivering returns to shareholders. And in fact, over 40 cents of every dollar we've brought in since 2021 has dropped to the bottom line. And so you are seeing through cycle operating leverage. If you just look through the first three months of this year, our revenue is up 13 and a half percent, our expenses are up 10 and a half percent, and that's why our PVT is up 20%. And if I go back just to January or Q1 of 2025, on a Quarterly PBT basis, we're up 800 million, and that's about 40%. And so you can always pick a specific time where one comparison may not look as attractive. But as Ted has said many times, through cycle, we're focused on delivering higher highs and higher lows. And all of the evidence that we would point to would suggest that we're on that path.

Yep. Is 40% the right way to think about incremental margins?

It's definitely the right way to think about what we've done to date.

Thank you. Nice way to avoid that one. You built the funnel. It's working. Over the course of the strategic journey, you've built this asset-gathering mousetrap and showed how it works. Year-to-date, net new, a remarkable half trillion. You touched on that before. It translates to 9% annualized organic growth. I mean, if we rewind the clock, people take it for granted because you've done such a good job with this business, but if we rewind the clock 10 years, nobody thought. That a wire could do that. And so you obviously IPO activity helped, right? But How should we think about those tailwinds sustaining, and how do we think about narrowly first the IPO impact as those get unlocked, but then longer term keeping up this growth?

Yeah, so first, I appreciate the framing of the question. We have said for a long time the investments that we have been making, and again, driving that tradeoff between returns and setting up the business for success, the investments that we've been making in the underlying integrated platform, in a consistent data lake across all of the channels, in building out the reinvestment network with the financial advisors, in building out LeadIQ and the process by which we provide. Inside leads to our advisors when it's in the right interests of our clients, that was always going to pay off during a period of heightened capital markets activity. And I think this year has been a compelling proof point to that effect. All of that said, to your question, I would make a couple of different points. Number one, when the lockups expire for the various IPOs, we are going to see outflows. Remember, a lot of the folks that are participating in the space are coming into wealth for the very first time, and they've known about it for months or years or, in some case, decades. So there are bills to pay, and there is education to fund, and there are houses to buy. But if you take, again, a broader step back, which is we think about this business through cycles, when the dust settles, We are going to have significantly more assets than when we started in the firm overall, in the advisor channel, and specifically in fee-based accounts. And it's just not a straight line to the end point. So I think that's one important point to understand. The second point to understand is there tends to be an assumption in the industry that the IPO is the event, and then you move on to the next thing. But actually, for us, there are multiple waves of opportunity that gets unlocked significantly after the IPO happens, right? On day of, you've got this immediate creation of a public equity admin, but the NNA impact of that varies. In some cases, you've got options versus RSUs. In some cases, you have lockups versus not lockups. And the combination of all of that is going to affect how much you actually see in the quarter of the event. But that is the first wave. Secondly, as we talked about, we do the DSP. Some of the participants in the DSP, the directed share plan, are not Morgan Stanley clients today, and they go right into the funnel, and we use those touch points to build relationships. Third, you've got our existing clients who participate on the open in some way, shape, or form, and that event is associated with NNA that comes from them. We've actually found that our existing clients bring cash from other places to participate in the IPO, so that's another source. Fourth, as lockups expire, we distribute shares to the LPs of a number of the venture capital and private equity firms who have participated. Some of them are our clients, which is great, but some of them are not our clients, and again, that is another opportunity for us to demonstrate to typically high net worth clients that the solution set that we can offer is differentiated. And then the fifth, of course, is the employee stock plan, which continues in perpetuity because as employees are getting equity-based compensation, there are regular vesting events, and we bring all of the education and tools and resources. To ultimately turn them into advised clients. So it happens over an extended period of time. If you want specific numbers, we've always said that there's a bit of a tail to the path to advice assets because someone might be experiencing a financial advisor relationship for the first time and not ready to go 100% into fee based accounts. And so what we've seen in practice is in the first year, it's only about high 20s, Low 30s percent of the assets that are in fee-based accounts. By the end of the second year, it gets to about 40 percent. And it's really not until the end of the third year where you get to the relative average of our fee-based penetration, which is close to 50 percent in the advisor channel. And you can see that using actual dollars. So if you go back to 2021, we had 200 billion of our path to advice assets that were in fee-based accounts. Today, that number is 550 billion. And because of both advisors moving more of the brokerage assets into fee-based accounts that came through PathAdvice and, of course, market appreciation. That today is $2 billion in incremental revenue. Why does that matter? Well, that 550, which is today's fee-based assets, that's off a base of 1.7 trillion in path to advice source. So we're still only at 30%. And so it's a bit of a coiled spring, because as advisors continue to deepen those relationships, more of the brokerage assets are going to move into advisory assets, and we're going to see another leg up in terms of the revenue that gets generated.

