James P. Gorman
Chairman and Chief Executive Officer at Morgan Stanley
Thank you. Good morning, everyone. Morgan Stanley delivered another record year of profits and results in 2021, generating a full-year ROTCE of 20%. Performance was strong in each business. In Institutional Securities, we showed strength and gained share, and in Wealth Management, we added over $430 billion of net new assets, bringing total client assets to nearly $5 trillion. We drove our strategic vision forward Investment Management, successfully closing our acquisition of Eaton Vance earlier in the year and created a premier asset manager, which itself has $1.6 trillion of assets under management.
Sharon will discuss the details of the quarter and the full-year shortly. But first, as always, I'll walk through our annual strategic update. If you turn to the document and start on Slide 3. At the beginning of last year, we set two-year objectives with the expectation that 2021 would be a transition year as we work through our integrations. Clearly, the Firm's performance exceeded the expectations we had for 2021 heading into that year. With the early successes of the E TRADE and Eaton Vance acquisitions and the Firm's overall momentum, we entered 2022 ahead of plan.
Turn to Slide 4. First, I'll focus on our 12-year transformation and where the Firm is today. History offers perspective on our track record. Next, I'll highlight where we've built unique competitive advantages around each of our businesses and how we expect to grow and maintain our leading positions. Then I will address our continued commitment to return capital to our shareholders. And finally, I'll touch on how when taken together, this should lead to further multiple expansion. To begin with our longer-term evolution, Slide 5 highlights the transformation of Morgan Stanley into a more balanced, higher returning Firm today. Total revenues are more than double the level of 2009 with each business significantly growing and contributing to the Firm's enhanced profitability. Each of our businesses now have defensible and sustainable competitive advantages to protect and drive their leading positions.
Start with Institutional Securities on Slide 6. Looking back to 2014, when we'd recovered from the financial crisis, before we reset our strategy and restructured some of this business, we've increased share both overall and individually across business lines. Share continues to aggregate to the industry leaders and we expect this trend to hold. Our competitive position is strong, and as demonstrated in the very active markets for the last two years, we're confident in our ability to capitalize on opportunities to hold, if not gain share across the division.
Moving to Slide 7, our integrated Investment Bank delivered $30 billion of revenues in 2021 and continues to demonstrate operating leverage highlighted by our expanding margins. Our footprint is balanced around the world, putting us in a leading tier of investment banks with global scale. Our franchise has never been stronger, and we have seen tangible results from the collaboration between our segments.
Shifting to Wealth Management on Slide 8, the growth we've seen in 2021 has been unprecedented. We added nearly $1 trillion in client assets in a single year. Scale advantages propelled growth, and we added $438 billion of net new assets in the last 12 months. This predominantly organic growth is the result of our consistent and focused execution on our integration and expansion initiatives and puts us in a leading position. The journey over the last few years has demonstrated the out of the possible. With respect to net new asset growth, this business has gone from very low single-digits in the last decade to 4%, 6% more recently through unprecedented growth this year. Obviously, it's still early days, but the verticals are in place. Before we commit to specific guidance for net new asset growth, we need more time to better understand the power of these channels. But what I can tell you is that the proof points are strong, and we feel great about where we are today in the business potential.
Turn to Slide 9. With the top advisor-led business in the industry complemented by leading Workplace and Self-Directed offerings, the Wealth franchise we have built as a category of one. We already serve nearly $5 trillion of client assets and overall revenue and assets remains high at over 50 basis points, underlining this segment is an -- underlining this segment as an economic engine for the Firm. As we think about the growth ahead, we're most excited about the nearly 15 million relationships we have across channels, and the potential to deepen those relationships further and consolidate client assets onto the platform.
On Slide 10, we look more closely at Workplace, which I'm incredibly excited about for the future. As we've said before, we see this channel as a funnel for client and asset acquisition to sustain growth going forward. We now have over $500 billion of unvested assets in this channel and expect to retain an increasing proportion as they vest. In 2021, we had a 24% retention rate, that compares with 21% the previous year. Given our focused effort, our long-term goal is to reach 30% retention. This new metric illustrates the strength of the Workplace business to augment net new assets to Wealth Management.
Moving to Investment Management on Slide 11. Our platform has transformed into a premier and growing asset manager. Our distinctive capabilities enable us to deliver differentiated client value as endorsed by $115 billion of net flows in the year. Total AUM is now $1.6 trillion, and our more durable asset management fees are nearly triple what they were in 2014.
If you look closer to our Investment Management business on Slide 12, you can see we are a leader and growing where it matters most. Customization, specifically, direct indexing through the premier Parametric brand, sustainability and alternatives are each areas of increasing client demand. We've strengthened our position across these categories with robust investment capabilities and we've seen meaningful asset under management growth as a result. Moreover, the complementary nature of distribution networks with Eaton Vance's powerful U.S. retail distribution capabilities and MSIM's strength in international distribution enhances our client reach. We're encouraged by early signs of success in leveraging the greater combined networks along with our world-class equity franchise and value-added fixed income platform, and we expect these areas will continue to drive growth into the future.
Finally on Slide 11 [Phonetic], as we look ahead, we expect rates to rise. We expect approximately $500 million of incremental NII in Wealth Management this year based on the year-end forward curve. Additionally, we expect another $200 million this year from the reversal of fee waivers in our Investment Management business. To further measure our rate sensitivity, we look at what happens if there is an incremental 100 basis point parallel shift in rates beyond the curve, that would deliver another $1.3 billion, which largely goes to the bottom line. While we certainly don't expect this additional shift to happen this year, the Firm will clearly benefit substantially as rates rise over the next several years.
Pivoting to our capital return strategy on Slide 14. An increased earnings power supported by revenues with more -- from more durable sources has enabled us to double our annualized dividend to $2.80 just last year, while at the same time executing our meaningful share repurchases. Notwithstanding the returns we're making to shareholders and the investments we make in our business, we continue to have an excess capital position. Our CET1 ratio was 16% at year-end after paying our dividend executing on our repurchase plan and accounting for the impact of SA-CCR.
And as further illustrated on Slide 15, growing net income has provided us the flexibility to reduce our share count. While we added 300 million shares from our two large acquisitions of E TRADE and Eaton Vance, we continue to execute on our meaningful buyback program and brought back our share count back to just under 1.8 billion [Phonetic] from 2 billion [Phonetic] in 2014.
Taking all this together, Slide 16 highlights the fundamentals we have in place to drive future multiple expansion. We have scale, significant growth opportunities in Wealth and Investment Management coupled with the leading institutional business and a strong commitment to capital return. The Morgan Stanley brand has never been stronger. We've been fortunate enough to acquire additional brands in the last few years that have tremendous value in expanding our footprint as some of these elements supports multiple expansion for the combined company.
Slide 17 shows our performance goals. Of note, we are increasing our ROTCE goal to reflect the earnings power we see in our business model. We are laser-focused on delivering value to our clients, our shareholders and our employees, and we believe an ROTCE in excess of 20% is achievable. As we look to the longer-term with the support of our track record behind us, we're adding a new goal, a long-term goal to achieve $10 trillion in client assets across Wealth and Investment Management. As always, our targets are subject of course to major market moves or changes in the economic, political, and regulatory environment. However, with the outlook we have now, we fully expect to achieve our goals.
I'll now turn the call over to Sharon, who'll discuss our fourth quarter and annual results and together, we will take your questions. Thank you.
