Morgan Stanley (MS): Business Model Canvas [Dec-2025 Updated]

You're looking to crack the code on how Morgan Stanley is structuring itself for the next decade, and honestly, it's all about balance. After years of evolution, the firm's engine now runs on a deliberate mix: anchoring the cyclical Institutional Securities business with the massive, stable scale of its Wealth Management arm, which pulled in 53% of net revenues through the first nine months of 2025. This integrated model now stewards over $8.2 trillion in total client assets, a testament to its pivot away from pure transaction reliance. So, how exactly do they connect their high-touch advisory services with the self-service ETRADE platform and keep their investment bankers firing on all cylinders? Dive into the full Business Model Canvas below to see the nine blocks that define Morgan Stanley's current strategy, defintely.

Morgan Stanley (MS) - Canvas Business Model: Key Partnerships

You're looking at the critical external relationships Morgan Stanley maintains to execute its strategy as of late 2025. These partnerships are essential for market access, technology scaling, and risk management across its diverse business lines.

Mitsubishi UFJ Financial Group (MUFG) for Joint Ventures in Japan

The alliance with Mitsubishi UFJ Financial Group, Inc. remains a cornerstone for Morgan Stanley's Japanese operations, structured through two primary joint venture entities, Morgan Stanley MUFG Securities (MSMS) and Mitsubishi UFJ Morgan Stanley Securities (MUMSS).

Ownership splits show a clear division of control:

• MSMS is a consolidated Morgan Stanley entity with a 51 percent voting interest and 40 percent economic interest.
• MUMSS is a consolidated MUFG entity, where MUFG holds a 60 percent interest and Morgan Stanley holds 40 percent.

The performance of these domestic securities companies shows significant contribution to the firm's regional results. Here's a look at the net operating revenue figures for the Japan JV entities:

Metric (JPY billion)	1Q FY2025	2Q Cumulative FY2025
Total Japan JV Net Operating Revenue	Over 100 billion	Approximately 240.2
MUMSS Net Operating Revenue	64.5	153.6
MSMS Net Operating Revenue	42.9	52.4

Overall, Morgan Stanley's Asia region revenues jumped 29% year over year to $7.27 billion in the first nine months of 2025.

Strategic Operators in Real Estate for Morgan Stanley Real Estate Investing (MSREI)

Morgan Stanley Real Estate Investing (MSREI) actively partners with operators to manage and grow its real estate assets. Recently, investment funds managed by MSREI acquired a senior housing portfolio from Kayne Anderson Real Estate for $305 million.

This portfolio, operated by MorningStar Senior Living, consists of 463 units across three communities near Denver. MSREI currently holds an ownership interest in approximately 30 senior living communities nationwide, totaling nearly 3,000 units.

Key figures related to MSREI's scale and outlook include:

• MSREI manages $53 billion of gross real estate assets globally.
• The senior housing sector is expected to grow nearly 5% annually over the next five years.

Zerohash, a Crypto Infrastructure Provider, for Future ETRADE Client Crypto Trading

Morgan Stanley is integrating cryptocurrency trading into its ETRADE platform in partnership with Zerohash, scheduled for the first half of 2026. This initial phase will allow trading in Bitcoin, Ethereum, and Solana.

Zerohash recently secured significant backing, completing a $104 million Series D-2 funding round that valued the company at $1 billion. Morgan Stanley participated in this funding round. ETrade serves over 5.2 million users.

EquityZen to Expand Access to the Rapidly Growing Private Markets Landscape

Morgan Stanley agreed to acquire EquityZen in October 2025 to enhance its private markets presence. EquityZen, established in 2013, has executed over 49,000 transactions involving nearly 500 private companies.

This move aligns with the growth in Morgan Stanley's alternative assets business. The wealth and asset management businesses' aggregate contribution to net revenues reached 53% in the first nine months of 2025. The firm manages $7 trillion in client assets across 20 million clients. For client portfolios, the suggested weighting towards alternatives, which includes private markets access via EquityZen, is around 10 to 15%.

