Goldman Sachs & Morgan Stanley Q4: Fee Growth, Wealth Management Strengths, Rising Risks

These recent earnings reinforce that both Goldman Sachs and Morgan Stanley are riding favourable market conditions—particularly in equities and investment banking—while their wealth and asset management franchises are strengthening, both in scale and profitability. Below are key observations and strategic implications.

1. Revenues & Segmental Strength:
Goldman Sachs’s Q4 2025 net revenues were $13.45B, a modest decline of ~3% YoY, due largely to the transfer of Apple Card loan assets from its Platform Solutions unit, which generated a sizable loss. In contrast, Equities revenue rose ~25% YoY, FICC trading grew 12%, and investment banking fees jumped 25%. Meanwhile, Morgan Stanley’s revenue mix in Q4 2025 saw Institutional Securities contribute $7.9B, Wealth Management $8.4B, and Investment Management $1.7B, setting records for its wealth segment.

2. Wealth Management as the Anchor:
Morgan Stanley’s wealth business is now clearly its growth engine: $122B of net new assets in Q4 across all channels, margins expanding to 31.4%, and adviser-led asset migration from workplace + E*TRADE hitting $99B in full year 2025 (up from historically ~$60B) suggest rising demand for advice and fee-based products. Similarly, Goldman’s asset & wealth management revenues grew year-over-year, with assets under supervision increasing to ~$3.6T, despite challenges in some revenue lines.

3. Profitability & Capital Returns:
Goldman’s net earnings rose 12% YoY to $4.62B; diluted EPS climbed to $14.01, with annualized ROE at ~16% in Q4. Morgan Stanley delivered ROTCE of ~21.6% for the full year with efficiency ratio ~68.4%, showing strong operating leverage. Both firms returned capital to shareholders: Goldman raised its dividend and had ongoing buybacks; Morgan Stanley bought back ~$4.6B in stock and raised its quarterly dividend.

4. Risks & Pockets of Weakness:
Goldman’s Platform Solutions loss stemming from the Apple Card-related transfer and exposure to regulatory or credit risks in consumer finance suggest areas to watch. Morgan Stanley saw some revenue pressure in its fixed income, currency, and commodities segment due to lower volatility and weaker credit performance.

5. Strategic Implications:
These performance trends support a shift in strategic emphasis for both banks toward wealth & asset management as steadier, fee-oriented businesses. Morgan Stanley appears further along in this transition. For Goldman, improving trading & IB performance is beneficial but volatility risk remains. Investors should monitor rising competition in fee-rich advisory channels, regulatory headwinds (especially for consumer finance), and the sustainability of market favorable conditions. Additionally, both firms must manage capital efficiently as interest rate, credit, and economic cycle risks persist.

Open Questions:

• Can Morgan Stanley sustain the high net new assets inflow, especially as markets normalize or volatility subsides?
• Will Goldman’s revenue growth in Platform Solutions recover or will the loss associated with the Apple Card transfer be a recurring drag?
• How will macroeconomic pressures—rate shifts, inflation, geopolitical risk—impact investment banking activity, asset valuations, and net interest revenue across both firms?
• Which bank has greater upside under shifting regulation, particularly around capital requirements, consumer finance, and advisory models?