Deposits Gathered From Brokerage ClientsNarrow moat

Morgan Stanley (MS) — moat facet

Morgan Stanley gathered four hundred billion dollars of deposits from brokerage clients without a branch network, but those clients know what cash is worth.

Morgan Stanley became a large deposit-taker without opening a branch network. Wealth Management deposits were $351 billion at the end of 2022, $346 billion in 2023, $370 billion in 2024 and $408 billion at the end of 202512, and firm deposits were $446,068 million in June 20263. The money is client cash swept from brokerage accounts into the firm's banks.

WM cost of deposits, period average (%)0.5320222.4320233.0520242.762025Morgan Stanley Forms 10-K FY2023 and FY2025
From half a percent to three.

That cash funds lending to the same clients and earns the segment its net interest income, $7,911 million in 20254. Of total deposits of $415,523 million at the end of 2025, $331,322 million were subject to FDIC insurance5.

The price of the deposits moved with rates. The segment's period-average cost of deposits was 0.53% in 2022, 2.43% in 2023, 3.05% in 2024 and 2.76% in 202567. Brokerage clients are more rate-aware than a checking customer, and when rates rose they moved cash into higher-paying products.

The advantage is that the deposits come with the relationship. A client whose investments and cash sit in one place rarely moves the cash alone.

Firm deposits were $351,804 million at the end of 2023 and $376,007 million at the end of 20248. Savings and demand deposits were $315,883 million and time deposits $99,640 million at the end of 20259, and the growth in time deposits shows clients asking for a fixed rate on part of their cash.

The cost of deposits is the running test. A figure that stayed near 2.8% while market rates fell would mean clients were demanding more for their cash than the franchise can justify, and net interest income would shrink faster than rates.

Moat trajectory: Holding steady

WM deposits $351bn (2022) to $408bn (2025); cost 2.76%.

The number that tests this moat
Reported
Firm deposits, latest quarter
$446,068M (Q2 2026) vs $415,523M at end-2025

The funding the wealth clients supply; a fall with rates stable would mean clients were moving cash out.

Source: Morgan Stanley Q2 2026 earnings release ↗
⚠ Threats to the moat
⚠ THREAT 01
The Cash Sweep Lawsuits
Class actions accuse Morgan Stanley and E*TRADE of underpaying on swept cash, which is exactly where the deposit spread comes from.
References
  1. ReportedWealth Management deposits were $351 billion at the end of 2022, $346 billion in 2023, $370 billion in 2024 and $408 billion at the end of 2025, and firm deposits were $446,068 million in June 2026.
    Morgan Stanley Form 10-K for fiscal 2025 - balance sheet, deposits, loans, goodwill and credit provisions. — FY2025 · publ. 19 February 2026 · source ↗
  2. ReportedWealth Management deposits were $351 billion at the end of 2022, $346 billion in 2023, $370 billion in 2024 and $408 billion at the end of 2025, and firm deposits were $446,068 million in June 2026.
    Morgan Stanley Form 10-K for fiscal 2023 - segment results for 2021-2023, Wealth Management metrics for 2021-2023, the block-trading settlements, and 2023 charges. — FY2023 · publ. February 2024 · source ↗
  3. ReportedWealth Management deposits were $351 billion at the end of 2022, $346 billion in 2023, $370 billion in 2024 and $408 billion at the end of 2025, and firm deposits were $446,068 million in June 2026.
    Morgan Stanley second-quarter 2026 financial supplement, Form 8-K exhibit 99.2 - Wealth Management metrics, Investment Management assets under management and flows, regional revenues. — Q2 2026 · publ. 15 July 2026 · source ↗
  4. ReportedThat cash funds lending to the same clients and earns the segment its net interest income, $7,911 million in 2025.
    Morgan Stanley Form 10-K for fiscal 2025 - segment results, revenue lines and regional net revenues. — FY2025 · publ. 19 February 2026 · source ↗
  5. ReportedOf total deposits of $415,523 million at the end of 2025, $331,322 million were subject to FDIC insurance.
    Morgan Stanley Form 10-K for fiscal 2025 - balance sheet, deposits, loans, goodwill and credit provisions. — FY2025 · publ. 19 February 2026 · source ↗
  6. ReportedThe segment's period-average cost of deposits was 0.53% in 2022, 2.43% in 2023, 3.05% in 2024 and 2.76% in 2025.
    Morgan Stanley Form 10-K for fiscal 2023 - segment results for 2021-2023, Wealth Management metrics for 2021-2023, the block-trading settlements, and 2023 charges. — FY2023 · publ. February 2024 · source ↗
  7. ReportedThe segment's period-average cost of deposits was 0.53% in 2022, 2.43% in 2023, 3.05% in 2024 and 2.76% in 2025.
    Morgan Stanley Form 10-K for fiscal 2025 - Wealth Management metrics: client assets, flows, channels, deposits and adviser loans. — FY2025 · publ. 19 February 2026 · source ↗
  8. ReportedFirm deposits were $351,804 million at the end of 2023 and $376,007 million at the end of 2024.
    Morgan Stanley Form 10-K for fiscal 2024 - share repurchases for 2022-2024 and deposits for 2023. — FY2024 · publ. February 2025 · source ↗
  9. ReportedSavings and demand deposits were $315,883 million and time deposits $99,640 million at the end of 2025, and the growth in time deposits shows clients asking for a fixed rate on part of their cash.
    Morgan Stanley Form 10-K for fiscal 2025 - balance sheet, deposits, loans, goodwill and credit provisions. — FY2025 · publ. 19 February 2026 · source ↗
Sources
Generated September 26, 2026