Technology Firms for AI Infrastructure and Digital Platform Development

Morgan Stanley is deeply involved in the AI ecosystem, both as a financier and a consumer of infrastructure. The firm's technology team forecasts AI software revenues to reach $1.1 trillion by 2028. Morgan Stanley projects related global investment to approach $3 trillion from 2025 to 2028.

In financing AI data centers, Morgan Stanley has arranged over $27 billion in debt and approximately $2.5 billion in equity for related projects. However, the firm is exploring risk transfer strategies due to concerns, with credit analysts projecting up to a 20% shortfall in U.S. power supply for data centers through 2028.

Morgan Stanley's financial health metrics reflect this operational scale:

• Net Margin: 25.18%.
• Return on Equity (ROE): 15.17%.

Morgan Stanley (MS) - Canvas Business Model: Key Activities

You're looking at the core engine room of Morgan Stanley, the activities that actually generate the firm's revenue. Honestly, the data from late 2025 shows a clear, powerful focus on balancing capital markets with client-facing wealth services. This dual-engine approach is what drove record results.

Executing complex global Mergers & Acquisitions (M&A) and advisory services.

Advisory services are a key part of the Institutional Securities segment, which reported net revenues of $8.5 billion in the third quarter of 2025. The M&A advisory piece saw a significant rebound, with advisory revenues increasing from a year ago on higher completed M&A transactions. For instance, Morgan Stanley advised Union Pacific on its $85 billion acquisition of Norfolk Southern, which was the largest deal announced globally in 2025.

Specific to regional performance, in South & Central America during the first half of 2025, Morgan Stanley took the top position in M&A fees with $59.9 million, capturing 9.15% of the wallet share. Global M&A volume surpassed $3 trillion in the first nine months of 2025, showing a constructive market for advisory work.

Underwriting and market-making in equity and fixed income securities.

The Markets businesses within Institutional Securities showed robust performance, with Equity net revenues up 35% year-over-year in Q3 2025. Fixed Income net revenues increased 8% in that same quarter, driven by credit and commodities.

Underwriting activity was strong across the board in Q3 2025, reflecting clients actively engaging in capital-raising opportunities:

• Equity underwriting revenues increased year-over-year, driven by higher IPOs and convertible offerings, including the Figma and Klarna IPOs.
• Fixed income underwriting revenues increased from a year ago on higher non-investment grade and investment grade loan issuances.
• Investment Banking net revenues overall were up 44% in Q3 2025.

Here's the quick math on Investment Banking revenue components for Q3 2025:

Business Line	Q3 2025 Revenue	Year-over-Year Growth
Advisory Services	$684 million	+25%
Equity Underwriting	$652 million	+80%
Fixed Income Underwriting	$772 million	+39%
Total Investment Banking	$2.11 billion	+44%

Prime brokerage, a key market-making activity, reached record revenues in Q3 2025 as average client balances and financing revenues hit new highs.

Providing comprehensive financial planning and wealth management services.

Wealth Management is a massive component of the firm's strategy, bringing in net revenues of $8.2 billion in Q3 2025, achieving a pre-tax margin of 30.3% for the quarter. This segment added $81 billion of net new assets during Q3 2025, with fee-based asset flows reaching $42 billion.

The focus on growing the advisor-led channel is paying off; the Wealth Management unit's pre-tax profit margin hit 30% in Q3 2025. The firm is clearly committed to scaling this business, with total client assets across Wealth and Investment Management climbing to over $8.2 trillion as of Q2 2025, pushing toward the $10 trillion target.

Managing global assets in equity, fixed income, and alternative investments.

The Investment Management segment, which includes asset management, reported net revenues of $1.7 billion in Q3 2025. This was primarily driven by asset management fees on higher average Assets Under Management (AUM).