When does that, when do you, when you think about it, like, when does that clock start, right? Because when, if we just narrowly think about some of the IPO activity this year, it was really that, the NNA was heavily oriented to brokerage as opposed to fee-based. Is it, is it sort of considered starting the clock when the IPO event happened, or were the FAs already engaging with those, with those folks?

Yeah, I gave you the average of vintages since 2021, but the clock in terms of the migration to advisory doesn't happen until they've opened up the wealth management relationship. But your point is exactly right. There's a pre-clock that starts, you know, when employees start getting shares, when we win a new workplace client where we're dripping on them and showing what we can do on a differentiated basis and bringing unique products, and that starts the clock a little further back. But what I was giving to you is the like-to-like in terms of assets that have already ended up with financial advisors that started somewhere else, and what is the migration path to fee-based. Yep.

Okay. Retirement. It seems like you guys have leaned into retirement a bit more recently. It's clearly in adjacency for stock plans. A lot of times you're selling to the same. cohort within an organization. So how big is that business for Morgan Stanley right now, and where are your ambitions there?

So we advise today on about $750 billion of corporate retirement plans through our institutional consulting business, and you're absolutely right. Over the last couple of years, we've made a couple of important investments. Number one, we've invested heavily in educational content for the plan participants. And then number two, we've invested in codifying our responsibility to deliver that content as part of the contractual process with these corporate clients. And so now, contractually, on a regular basis, most often it's quarterly, a number of Morgan Stanley financial advisors show up to the corporate client and deliver education for the benefit of the participants. The fact that we get those at-bats, though, has led to more discussions about not just how should I think about allocating within my 401k, but what about the rest of my wealth that is outside my 401k? And that has led to an acceleration in the path to advice assets that come from retirement versus stock plan or E-Trade. And just to put some numbers around it, if you go back to 2021, it was probably about 9% of the path to advice assets. Obviously, that number from a denominator perspective has grown significantly, and yet still retirement is now up to 14%. So it's growing faster because we're figuring out how do we give the plan participants unique insights, unique education, and help them build relationships with folks who can ultimately help them achieve their goals. Okay.

Makes sense. I'd love to touch on deposits and banking a little bit. Loan demand. Yeah, I can't help it. I know. At least it's not like, you know, the sweep and the sorting and all that. I haven't heard the question yet. Fair. Loan growth slowed quarter over quarter down to just under 3, 2.8%. It was 5.0 in 2Q. So it's still positive, still growing, but the pace has definitely slowed. So are you seeing that be the impact from higher rates impacting demand? And based on what we learned during the last hiking cycle, how does that inform your expectations for changes in loan demand?

Yeah, so first I wouldn't read too much in terms of Q3 rates versus Q2 growth rates because Q2 typically is our seasonally strongest quarter Because you've got LAL campaigns that help fund tax payments, right? So if you just look at the progress year-to-date at $20 billion, that would put us on path to be one of the best years we've actually ever had, second-best year behind 2021, and rates were zero in 2021, and rates are not zero today. So I think it speaks to the strength of the underlying engine, number one. Number two, if you look at Q3, we were actually above the average of the peers from a year-over-year perspective, but I think the most encouraging part of what happened in Q3 is if you look under the hood, new loan commitments were actually the exact same level as they were in Q2 and up 35% year-over-year. It's just the paydowns were elevated, again, because of the rate environment, and that's why the balance growth was lower. But we remain incredibly constructive and optimistic about our ability to leverage lending solutions to help meet our clients' needs, and going forward, we are incredibly excited about the ability to build the business for a couple of different reasons. Number one, despite all of our growth, we're still at about 18% penetration, and if you look at our peers, they're somewhere in the mid-20s. So just getting to market is another leg up of loan growth. Number two, we're innovating from both a product perspective in areas like lending against private, lending against digital assets, which we've been investing in, of course, but not just the product, but the process as well. I mean, think about making it really easy to click a link and start the process and get funded in 24 hours, which is what we can do in some of our accounts. And then three, obviously, the firm is growing at a really fast level. We're up 1.4 trillion of assets versus 12 months ago, we're up 700,000 clients, and that is all new opportunity to bring lending solutions to help them meet their needs. And so despite the rate environment, we're demonstrating that there are demands for people to borrow and we are addressing those demands.

