Morgan Stanley (NYSE:MS)
Morgan Stanley Financials Conference
June 10, 2014 03:35 pm ET
James Gorman - Chairman of the Board, Chief Executive Officer
Betsy Graseck - Morgan Stanley
Betsy Graseck - Morgan Stanley
Okay. Thank you everybody. We are going to get started here. There's a few seats up in the front for folks if you would like to make your way to the front row seats.
Okay. On behalf of the entire financial services' team and equity research, I am delighted to welcome our Chairman and CEO, James Gorman to Morgan Stanley's Fifth Annual Financial Services Conference. James is well known for his to-do list and we look forward to seeing what's left on his list today.
I will turn it over to James for a presentation. Following that, I have a couple of kick-off questions. There is no breakout, so one-on-one, so I encourage you to think about your questions as we are going through the presentation, because I am only going to ask one or two of them.
With that, let me turn it over to James. Thank you.
Thank you, Betsy. I appreciate everybody's staying for the graveyard shift here. I was told I have about two-and-a-half hours, since I have work with all of you. I will make sure we are aligned here. Please, you can ask anything at the end of this. On either the presentation materials or other things we have done at Morgan Stanley, and if I can't answer them, I am sure Celeste Brown, our Head of Investor Relations, can or we will get back to you for sure.
I have - your counting about 25 swards, they will follow a pattern hopefully you recognize given we have all done this before a few times. Then we will lay out where we are with our strategy, the things we are now trying to achieve and what we think the future looks like.
Let me start with of course our disclosure which you can speed-read and I am sure have done many times. A few basics, Morgan Stanley then and now. It might be very self-serving to put these up, but it is a healthy reminder of the journey that we have come through. The stock price is up 111% in the last two years since the beginning of 2014. The market cap was up 116%, and for my money the most important measure was our CDS which as you will recall during the dips of the financial crisis was well in the 1,000s during the so-called peripheral crisis when the world thought that we were suddenly exposed in a major way to France in other peripherals which of course we weren't, but it didn't matter how often we said that we just had to prove it over time.
Our CDS was still at 500 to 600. As of the end of the year, it was at 87, and those of you who pay attention to the stuff will note that it's at 60 today within one basis point at two of our major bank competitors and several basis points below one of our of other securities competitors.
The firm further underlying measures of transformation included decline in Level III assets as a percent of total assets to 2%, importantly a decline in our Basel III three risk-weighted assets from $506 billion in 2011 to $428 billion today. We have also managed to grow revenues over that time period. They are up 16%, during a relatively difficult market environment. I think, we would all agree from 2011-2013.
Our earnings and ROE, excluding elevated legal expenses are also higher, but still well below what we consider only acceptable and that continues to be our major focus now that we have got the rest of the house in order.
Looking at the transformation at Morgan Stanley and how we think about it, from sort of the early to late 2000s, we were, I would describe it as fast, but vulnerable. We had an almost ecliptic collection of businesses ranging from the Discover credit card, they teamed with a brokerage franchise. Of course, the Morgan Stanley institutional business, various asset management businesses, making up retail asset management bank campaign and the Morgan Stanley asset management funds, MSCI among other things and we had relatively fewer checks and balances. Of course, we were not a fit holding company at that point in time.
What we have evolved to is certainly a more deliberate institution, but we think decisive, less complex for sure, an integrated model focused on our clients, a business mix that provides both, balance in difficult economic cycles and tremendous growth in speed during improved economic cycles, a strong risk management focus starting with the board risk management committee which we didn't have for the much of the 2000s leading to thousands of risk limits that we have put across the institution through transmission at a very returns focused a culture among the management and the broader organization.
If we were to characterize these periods in simple language, this is how we would characterize it. Obviously the crisis period between many others went through, we then had a period of what I would describe as fragility, which included the euro peripheral period of 2011.
2012 and 2013, we are doing much about the to-do list that Betsy referenced. Cleaning up and healing the institution, while at the same time a large part of our institutional business continued to motor along very well and we now think ourselves in a period of performance and growth focused on both, efficiency of our business model, but also growth in our business model.