Morgan Stanley Investment Management, along with its affiliates, reported $1.8 trillion in assets under management or supervision as of September 30, 2025. The segment saw positive long-term net flows of $16.5 billion in Q3 2025. The aggregate contribution of Wealth and Asset Management to total net revenues was 53% in the first nine months of 2025.

Investing heavily in technology and AI-related infrastructure financing.

While direct capital expenditure figures for Morgan Stanley aren't explicitly stated here, the firm's research and strategic outlook reflect heavy involvement in the technology ecosystem. Morgan Stanley Research estimates that AI-driven productivity could add 30 basis points to S&P 500 net margins in 2025. The firm's technology team forecasts that AI software revenues could reach $1.1 trillion by 2028 globally. Furthermore, Morgan Stanley anticipates that global related expenditures across the industry will approach $3 trillion by 2028, suggesting significant financing and advisory opportunities for the Institutional Securities division.

The firm's overall expense efficiency ratio dropped to a healthy 67% in Q3 2025, down from 72% a year earlier, which suggests operational leverage is being gained, partly through technology use. Finance: draft 13-week cash view by Friday.

Morgan Stanley (MS) - Canvas Business Model: Key Resources

You're looking at the core assets that power Morgan Stanley's global financial engine as of late 2025. These aren't just line items on a balance sheet; they are the actual capabilities that let the firm advise, trade, and manage wealth at scale. Honestly, the sheer size of the client base is the first thing that jumps out.

The combined client assets across the Wealth Management and Investment Management divisions show massive scale, which translates directly into stable fee revenue. As of the third quarter of 2025, Morgan Stanley reported total client assets reaching $8.9 trillion. That's up significantly from the $8.2 trillion reported at the end of the second quarter of 2025, showing strong momentum toward the firm's stated goal of surpassing $10 trillion in total client assets. This asset base is the foundation for the firm's recurring revenue streams.

Key Resource Metric	Latest Reported Value (as of late 2025)	Context/Date
Total Client Assets (Wealth & Investment Management)	$8.9 trillion	Q3 2025
Investment Management Professionals	More than 1,300	As of September 30, 2025
Standardized Common Equity Tier 1 (CET1) Ratio	15.2%	As of September 30, 2025
Aggregate U.S. Basel III Standardized Approach CET1 Ratio (Post-SCB adjustment)	11.8%	Effective October 1, 2025
ETRADE Acquisition Cost	$13 billion	October 2020

The human capital is just as critical. You need the right people to manage that capital. Morgan Stanley Investment Management alone has more than 1,300 investment professionals globally as of September 30, 2025. While the exact current count of all financial advisors and investment bankers isn't always broken out separately in the headline reports, the firm's compensation planning in late 2024 referenced a base of 15,000 advisors, underscoring the importance of this network for driving cross-business referrals.

When we look at the technology and risk management, the numbers are less direct but still visible. The firm is actively investing in its digital backbone, with the CFO highlighting investments in technology, including AI initiatives like DevGen AI, Parable, and LeadIQ, which are designed to boost productivity across the firm. This infrastructure supports the trading and advisory functions.

The capital position is a non-negotiable resource for a firm this size. The Standardized Common Equity Tier 1 (CET1) capital ratio stood at 15.2% on September 30, 2025. Even after the Federal Reserve adjusted the Stress Capital Buffer (SCB), the resulting aggregate U.S. Basel III Standardized Approach CET1 ratio was 11.8% effective October 1, 2025. That level is definitely above the minimums, giving the firm flexibility to deploy capital, such as the $1.1 billion in common stock repurchased during Q3 2025.

Finally, the ETRADE platform is a massive, integrated resource. Morgan Stanley paid $13 billion for it back in October 2020. At the time of acquisition, it brought in over 5 million retail client accounts and about $360 billion in assets. The brand strength remains, as ETRADE from Morgan Stanley earned the distinction of being the #1 Web Trading Platform in the StockBrokers.com 2025 Annual Awards. They are also actively upgrading this resource, launching the Power ETrade Pro platform in 2025 to compete for sophisticated traders.

