Why Wealth Management Is Such Good Business for Banks
Over the last few years, many banks have doubled down on their asset and wealth management businesses. They've done so to diversify their revenue streams, but also because wealth management products and services offer an attractive risk/return proposition.
The third-quarter results from banks bears out the sector's affinity for wealth management. To cite two banks in particular, Bank of America (NYSE: BAC) crossed $1 trillion in assets under management for the first time in its history. Meanwhile, over at Morgan Stanley (NYSE: MS), the investment bank generated nearly half, or 46%, of its total revenue from asset and wealth management.
Morgan Stanley aside, wealth management nevertheless tends to be one of the smaller businesses in most universal banks' operating portfolios. At JPMorgan Chase (NYSE: JPM), for instance, its wealth management segment ranks third out of four operating units based on revenue at the nation's biggest bank by assets. The same is true at Bank of America.
Source: Fool.com