Morgan Stanley bought E*Trade and Eaton Vance in 2020 and posted record profit

In February 2020, weeks before COVID lockdowns hit, Morgan Stanley agreed to buy E*TRADE for about $13 billion in stock, adding 5.2 million client accounts, $360 billion of retail assets and a direct-to-consumer digital channel. CEO James Gorman called it a leap forward in the firm's decade-long move toward balance-sheet-light, durable revenue.

The deal closed on October 2, 2020, in the middle of the pandemic. Six days later Morgan Stanley agreed to buy asset manager Eaton Vance for about $7 billion — a 38% premium for roughly $500 billion of AUM — completing the two largest acquisitions any big bank had made in the post-crisis era within ten months.

The timing looked bold, but the payoff came fast: trading volumes exploded during the pandemic, and Morgan Stanley finished 2020 with record net revenues of $48.2 billion, up 16%, and record net income of $11 billion, up 22%, with wealth management contributing a 23% pre-tax margin.

E*TRADE added 5.2M accounts and $360B of assets; Eaton Vance added ~$500B of AUM. 2020 revenue hit a record $48.2B and net income $11B.

E*TRADE's retail platform captured the retail trading boom at the right moment.

Eaton Vance's fee-based AUM added stable, low-capital revenue.

The wealth pivot reduced dependence on volatile trading markets.

Deals done in a crisis face less bidding competition and price pressure.

A decade of shifting toward wealth and stable fees meant the firm could buy digital scale at the bottom of a panic instead of defending a shrinking trading book.

Morgan Stanley entered 2021 with wealth management as its earnings anchor; Gorman said the firm was done acquiring and focused on integrating E*TRADE and Eaton Vance. The two deals positioned Morgan Stanley as a leader across advisory, workplace and self-directed channels — the strategy that defined its post-2008 identity.