Here are some of the platform-specific capabilities:

• The Power ETrade Pro platform allows traders to customize up to 120 tools across six screens.
• The platform offers over 145 technical studies and drawing tools.
• The options contract fee for active traders is cited as $0.50 per contract.

Morgan Stanley (MS) - Canvas Business Model: Value Propositions

You're looking at the core value Morgan Stanley (MS) delivers to its clients and the market as of late 2025. It's all about scale, integration, and high-margin advice.

Stability and resilience through a diversified, integrated business model.

The firm's structure is designed for balance. You see this in the revenue mix and capital strength. Total client assets across Wealth and Investment Management hit $8.9 trillion in the third quarter of 2025. Net revenues for that same quarter were $18.2 billion, an 18% increase year-over-year. The wealth and asset management businesses together contributed 53% of total net revenues in the first nine months of 2025, showing a clear shift toward more durable, fee-based income. Plus, the capital position remains solid, with the Common Equity Tier 1 capital ratio at 15.2% under the Standardized Approach as of September 30, 2025. That's real resilience.

Here's a quick look at the scale of the integrated firm in Q3 2025:

Metric	Value (Q3 2025)	Source Period
Total Client Assets (WM & IM)	$8.9 trillion	Q3 2025
Firm Net Revenues	$18.224 billion	Q3 2025
Return on Tangible Common Equity (ROTCE)	23.5%	Q3 2025
Institutional Securities Net Revenues	$8.523 billion	Q3 2025

Access to global capital markets and sophisticated institutional financing.

For institutions, Morgan Stanley delivers deep market access. The Institutional Securities segment pulled in net revenues of $8.5 billion in Q3 2025. Investment Banking activity rebounded, posting revenues of $2.108 billion that quarter, driven by higher IPOs and M&A transactions. The firm's Investment Banking Co-Head claimed the dealmaking pipeline was at "all-time highs" in October 2025. In Q1 2025, the Equity trading business alone generated $4.13 billion in revenue, reflecting robust client activity. You get access to sophisticated financing, like the growing appetite for investment-grade private credit, which the firm is actively involved in.

Comprehensive wealth planning and personalized advice for high-net-worth clients.

The focus here is on high-margin advice. Wealth Management achieved a 30% pre-tax margin in Q3 2025, hitting a key profitability target. The firm is successfully funneling clients through its channels, adding $81 billion in net new assets in that same quarter. Overall, the firm services 20 million individual relationships across its channels. This personalized advice is what drives the durable, recurring fee-based revenue stream.

Scale in asset management, with over $2.5 trillion in fee-based assets.

The scale in asset management is significant. Fee-based client assets within Wealth Management alone reached $2.653 trillion by Q3 2025. This figure is up from $2.302 trillion a year prior in Q3 2024. Separately, the Investment Management division's total Assets Under Management (AUM) hit a record $1.807 trillion in Q3 2025. The firm generated $41.9 billion in fee-based asset flows in Q3 2025.

• Fee-based Assets (Wealth Management): $2.653 trillion (Q3 2025)
• Investment Management AUM: $1.807 trillion (Q3 2025)
• Net New Assets (Wealth Management): $81.0 billion (Q3 2025)

Thought leadership and research on key trends like AI and energy transition.

Morgan Stanley provides proprietary views on major shifts. Leadership has commented on being more "discerning" about financing companies in the Artificial Intelligence space. The firm's research output covers global fixed income markets, multi-asset positioning, and deep dives into themes like Real Assets and Private Credit & Equity. You can expect analysis on how corporate strategy is adapting to geopolitical uncertainty and evolving trade policy.

Finance: draft 13-week cash view by Friday.

Morgan Stanley (MS) - Canvas Business Model: Customer Relationships

You're looking at how Morgan Stanley (MS) keeps its massive client base engaged, which is the core of their Wealth Management and Investment Management segments. It's a mix of personal service and digital scale, honestly.

