(New York)

Morgan Stanley’s wealth management can be described as nothing other than an unmitigated success in the fourth quarter. The numbers are in, and the data show that the unit is minting cash as the broker enjoys the transition from commission-based to fee-based accounts as provided by the fiduciary rule. Revenue increased a whopping 10% and the profit margin rose from under 10% the previous year to an eye-watering 26% in 2017.

FINSUM: We realize the importance of fiduciary duty, but how is a transition to much more expensive fee-based accounts—which are hugely boosting net profits to big firms—in the ultimate best interest of clients?

(New York)

Like Morgan Stanley, Merrill Lynch is in the middle of a big bet on its wealth management unit The broker has decided to focus less resources on hiring senior advisors and more on training younger staff. Accordingly, its staff costs have shrunk despite growing its advisor base by 2%. By some accounts the early signs for the experiment are good, but it will take a long time to see how well it plays out.

FINSUM: The whole industry has a bit of an inheritance problem right now, since there are herds of baby boomer advisors who are set to retire in the coming years, and as yet, a dearth of young advisors to take their places.

(New York)

Most of the market’s panic over retail centers on the threat from Amazon and the shift to ecommerce from brick and mortar (admittedly related threats). However, there is more out there to be worried about than just those. In particular, the apparel market is not growing very quickly, as it is losing market share to other areas of consumer spending, such as restaurants, entertainment and wellness. Staffing costs are also rising at the same time as price pressure is growing, putting a strain on margins.

FINSUM: Amazon’s growth in apparel sales is also well-outpacing the overall industry’s growth rate, which means it is already stealing market share on top of these other challenges.

(New York)

Goldman Sachs has stuck to its guns with its trading division despite numerous changes to the industry and its competitors revamping. However, the bank finally appears to be changing its strategy. Since 2009, Goldman’s fixed income trading revenue has shrunk from over $23 bn in 2009, to just over $5 bn in 2017. Now the bank is changing its focus away from serving hedge fund clients, whom it has become overly reliant on, and towards big corporate clients, who offer a different sort of “flow” business based on interest swaps and other corporate needs.

FINSUM: We think it is smart for Goldman to diversify the focus on its fixed income unit. Especially since the $20bn plus revenue days don’t look like they are coming back.

(Houston)

Oil prices have done very well over the last several months. Prices have been rising at the pump, making producers happier and consumers less so. However, gloomier days may lay ahead. The IEA thinks US shale oil output may soon surge on the back of higher prices. If this happens, it would undue the supply reduction OPEC’s cuts have created and send the market downward. Additionally, it would likely lead to an unwind of OPEC’s cuts, as if they were maintained, the reductions would be disproportionately benefitting OPEC’s competitors.

FINSUM: Oil prices have been doing better, but that does not change the fact that world has a fundamental oversupply of oil. This is not a problem by any means, but is a factor that will weigh on prices for years to come.