Morgan Stanley’s wealth management business added hundreds of billions of dollars in net new assets in 2021, helping the unit post strong growth in revenues and net income.

The segment had $4.9 trillion in total client assets by the end of December, which was 7% higher than at the end of September and 23% higher year-over-year, according to the company’s fourth-quarter earnings report.

The growth was in part due to $127 billion in net new assets the segment added in the last quarter of 2021, Morgan Stanley says. While that was 6% lower than it added during the prior quarter, it was 73% higher year-over-year, according to the report.

During all of 2021, the unit added $438 billion in net new assets, the company says.

Of the total, advisor-led client assets made up $3.9 trillion by the end of 2021, which was 23% higher year-over-year, according to the report.

The unit saw $37.8 billion in fee-based client assets during the latest quarter, bringing the total to $1.8 trillion by the end of the December, a 25% increase year-over-year, the company says.

Meanwhile, net revenue from wealth management in the fourth quarter was $6.3 billion, which was 5% higher than in the prior quarter and 10% higher year-over-year, according to the report. The company attributes the growth to higher asset management revenue due to higher asset levels driven by higher markets as well as fee-based flows. Transactional revenue, according to the firm, was essentially unchanged aside from “mark-to-market gains on investments associated with certain employee deferred compensation plans.”

Non-interest expenses in the unit, however, were $4.8 billion, which was a 10% increase from the prior quarter and a 5% increase year-over-year, which Morgan Stanley says was due to higher compensation expenses driven by higher compensation revenues as well as higher benefits cost, which was partially offset by lower deferred compensation plan expenses.

The company said it also saw an increase in non-compensation expenses “driven by higher professional services and integration- related expenses.”

As a result of the bump in expenses, net income applicable to Morgan Stanley fell 7% from the third quarter, to $1.1 billion in the fourth, according to the report. But that was nonetheless 34% higher year-over-year, the company says.

For all of 2021, the wealth management unit posted $4.7 billion in net income, which was 41% higher than in 2020, according to the report. That was on a total of $24.2 billion in net revenues in 2021, which was 27% higher than the unit earned in 2020, the company says.

Morgan Stanley did not disclose the number of wealth management representatives for the fourth quarter in a row.

As the end of 2020, the last time the firm reported the numbers, it had had 15,950 advisors, which was 3% higher than at the end of 2019, as reported.

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