Got it. Got to touch on deposits, both the growth and the cost. I'd be offended if you didn't. I wouldn't want to offend you. Other deposits increased nearly 10% quarter over quarter in the third quarter, $318 billion, as you intentionally grew the bank, right? That did weigh on NII through mixed shifts. So how are you thinking about continued investment in the bank and then continuing to grow those deposits? And what are the trends that you're seeing across different deposit types?

Yeah, so we're obviously focused on continuing to grow the bank and on the deposits because there's demand for it on the asset side, as we just talked about, even if you look just within the four walls of the wealth management business. I think what's exciting about this year is we're deploying a much broader set of levers to take advantage of whatever is happening in the environment. So we've innovated around account type. So it's not just BDP. We've got checking accounts, savings accounts, CDs, time deposits. So that's one vector for us. We've innovated around promotions and marketing and how we connect to the right people in the right time. And of course, rate is also a lever. And we're optimizing based on what is best for the environment that we're sitting in at this point. I would say the thing worth calling out, though, to your question, is the pace at which E-Trade sweeps are being deployed back into the marketplace to take advantage of the equity volatility that we're seeing is higher than we expected. And while the guidance that we gave last quarter for Q4 NII still holds, it's something that we're watching pretty closely.

Okay. That makes sense. And that's perfectly logical. Alts. It's been a big topic around wealth. You guys have a robust alts offering in your wealth business. Love to touch it in two directions. One, a bit tactical. Like, what inning do you think we're at in the redemption saga with all of the gating and all that? Absent an actual shoe dropping in credit, right? Because that means all bets are off, basically. And then, more broadly, have the redemption gates impacted FAA's perceptions or the end investor's perception of the asset class or private assets more broadly?

Sure. So to your first question, it's still in the early innings, but we're definitely off the lows. The low point for us was, even though it happened in the March timeframe, the low point for us was probably July because there's always a lag. And in October, we were triple the sales of July. And by the way, it was always positive. We've never gotten negative. And redemption requests we're seeing slow consistently. And so, look, our view is this was always more in the headlines than it was in the actual risk. Our asset management partners who are providing the private credit solutions are the absolute best at what they do. And we're not in a credit cycle. Things are still around the tights. And so this was always more headline than it was actual impact in terms of demand for clients and advisors. As it relates to the Morgan Stanley alt story more broadly, it has been totally irrelevant. I mean, private credit is one part of a much broader portfolio of private solutions that we deliver. Private equity, real estate, infrastructure, hedge funds, venture capital, direct investment in private shares. And our advisors are constantly rebalancing across those to help clients best take advantage of whatever cycle that we are in. And you can see it because we are on pace to eclipse last year from a new sales perspective by about 40%, which is a huge number considering last year was a record as well.

So we are so 40% gross sales in all the product. Higher than we did last year, and last year was a record as well. So the demand for the asset class is continuing to increase. Scale, yeah. I'd love to talk about Pmax. Very cool innovation. It actually came up, we had dinner last night with John Ruddett, who runs the equity business at Carlock, came up during the dinner. So it's basically, it's now a brand. So for those who are not familiar, it's basically a ticket. It simplifies alts allocation, no K1. You don't worry about asset allocation. It's done at home office, and it's just like dropping a ticket. There's no complexity.

Yeah, the cost gets passed back to the GP, and there's, you know, 12 to 15 managers where we will rebalance. So it's a very cheap, accessible way to get into alts if, you know, you don't have this portfolio to stroke a bunch of $250,000 tickets. Right.

So we'd love to hear about, from my understanding, this was the most successful launch that you guys have ever had. I want to make sure I'm remembering that correctly. What's happened to the momentum in that product? Has some of the drama that we just talked about around credit had any impact there? And then what's the GP feedback from the partner's side? Yes, no, yes.