Dedicated, high-touch relationship management via Financial Advisors.

The firm relies heavily on its Financial Advisors for its high-touch service model. While Morgan Stanley executives have moved away from quarterly reporting of advisor headcount, the quality and recognition of the advisor force remain a focus. For instance, the 2025 Forbes Top Wealth Advisors ranking included 59 Morgan Stanley Advisors, more than any other firm. Furthermore, the 2025 Forbes Best-In-State ranking recognized 1,885 Morgan Stanley Advisors, with 16 of those advisors ranking number one in their respective territories. This indicates a significant, high-performing advisor force driving client relationships.

Self-service and digital tools for ETRADE retail and stock plan clients.

The integration of ETRADE provides a crucial self-service channel. At the time of the acquisition, the combined platforms were projected to serve 8.2 million retail client relationships and accounts, alongside 4.6 million stock plan participants. The ETRADE platform supports retail customers with direct-to-consumer and digital capabilities, complementing the advisor-driven model. ETRADE from Morgan Stanley continues to release data based on customer behavior, such as its monthly sector rotation study.

Institutional relationship teams for corporate and sovereign clients.

Morgan Stanley maintains a global footprint to serve its institutional clients, including corporations and governments. The firm operates with offices in 42 countries. These relationship teams manage complex needs across Investment Banking and the Investment Management segment, which serves institutional clients through proprietary and third-party distribution channels. The firm's focus on expanding its wealth and asset management operations supports this diverse client base.

Client-focused events and proprietary market seminars to build loyalty.

Building loyalty involves direct engagement through proprietary content and events. Morgan Stanley hosts events like the Global Consumer & Retail Conference, which took place in December 2025, and issues proprietary outlooks, such as the 2025 Capital Markets Outlook published in February 2025. These interactions are designed to provide keen insight across regions and markets, underpinning the firm's commitment to its clients.

Here's a quick look at the scale of client assets managed across the key segments as of mid-2025:

Metric	Value as of Late 2025 Data Point
Total Client Assets (WM + IM)	Over $8.2 trillion (Q2 2025)
WM Segment Client Asset CAGR (2019-2024)	18.1%
IM Segment AUM CAGR (2019-2024)	24.7%
Projected Aggregate WM/IM Revenue Contribution (2025)	55.2%

The firm has an explicit goal to grow total client assets to exceed $10 trillion.

The client base is segmented across various needs, which the firm addresses through specialized offerings:

• High Net Worth Individuals
• Ultra High Net Worth Individuals
• Institutional Clients
• Family Offices

Finance: review the Q3 2025 client retention rate for the Wealth Management segment by end of next week.

Morgan Stanley (MS) - Canvas Business Model: Channels

You're looking at how Morgan Stanley (MS) gets its services and products to clients, which is a mix of high-touch advisory and massive digital scale. It's defintely an integrated approach now.

Global network of physical offices and branches for Institutional Securities

The Institutional Securities business relies on a global physical presence to service corporations, governments, and institutions for investment banking and trading.

Morgan Stanley operates with a worldwide footprint, maintaining offices in 42 countries as of the latest available data. The world headquarters remains at 1585 Broadway in New York City. This physical network supports the global market access and trading capabilities that drive the Institutional Securities segment.

Financial Advisor-led brokerage and advisory accounts

This channel is the core of the advisor-driven wealth management experience. You see the scale of this through the assets they manage.

As of the third quarter of 2025, the total client assets across the Wealth Management and Investment Management segments reached $8.9 trillion. The Wealth Management portion, which is heavily reliant on Financial Advisors, reported fee-based assets of $2,653 billion at the end of Q3 2025. The momentum in this channel was clear, bringing in $81.0 billion in net new assets during that same quarter.