Most of what I am going to talk to you about for the rest of today is on those things, efficiency and growth, because we think one of the - while there has been a lot of attention about the turnaround at Morgan Stanley, we actually as management are much more excited now about the growth potential from where we sit today. We are not looking back, but we looking forward.
Let me turn to efficiency growth and start with compensation. We are very focused on our overall comp ratios. Of course, they are subject to a reasonable revenues under all circumstances, but over time, we expect to drive the comp ratio for our Securities business to less than or equal to 40% as we drive revenues higher. It was 42% last year. It's been as high as the 46%, 47%, this is all ex-DVA. In the last several years, it was 41% in the first quarter and we continue to think as we grow revenues, there is room for improvement there.
Wealth management, which has been as high as 62%, 63% and last year it was 60%, we are targeting a comp to revenue ratio of 55% which is driven both, by revenue growth but also mix of revenues as we have a lot of businesses that are non-compensable. In investment management, our comp to revenue ratio will be less than or equal to 40% and this includes the pro forma effect of the [deconsolidation] of certain funds that has taken place now which will have zero PBT impact on the business.
We will continue to stay very focused on non-compensation expenses. That is the discipline that we have built across the company. Every quarter, we have a major focus with all the chief operating officers and chief financial officers of each of businesses and reports into the management operating committees and you saw the results of that in the first quarter and that's something that we are going to continue to stay very, very focused on.
Mind you, given the regulatory pressures to change our business and add expenses to the business in compliance with those regulatory pressures, this is no mean feat to actually be controlling non-expenses in the manner that we have been doing in recent quarters and we will continue to do.
Now I'd like to transition from the firm to each of businesses and particular the growth opportunities in those businesses. Let's start with the wealth management business and look at where some of the upside is.
Firstly, the industry is going through a managed account revolution. For those of you very familiar with the industry, you would note over the last 20 years there has been enormous shift from individual purchase of securities into managed accounts of various forms and fee-based securities.
Generally the revenues per dollar vested in the managed accounts business are higher coincide the stability they are more focused on advise, the asset allocation and they are on individual security mixes. For most retail clients, that's a good answer.
We are also seeing significantly lower attrition and financial advisor moves. This was not a planned outcome, but I think a direct result of the consolidation our industry has gone through in the last 20 or 30 years where there were effectively in traditional full-service large scale firms. There were four firms operating this country and there were a couple of midsized firms and after that it's a very small operators and those four firms can only hire so many people from each other so many times before they stop doing that and we are at that threshold point now which I think is very exciting for industry stability.
There's Morgan Stanley factors that are positive that are at work. Obviously the development of our lending product suite, the alignment of our compensation model where we are more heavily rewarding advisors for growing their books, the use of technology which we have used by creating virtual financial advisors, teaming up financial advises something we call our insights engine where we get best ideas out to the field and really using technology as a tool to help improve the productivity of their advisors. Of course, at the bottom you'll see we have an underutilized deposit base, more of that to come.
I thought this was very interesting, if you look we always argue that scale mattered in this business. If you look at the total client assets here which have gone from about 700 being a little under that when I arrived back in 2006. We now have almost 2 trillion. We expect to pass 2 trillion any day now and it's truly transformation of the business, but most interesting if you look at the top-right-hand and half of this chart, a lot of the asset growth has actually been among the very wealthy.
Most people look at our business and think that we serve millions of small households. That is true, but we also served thousands of very, very, very large households and those are growing much faster. The growth rate is for the $10 million-plus household has been 71%, contrasted with the growth rate of the under $100,000 thousand household of -20%.
In asset size, $41 billion resides in households with less than $100,000, $701 billion with households of more than 10 million. Then one of things which I find very attractive about this business is that you wake up every morning knowing with almost certainty that the revenues for the business are going to fall within a very small band.
We thought for the first time we would illustrate this with the bottom right-hand chart, where you can see in the first quarter of 2014, we had no days where revenues were less than $40 million. We had 7% of the days in the previous quarter. We had 67% of the days between $50 million and $60 million, 30% between 60% and 70% and 3% $70 million or higher.