This is the way I would answer it. So, no, I appreciate it. It has been really exciting for us. The tonnage is there. We're over 1.6 billion having just launched it last year for an evergreen alt. That's pretty quick. So it's definitely one of the fastest growing products we've ever seen. But more important than the tonnage is the specific client need that it solves. Because as we've talked about before, we're at about 330 billion in terms of the size of our alts platform off of We have a base of advisor-led assets around 6.7 trillion, which is how we get to the kind of 5 percent penetration. But the clients who actually do use alt are at an 18 to 20 percent penetration. They're actually following the advice of our GIC, our Global Investment Committee. So the key challenge for us is how do we get from zero to one, people who are not using it to using it, which is what the design goal of Pmax was, and thankfully it has been proving So 40% of the tickets dropped for the product are with clients who have never used alts before. And 80% of them are under 10 million in total AUM, which tends to be the hardest cohort to bring into the alt space just because the platform is complicated and minimum tickets are high, et cetera. And so we're really pleased with the progress. We added a new version of it this year called Pmax Growth, which is more private equity focused. And we think it's going to continue to help clients get access to an asset class, which is less correlated, and help them achieve their goal. It's your question about the GPs. Now that everyone has seen the progress and the success, everybody is interested in participating in some way, shape, or form. And we're lucky to have the best asset managers in the world as our key partners to help deliver the products that fit in those various sleeves. Got it.

The 80% under 10, was that of a subset of the 40, or is that 80 for the entire 1.6? It's 80 for the entire 1.6. Got it. Okay. That's really interesting. Wouldn't be a conversation with you without some kind of discussion about disruption. You embrace it, which is great. I know you're very tech savvy yourself. So I'd love to start on AI. It feels to me that this has been a debate around wealth. Since early this year when we saw this last apocalypse, and the way I like to describe it is I think of it as two vectors, right, for possible disruption. One that's sort of easier to get your head around is just around cache and whether or not the AI either automates the cache sorting or increases the awareness in order to facilitate it. You know, to me, that's... Feels a little neither here nor there, but whatever, that's one of the debates. One that I think is more pernicious and possibly a bigger risk is whether or not we see a better version of Robo, right? Initially, Robo was thought of as it'll kill the brokerage business. In reality, we realized people don't want automated solutions for this. They want to talk to an advisor. So do we see AI efficiency allowing for disruptive competitors to come in and undercut on price? To me, that, I think, is more serious, but I'd love to hear your views on it.

Yeah, I think you touched on a lot of the important discussions that are happening right now. Why don't I start at the highest level and just give you our view, and then feel free to interrupt and probe into any of the areas. I know you do. So, look, I think the frustration that some of us in the industry has felt as this kind of obsolescence narrative has made its way through the stock price of knowledge-based companies is the assumption is that the entire value proposition is going to be commoditized. And there is some truth to that, meaning there are parts of the value proposition. In wealth management, for example, asset allocation, you know, is there really anything that differentiated about a 60-40 portfolio? I don't know. Some people could say yes, but it's 60-40. Planning tools, agents are actually pretty good at running Monte Carlo simulations. The optimization piece that you talked about that doesn't really exist yet, but absolutely will, that's going to be commoditized as well. But particularly the larger firms have the ability to deliver things that remain unique, even in a world of LLMs and agents and blockchain and frictionless movements. So, for example, we talked about our role as the cap table manager for half of the unicorns in the industry, and Carta, our good partners, are the cap table manager for the other half. When any of those firms want to source liquidity for their early investors and employees and don't want to send their data out to third parties and don't want, you know, nested SPV infrastructures that essentially take value from the company and bring it to middlemen, Again, they can source that liquidity at Morgan Stanley, at E-Trade, within equity's end. You can't prompt access to private shares. You can't prompt access to the Alts platform that we have. You can't prompt access to getting an OCIO experience for retail clients when it's previously reserved for institutions. You can't prompt access to facing off against one firm that can serve you as a family business And so there are a number of things that we can deliver with our scale that are still differentiated. So that would be one argument. The second argument is the data that we deliver is differentiated, right? You said it, at eight and a half trillion, we are a couple trillion dollars larger than the next largest full service wealth management firm globally. We've grown by a trillion in each of the last three years. Over the last 12 months, 21 million companies have grown by a trillion in each of the last three years. And the point that I'm making is that for any client in any stage of their life with any investment objective and any risk tolerance, we know what good looks like, we know what is going to be the most likely thing to get them to their goals, because we've seen that movie in a much bigger, more comprehensive way than anybody else, and we are training our own models, we're training our own agents to deliver that. So that is the second argument. The third, of course, is client protection in this era of cyber superweapons. Just on a pure magnitude basis, we're spending a lot of money in order to ensure that we're discharging our guardianship responsibilities. Fourth, on the optimization itself, let me tell you the reason why this one, I think, is not fully thought through, but it's a great headline, is because, yes, of course, agents can manage the movement of assets across multiple accounts or dozens or hundreds accounts, but it runs counter to the objective in the first place, because if you spread your assets across three, five, seven, ten providers, you're not getting relationship pricing. You're not making the AUM breakpoints. You're not getting better loan terms. You may not qualify for asset minims to get access to differentiated product, and your risk surface goes up massively because every day money is being moved And if you just follow the thought experiment to its logical conclusion, yields are going to be the same because if bank A has a higher yield than bank B, in a frictionless world, the assets are going to move to bank A until everything kind of settles. So yields are going to be risk-based as opposed to company-based. And then the optimal recommendation for the agents are going to be, well, you should keep it at one place where you benefit from all the other things that having your assets at a firm can deliver. And you do that in a safe way. So I actually think the optimization effort is going to lead to the big firms getting bigger. And then the last argument around why Robo 2.0 isn't really going to be there, although there will probably be some parts of the lower end of the advised value proposition that it intermediates, is that relationships are incredibly strong and incredibly deep. And financial advice remains emotional, and it remains personal, and it remains the second most important advice that you can get besides medical advice. And two people in the exact same situation might have very different optimal answers based on what they want for themselves and their families and their communities. And while LLMs can give you really detailed answers for really detailed questions, what if you don't know the question to ask? What if you don't provide the right context? Or what if you meant something, but you said something else? Remember, 95% of the wealth in this country today is held by people who are over 40 who didn't grow up telling their feelings to a chatbot. And in 10 years from now, the people over 50 are going to have 85% of the wealth, but the quantum will have increased by 60 trillion over that time period. And the vast majority of those folks are still going to want to talk to a human, even if an agent is doing the underlying heavy lifting. And so I just think the excitement about people changing years, decades, multi-generational families' behavior on a dime because there's a slick user interface is just a little bit overblown relative to all the transitions that we've seen in reality. That said, of course, we're investing heavily in our own agentic infrastructure to make sure clients' agents can connect to our agents, our advisors have their own agents, our service folks have tools that make them more efficient, because that experience is going to be competitive, and we're investing to win there.