Here's a quick look at the scale of the Wealth and Investment Management channels as of late 2025:

Metric	Value (Q3 2025)	Source Segment
Total Client Assets (WM & IM Aggregate)	$8.9 trillion	Wealth & Investment Management
Fee-based Client Assets	$2,653 billion	Wealth Management
Net New Assets (NNA)	$81.0 billion	Wealth Management (Q3 2025)
Investment Management AUM	$1,807 billion	Investment Management

ETRADE digital platform for self-directed retail investors

The ETRADE platform provides the self-directed and digital banking access point for a significant portion of Morgan Stanley's retail clients. This channel was integrated following the acquisition valued at approximately $13 billion.

At the time of the deal announcement, ETRADE brought over 5.2 million client accounts and $360 billion in retail client assets. Even recently, as of December 6, 2025, the Premium Savings Account offered through the platform showed an Annual Percentage Yield (APY) of 3.75%.

• Commodity futures and options on futures products are offered by ETRADE Futures LLC, Member NFA.
• Banking products and services are provided by Morgan Stanley Private Bank, National Association, Member FDIC.
• The platform supports online brokerage, automated investment management via Core Portfolios, and various IRA types.

Morgan Stanley Investment Management (MSIM) third-party distribution channels

Morgan Stanley Investment Management (MSIM) uses various external channels to reach institutional and retail clients, complementing its direct institutional distribution.

MSIM's Assets Under Management (AUM) stood at $1,807 billion as of the third quarter of 2025. The long-term net flows for the Investment Management segment were $16.5 billion in Q3 2025, showing continued external demand for their products.

The firm is also tracking investor sentiment through its surveys, noting that 86% of asset owners expected to increase allocations to sustainable funds over the next two years, according to a November 2025 survey, which impacts how mandates are awarded through these distribution partners.

Morgan Stanley (MS) - Canvas Business Model: Customer Segments

You're looking at how Morgan Stanley structures its relationships with the diverse set of clients it serves across its global platform as of late 2025. The firm's strategy clearly emphasizes growing the wealth and asset management side, which now contributes 53% of total net revenues in the first nine months of 2025, up from 26% in 2010.

The client base is segmented across the Institutional Securities, Wealth Management, and Investment Management divisions. Total client assets across Wealth and Investment Management climbed to over $8.2 trillion in the second quarter of 2025, pushing toward the goal of exceeding $10 trillion.

Global Corporations and Governments (Institutional Securities)

This segment serves the largest entities in the global economy. Morgan Stanley helps corporations and governments with capital raising, M&A advisory, and trading services. The activity here is a key driver of overall firm performance, especially when deal-making picks up, as seen with the rebound in global M&A activity in the third quarter of 2025.

For instance, client activity in Asia amid market volatility drove the Asia region revenues for this segment up 29% year over year to $7.27 billion in the first nine months of 2025.

Key client types within this group include:

• Corporations seeking M&A advice and capital markets access.
• Governments requiring financing and advisory services.
• Financial institutions needing trading and execution services.

Ultra-High-Net-Worth and High-Net-Worth Individuals

These clients are served primarily through the Global Wealth Management Group, often utilizing the full-service, advisor-driven model. They access the firm's combined resources, including investment banking services and proprietary deals, which is a key differentiator for this sophisticated clientele.

The Wealth Management segment's total client assets showed a five-year (2019-2024) compound annual growth rate (CAGR) of 18.1%, and this growth trend continued into 2025.

Retail and Mass Affluent Investors (via ETRADE)

The acquisition of ETRADE positioned Morgan Stanley as a top player across all wealth management channels, including the self-directed space. This group relies heavily on digital capabilities and commission-free trading options.

While the initial deal metrics from 2020 showed ETRADE brought over 5.2 million client accounts and $360 billion in retail client assets, the combined platform now serves 8.2 million retail client relationships and accounts.

The offering for this segment includes:

• Brokerage and investment advisory services.
• Retirement plan services.
• Cash Management Solutions like the Active Assets Account.