There is tremendous stability and you'll see the shift in that chart as obviously the revenue per day has improved over that time period and I expect over the next several years it will continue to improve. You never see the flashy upsides in that business, but in addition you never see the downsides that you can see another parts the world we operate in.
Net interest income is obviously major growth opportunity. It's been compounding at 20%. As we have publicly said and Greg Fleming has been before you and laid out these goals, we believe we will be achieving by the fourth quarter 2015, pre-tax margins of 22% to 25%. We achieved 19% last quarter, up from 10% in 2011.
Just turning briefly to where we are with deposits and with loan growth. Firstly, the lending business is a source of growth through our institutional business as well as our retail business where we originate many of the loans under Colm Kelleher's leadership and we believe that it will continue to enhance the stability and earnings of the firm as a whole, not just on the wealth management side and increases to client stickiness and the durability of those deposits and those loans over time.
You can see the firm-wide deposits are growing, and on a pro forma basis when we complete the sweep of all the deposits which repurchases part of the Smith Barney acquisition, we will have pro forma by the middle of the middle I think it's middle of 2015, 140 billion. We currently have in house now, I believe, it's a little over 120 billion as of today.
Obviously, we have tremendous loan growth both, in wealth management institutional securities. We think we can take that from the pro forma 2014 will be around 60 billion 75 billion the following year.
Now one of the things that you should ask if you haven't already of their management is how can we do this in a prudent fashion. We have no interest in creating a credit crisis for ourselves, and I would tell you, you will see the growth actually has been very moderate as we have lagged into a lot of these loan products.
We have also have built the risk management technology and client service systems so that we are really making sure that we have a bulletproof loan book and we are not just growing for growth sake, we are growing quality loans that we want to keep on the books for years to come.
Let me turn now to the institutional business and start with investment banking. It's interesting investment banking is also very stable business for us. It has been operating in the $4 billion to $5 billion range for most of the last several years even during a very difficult period. Clearly, we see potential upside from that.
We have a strong pipeline, we are seeing large transactions around the world, we are seeing a lot cross-border deals, all the stuff you are reading about in the newspaper as often as now we are participating in those deals and we see more upside from corporate derivatives as we benefit from the integrated firm I have already described, plus our relationship with Mitsubishi continues to grow.
Suntory acquisition of Jim Beam early this year was a perfect example of our two companies worked well together. Finally, there were a lot of synergies with deal originations through wealth management.
We see investment banking has both, shown stability during some very difficult periods and is now poised, we think, for significant growth as the global economies are recovering and you are seeing a lot of industrial-type M&A activity around the world.
Happily through all of those periods of fragility and healing our banking franchise remained strong. Year-to-date announced M&A, we are at number two globally, number one in EMEA and number one in Asia, number one in cross-border. I want to take you through all of these facts. You can read them. I will get them up the website when we are done, but clearly we have been very prominent in major transactions from the Time Warner deal to the WhatsApp deal, to the Suntory deal across a range of sectors and we believe across both, M&A, capital markets, debt underwriting and equity underwriting, the firm has a very, very strong franchise which has remained remarkably stable and should prosper as we go through the next few years of economic growth.
Our equities business is really tremendous story. They have grown now for the last several years after a difficult period during the crisis when we lost a lot of by prime brokerage balances. That has come back. In two of our last three quarters, we have been number one in equities and we have enjoyed 7% compound growth over the last several years. Our top three competitors have shown negative 1% growth and it's a very well integrated stable, experienced management team under Ted Pick working, who works very well with the other leaders of our business (Inaudible) in banking Rob Rooney and Mike Heaney in the fixed income part of their firm.
You can see the numbers there. We feel very good about where we are with equities. One of the reasons why we think it is done as well as it has is that they remain strong across cash, derivatives, prime brokerage, but at the same time they have made a very hard focus on operating leverage and returns. You can see the focus on our clients, the skill of the team, the use of technology to support our transactions and the depth of our client relationships has served very well across all of our equities franchise.
In fixed income, obviously, it is been a different story given what's changed in the marketplace. We are going through as an industry both, secular and cyclical change right now. The secular changes clearly relate primarily to the regulatory world and the accounting for capital required to support global fixed-income businesses, the cyclical changes relate to the low-volume environment, low volatility that we are experiencing at the moment and old firms are now having to decide what part they want to take with their fixed-income business.