Yeah. You said a lot there, but it's true.

It was a long question.

It was a long question. Fair. But we all know from our own experience with these chatbots, if you're not asking the right question, you're not getting the right answer.

And how often do you go and check another source? You're like, that seems right, but I don't know. And that's okay when you're looking up a fact, but when it's like, what is the best thing for the trust structure for my kids? You want someone who's seen 50 other trust structures who have seen what good looks like and what bad looks like, and so I just think that it's all good until it becomes super personal.

So you're saying I made a bad decision in using ChatGPT for the trust structure?

We'll do your personal account afterwards.

I want to finish on this, and it's about scaled winners. There's a lot of debate about whether all this disruption favors incumbents versus the new disruptors. You touched on a lot of it right there. Is that because winning in the next chapter is a scale question to help investors through the transition? And then, you know, what are some of the biggest pieces that make you confident that Morgan is going to be able to hold its position as the leader in this space?

Well, I'll start with the last piece first, which is our strategy is very simple. We are an advice firm. We originate, manage, advise capital, and we are very deliberate in terms of what we do and what we don't do. And our view is in the world where there is all this uncertainty, all of this disruption, all of this technology, ironically, the premium on advice goes up. And it's not just advice, but it's the ability to deliver the recommendations that come from that advice. And, you know, we didn't talk about this, but there's a lot of discussion now about tokenization. It is incredibly difficult to build a digital wallet infrastructure that sits next to a traditional subcustody infrastructure and do it in a way that is seamless to clients. Like, you can't vibe code that. There's always this expectation that, well, if ChatGPT spits it out or Claude spits it out, then it should just be easy to do in the enterprise, Which is why this whole narrative around, you know, AI productivity gains not showing up, I think is flawed. It's just early, but we're starting to see it happen. But the expectation for large firms that they can do it in a way that protects their clients, that protects their stakeholders, that adheres with an evolving regulatory landscape, and that just takes scale to do. And so when you think about trust-based relationships, when you think about distribution footprint, when you think about having the resources to be able to institutionalize a lot of the technology that has come up over the last couple years, it's just going to be really hard for fintech startups or small RIAs or even regional independents or banks to compete with firms that have the resource to invest at scale.

That's an awesome note to end on. Jed, thanks a lot for your time. Thanks for having me.