Wealth management: for and against It's hard to destroy a bank by giving rich people financial advice. Which may be why everyone tends to forget about wealth management during results and focuses on investment banking. But as Morgan Stanley and Bank of America showed again on Thursday, investment banking is actually mundanely cyclical. This quarter, both banks made bumper profits, helping share prices higher. But it is swings and roundabouts. Thus wealth management should not be ignored. Morgan Stanley's $3.4bn of wealth management revenues in the first quarter were not far behind the $4.9bn from investment banking and sales and trading (excluding debt valuation adjustments). At BofA, global wealth and investment management revenues were almost two-thirds as big as its consumer and business banking operation. But it is not only size that should focus minds. Investors should also ponder why banks are in wealth management at all. The case for is that the business is scaleable and benefits from rising asset prices and the ever-increasing wealth of mankind. The booming emerging world is a bonus, as is the rich being less vulnerable to downturns. Clients can also open the odd investment banking door. One of the best post-crisis attributes is that the business uses little capital. Tier one capital at Morgan Stanley's wealth management group, for example, accounts for only 6 per cent of the total. Advising the rich is no gold mine, though. Assets under management and therefore fees fall when markets do. Advisers are always threatening to leave with clients. Hence they are expensive. The cost-income ratio at BofA's wealth management division is above 80 per cent. Little common equity may be required, but Morgan Stanley's return on it is in single digits. These are far more interesting things to be quizzing management about than cyclical trading profits.