Morgan Stanley Wealth Management has reported strong pre-tax income from continuing operations.

Morgan Stanley Wealth Management has reported Q4 2014 pre-tax income from continuing operations of $736 million, up 3 per cent from $715 million in the fourth quarter of 2013 but down 8 per cent from $800 million in the previous quarter.

Net revenues inched up 2 per cent to $3.8 billion - a quarterly record, it said - from $3.7 billion a year ago and 1 per cent from Q3.

Net interest income – the difference between revenue generated from assets and the expenses associated with paying out its liabilities – of $625 million rose from $526 million a year ago on higher deposits and loan balances, the firm said.

Meanwhile, asset management fee revenues of $2.1 billion increase from $2.0 billion a year ago, primarily reflecting market appreciation and positive flows.

Transactional revenues - money earned through an exchange of cash or credit for goods, services or assets - of $976 million decreased however from $1.1 billion a year ago, reflecting lower revenues related to deferred compensation plans and lower levels of new issue activity.

Total client assets came in at over $2.0 trillion at quarter-end, with assets in fee-based accounts of $785 billion having risen by 13 per cent compared with the prior-year quarter. Fee-based asset flows for the quarter were a “record” $20.8 billion, Morgan Stanley said.

The number of wealth management representatives dropped from 16,456 a year ago to 16,076, although the average annualized revenue per representative - $944,000 - and total client assets per representative - $126 million - rose by 5 per cent and 9 per cent respectively.

Of note in Q4, Morgan Stanley launched an Institute of Family Wealth Management to help its advisors capture business from the highly talked-about wealth transfer sweeping the US. It also assembled a group of financial advisors across the US to spearhead the launch of its global sports and entertainment division.

Meanwhile, Morgan Stanley as a whole today logged net revenues of $7.8 billion for the fourth quarter ended December 31, 2014, down from $8.9 billion in Q3 and unchanged from $7.8 billion a year ago.

“We finished 2014 in substantially better shape than we entered the year. We delivered strong results across several of our businesses, although overall performance was affected by the choppy market conditions of the fourth quarter," said James Gorman, chairman and chief executive. "We also addressed a number of items that, while affecting our results in the short term, position us well in the years ahead. Entering 2015, we remain confident about our business mix, market position and the opportunities ahead of us.”

Over the last couple of years the US-listed firm has sold part of its non-domestic wealth management business while retaining operations in regions such as Asia.