Institutional Investors (pension funds, endowments, sovereign wealth funds)

This group is a core focus for the Investment Management segment. Morgan Stanley Investment Management (MSIM) provides a suite of solutions across public and private markets to these large pools of capital.

As of September 30, 2025, MSIM managed or supervised $1.8 trillion in assets. The Investment Management segment's total assets under management saw a five-year (2019-2024) CAGR of 24.7%, with the uptrend continuing in 2025.

The client base here is extensive:

• Defined benefit/defined contribution pension funds.
• Foundations and endowments.
• Sovereign wealth funds and insurance companies.
• Third-party fund sponsors.

Private Equity Sponsors and Hedge Funds (Prime Brokerage)

These sophisticated financial players are major users of the Institutional Securities segment, particularly the Prime Brokerage services. This area benefits significantly from market volatility and solid client activity, as evidenced by record equity net revenues in Asia driven by prime brokerage outperformance.

Morgan Stanley helps these clients with tailored and flexible structures, especially in areas like private credit, where the market is estimated to reach $2.8 trillion by 2028.

Here's a quick look at the scale of assets managed for clients across the wealth and investment arms as of mid-to-late 2025:

Client Asset Category	Metric/Value	As of Date/Period
Total Client Assets (WM & IM)	Over $8.2 trillion	Q2 2025
Investment Management AUM/Supervision	$1.8 trillion	September 30, 2025
Wealth Management (Pre-Eaton Vance/MSIM Growth)	$5.4 trillion	2021 (Post-Acquisition Baseline)
ETRADE Retail Client Assets (Acquisition Baseline)	Over $360 billion	February 2020

The firm's strategy is clearly about capturing more wallet share across the spectrum, from the individual investor on ETRADE to the largest sovereign wealth funds. Finance: draft 13-week cash view by Friday.

Morgan Stanley (MS) - Canvas Business Model: Cost Structure

You're looking at the expense side of Morgan Stanley's operations as of late 2025, and honestly, it's a story of scale and investment. The costs reflect a firm handling massive client flows and aggressively building for the future.

Compensation and benefits remains the single largest drain on the bottom line, which is typical for a services-heavy financial institution. For the third quarter ending September 30, 2025, the reported compensation expense was $7,442 million. This figure was driven higher by expenses related to deferred compensation and higher salaries. To give you a sense of the scale, the non-GAAP adjusted compensation expense, which excludes certain cash-based deferred compensation plans, was $7,142 million for the same period.

Next up are the non-compensation expenses, which are a direct reflection of growth investment. These expenses rose 9% in Q3 2025 compared to the prior year, totaling $4,754 million for the quarter. This increase was primarily due to higher execution-related expenses.

Here's a quick look at the major expense categories for the third quarter of 2025:

Expense Category	Q3 2025 Amount (Millions USD)	Context
Compensation Expense	$7,442	Largest single expense category.
Non-compensation Expenses	$4,754	Reflecting growth investment, up 9% year-over-year.
Interest Expense on Debt (Quarterly)	$12.97B	Reported for the fiscal quarter ending September 2025.

The firm is making significant technology and data infrastructure spending, especially on AI capabilities, which feeds into those non-compensation figures. While a specific Q3 2025 technology spend number isn't explicitly broken out, the forward-looking data is telling. Morgan Stanley's own analysts project that global data center construction will require approximately $2.9 trillion in investment from 2025 to 2028. Furthermore, the technology team forecasts AI software revenues to reach $1.1 trillion by 2028, suggesting the current investment cycle is expected to generate enduring cash flows.

You also have to account for regulatory compliance and legal costs associated with global operations, which is a constant, non-trivial cost of doing business at this scale. To be fair, we see other large, non-recurring operating costs, like the $144 million recorded for the reduction in force (RIF) in Q3 2025, which was included within Compensation and benefits expense.

