Let the good times roll.

Some of Wall Street’s biggest names, including BlackRock, Goldman Sachs, JPMorgan and others, delivered another round of stellar earnings this week, supported by strong revenues in their wealth and asset management divisions. BlackRock, the world’s largest asset manager, reported a record $13.5 trillion in assets, up 17% year-over-year. Much of the growth came from its expansion into private markets, particularly its acquisition of HPS Investment Partners, which added $165 billion of client AUM and $118 billion in fee-paying assets. Investor enthusiasm for ETFs also played a role, with iShares funds bringing in $153 billion in net inflows in Q3.

“The scale of the opportunity ahead far exceeds what we’ve ever seen before,” CEO Larry Fink said in a statement.

Deal the Cards

Goldman Sachs also impressed, as its asset and wealth management fees rose 17% to $4.4 billion, marking the segment’s first quarterly increase this year. The investment bank also announced the acquisition of venture capital firm Industry Ventures this week, a move CEO David Solomon said would strengthen its relationships with ultra-high-net-worth clients.

Overall, the firm reported $15 billion in net revenues, partially driven by a surge in M&A volumes. It also advised on $1 trillion in announced deals this year, including Electronic Arts’ $55 billion sale to private equity firms and Saudi Arabia’s PIF, and Fifth Third Bancorp’s $10.9 billion purchase of Comerica.

Wirehouse Winning Streak

Not to be outdone, Bank of America’s wealth unit, which includes Merrill Lynch and BofA Private Bank, reported about $1.3 billion, up 19% from last year. Wells Fargo’s wealth and investment management unit reported net income of $591 million, a 12% increase year over year. And, Morgan Stanley’s wealth unit reported record revenue of $8.2 billion, up 13% over the same time last year, bolstered by asset management and transactional revenue.

Other big wealth management firms also saw success in Q3:

• Citigroup, whose wealth unit is a key component of the firm’s turnaround efforts, reported $18.6 billion in new investment assets, up from $13.8 billion this time last year.
• JPMorgan’s client assets reached $1.2 trillion, up 15% from Q3 2024. Also, the firm’s advisor headcount topped 6,000.

Know When to Fold ‘Em. Leave it to JPMorgan CEO Jamie Dimon to always pull us back down to earth. Dimon said Tuesday that despite the economy being fairly resilient, there continues to be “a heightened degree of uncertainty” due to complex geopolitical conditions, tariffs, sticky inflation, elevated asset prices and trade issues. Similarly, JPMorgan Asset Management Chief Global Strategist David Kelly warned in a note that the country is “going broke” because of rising federal debt.

Granted, he did say we were “slowly” going broke.

All the double-leveraged ETFs on the market are starting to look downright quaint.

Several exchange-traded fund issuers recently flooded the SEC’s Edgar system with dozens of proposed triple-leveraged single stock products. Not to be outdone, one company, Volatility Shares, skipped right to 5x. That firm filed numerous proposed ETFs with the Securities and Exchange Commission on Tuesday, all of which are either 3x- or 5x-leveraged single-stock or crypto funds. That’s really taking the name Volatility Shares seriously.

If there is a use case for such an aggressively risky product, it is speculative intraday betting, said Bryan Armour, director of ETF and passive strategies research for North America at Morningstar Research Services. “Anything beyond that would almost certainly be a poor outcome for investors,” he said. “Leveraged ETFs have a very bloodied history.”

There Will Be Blood

Volatility Shares, which declined to comment, filed for more than two dozen new ETFs. Those include both 3x and 5x single stock versions for Circle Internet Group, MicroStrategy, Nvidia, Amazon, Coinbase Global, Palantir Technologies, Tesla, Google and AMD. There are also 3x and 5x ETFs focused on digital assets, including XRP, Bitcoin, Ether and Solana. Another is a 3x leveraged VIX ETF.

With positive stock performance, there is a big potential for amplified returns. What could go wrong? A lot, it would seem:

• Of all the leveraged ETFs that have existed in the US, more than half of those that were on the market for at least three years have closed, Armour noted.
• 17% of ETFs in the category have lost a cumulative 98% of their values over their lifetimes, he said.
• A UK-domiciled GraniteShares exchange-traded product, the 3x Short AMD, earlier this month went to zero after AMD’s stock rocketed 38%, and shareholders lost everything they had in the fund.

‘I’m Finished!’ It’s unclear if the SEC could approve any of the 3x leveraged ETFs that issuers are now seeking, let alone any 5x ones. The regulator has limits on volatility that historically have prevented such strategies. But then again, it was not long ago that the SEC didn’t allow single-stock or spot-crypto ETFs, Armour said. “I don’t know where the line is for the SEC anymore.”

Of course, it could give some day traders what they want. “A 20% daily decline could lead to 100% losses and if held longer-term, there could be significant compounded losses even with lower daily declines,” said Roxanna Islam, head of sector and industry research at TMX VettaFi. “If approved, however, it’s a way to capture demand and volume in a segment of the market eager for high risk/high return investing.”

AI notetakers and chatbots are taking over wealth management. The next frontier may be less glamorous.

Regulatory compliance could become the next battlefield for advisors and offer significant cost savings for firms, which often pay millions of dollars to comply with federal and state regulations, as well as industry rules, each year. Much of those expenses cover risk officers and compliance teams. The new tools would only add to AI’s already significant impact on financial services; the fintech market, which is rapidly incorporating AI into its services, is estimated to grow to more than $1 trillion by 2032. Platforms that draft emails, summarize meetings and take notes have cropped up left and right, and some firms have even launched their own chatbot LLMs to answer clients’ questions.

“Our industry as a whole is a little behind when it comes to AI, and that’s not a bad thing,” said Ryan Borer, managing partner of Advisor CRM. “AI meeting notetakers, meeting prep, that stuff caught on because it was so easy to adopt… There’s a lot of firms still focusing on that, but I think there are some other areas we’ll start to see more of an emphasis on.”

Compl(AI)nce

AI isn’t just expanding into other capabilities, like creating marketing materials from scratch and picking stocks. One of the latest firms to join the fray, Hamachi.ai, has a compliance bot that ensures everything it produces is in line with regulations imposed by the Securities and Exchange Commission and the Financial Industry Regulatory Authority, or FINRA. Hamachi.ai CEO Mike Wilson has worked at the convergence of tech and wealth for decades, helping bring PC-oriented firms to the web in the early 2000s. “We see a very similar type of transformation now, as the wealth management community starts to use AI in their practices,” Wilson said. “The future, in our opinion, belongs to firms that connect expertise with AI and compliance, and that do so with the ability to deliver personalized advice at scale.”

In the Hopper. One capability that may become crucial in coming years is an AI model that integrates data from numerous sources and minimizes what Borer calls “system hopping,” or using different tech platforms to perform different tasks. “We’ve got a CRM here, we’ve got our financial planning software here,” he said. “There’s certain points [where] data doesn’t flow correctly.” The solution, Borer added, is to implement either an all-in-one platform or an additional tech layer that sits on top of, and integrates, whatever platforms a firm already uses.

“There’s a lot of advisors frustrated by lack of integration in tech stacks,” Borer said. “We’re starting to really connect the dots.”