Finally, the cost of financing the balance sheet shows up as interest expense on long-term debt. As of September 30, 2025, Morgan Stanley reported $324.1 billion in long-term debt outstanding. The actual interest expense recognized for that quarter was $12.97B. The firm's expense efficiency ratio improved to 67% in Q3 2025, down from 72% a year ago, showing they are managing these costs relative to record revenues.

Morgan Stanley (MS) - Canvas Business Model: Revenue Streams

You're looking at the engine room of Morgan Stanley's profitability, the streams that feed the firm's overall performance as of late 2025. It's a mix of steady, recurring fees and the more volatile, but often lucrative, transactional businesses. Honestly, the shift toward fee-based income has been a major strategic focus for years.

The combined power of Wealth Management and Investment Management is substantial. In the first nine months of 2025 (9M 2025), these fee-based revenues contributed 53% of Morgan Stanley's total net revenues. This focus on recurring revenue provides a solid base, which is smart when capital markets get choppy.

Investment Banking fees remain a critical component, showing a strong rebound in dealmaking activity. After a slower period, the environment picked up steam. For the third quarter of 2025 (3Q 2025), Investment Banking revenue jumped 44% year-over-year to $2.11 billion. This was fueled by a rebound in strategic Mergers & Acquisitions (M&A) and renewed financing activity, with the pipeline reportedly at all-time highs.

Here's a quick look at the components of that Investment Banking revenue for 3Q 2025, based on consensus estimates:

Revenue Component	3Q 2025 Estimated Revenue (Year-over-Year Change)
Total Investment Banking Income	$1.51 billion (3.4% rise consensus)
Advisory Fees	$589 million (7.9% rise consensus)
Equity Underwriting Fees	$440 million (21.5% rise consensus)
Fixed Income Underwriting Fees	$510 million (8.1% fall consensus)

Sales and Trading revenue is where you see the immediate impact of market volatility. You definitely saw this in the first quarter of 2025 (Q1 2025), where equity trading revenue surged 45% to a record $4.13 billion. This was driven by heightened volatility, leading to increased hedging activity from clients. By the third quarter of 2025, Equity revenue was still strong at $4.12 billion, representing a 35% year-over-year increase.

Net interest income (NII) from lending and cash management services provides a steadier stream. For the second quarter of 2025 (Q2 2025), NII totaled $2.35 billion, which was flat compared to Q1 2025. This stability is supported by the cumulative impact of lending growth.

Asset Management fees are directly tied to the assets Morgan Stanley manages. Total client assets across Wealth and Investment Management reached $8.9 trillion by the end of 3Q 2025. The Investment Management segment specifically held $1.807 trillion in Assets Under Management (AUM) in 3Q 2025. This scale supported net revenues for the Investment Management segment of $1.651 billion in 3Q 2025.

To give you a clearer picture of the quarterly revenue mix from the latest available detailed reports, here's a snapshot:

• Wealth Management net revenues in 3Q 2025 hit a record $8.234 billion.
• The pre-tax margin for Wealth Management in 3Q 2025 was 30.3%.
• Net new assets for Wealth Management in 3Q 2025 were $81.0 billion.
• Fee-based asset flows in Wealth Management for 3Q 2025 were $41.9 billion.
• Investment Management net revenues in 3Q 2025 were $1.651 billion.

Here's how the key revenue segments stacked up in the third quarter of 2025:

Business Segment	3Q 2025 Net Revenues ($ millions)	Year-over-Year Change
Institutional Securities (Total)	$8,523	Increase
Investment Banking (within Institutional Securities)	$2,108	Up 44% (Implied from IB revenue rise)
Equity (within Institutional Securities)	$4,116	Surge (Q1 saw 45% surge)
Wealth Management (Total)	$8,234	Jump (Up 13% from a year ago)
Investment Management (Total)	$1,651	Increase

If onboarding takes 14+ days, churn risk rises, but for Morgan Stanley, the recurring revenue streams are definitely holding up their end of the bargain.

Finance: draft 13-week cash view by Friday.