We have significantly focused on our capital efficiency and returns in fixed-income and commodities, and the industry as you can see from the industry numbers, has had a major decline from the peak back to 2009.
At Morgan Stanley, we've been very focused on reducing our risk-weighted assets and therefore the capital to support the business the risk-weighted assets are down 50% approximately, since the third quarter 2011 and we've been very focused, we have laid out targets to you and consistently beaten those targets. The management is very aligned in getting our business where it is supported by a smaller capital base to generate additional returns. We have never had the aspiration to be one of the mega fixed income businesses, we have never had the flow, particular macro of those businesses so it's been important for us to right-size it for what Morgan Stanley is and will be.
Let me just touch on some of the products in this fixed space. Starting with commodities, we've been through in the last year some very major change in our commodities platform. We announced yesterday the sale of their ownership stake in TransMontaigne to NGL Energy Partners. We announced early this year the sale of our Global Oil Merchanting business to Rosneft. We expect to close on both of those transactions probably in the third quarter of this year. We are very pleased with the way the transactions came to fruition and we had laid out with our regulators and with our investors what we believe was to be in a non-physical space in the oil part of our commodities business and now we have achieved that objective through this transaction.
We will continue to be facilitating client demand in oil, power, natural gas and some of the metals. We are out of agricultural as you know from couple of years ago and we are targeting returns of 10% pro forma exceeding 10% and what we believe will now be a more regulatory-friendly commodities business.
Our credit business has been excellent both, in our core credit and securitized products, normalized ROEs of greater than 15%. These represent some of the best of Morgan Stanley leveraging our content, our client service and our execution and we think there is upside, particularly from the execution of the bank strategy and SPG and our credit business we expect to be an important driver of our strong investment banking franchise, so this is an area where we are very comfortable with. We have strong leadership and the firm is well-positioned for the years ahead.
Where we've obviously had our challenges as have many on the Street has been in the macro space. We have never had the global footprint of the universal banks. We've been through another recent undertaking where we have been optimizing our front and back-office headcount are reflecting what we think is the opportunity set across our foreign exchange and the rates. We have lowered our grossed up balance sheet, but we are maintaining a global franchise with 102 geographic areas where have cut back from Canada most recently.
We think that while the changes we have put in place may modestly impact our revenues, they will enhance our ROEs and benefit the supplemental leverage ratio. Most recent set of changes we think will improve our supplemental leverage ratio by 20 basis points of those changes over the last very short period.
Again, the focus is on the core parts, core products and core geographies within rates and FX the G 10 FX, treasuries, agency, the core parts of our business and it's a lower aspiration than what some others may have in the industry, but it's what suits Morgan Stanley and is consistent with what we need to support our global franchise in fixed income and across the firm and this just continues to emphasize the importance for attached tubing in client and of our fixed income business to working with our investment banking, wealth management and equities franchises where we have client overlap to be mindful of the evolving regulatory landscape and as a result, we have adjusted the amount of balance sheet we are prepaid to use and capital to support our fixed income business.
Turning to the last leg of the firm, which is our Asset Management Business. We have enjoyed since 2010, 50% growth in assets under management driven by inflows, performance and overall markets. It is increasingly becoming a legitimate third leg of the company and we would like to see it grow over the next several years and that's going to be a major focus. We still think there's more to do and that we are punching under our brand even with 382 billion of assets under management.
Just taking the merchant banking real estate investing, I'm not identifying these funds by name but across our Global Private Equity, our Asia Private Equity, our mezzanine funds, our real estate funds and our infrastructure funds. We have a broad product set across our merchant bank and real estate. It has recovered from the crisis, particularly in the real estate arena. We are seeing strong returns across these products and we are out in the market raising new funds across almost all of these product groups and we continue to see a strong future compliant with the Volcker Rule in terms of capital use to support this business, but a strong future for our merchant bank which is now much more a fee-based business than it is a capital return business.
Our Long-Only business which many of you would be intimately familiar with has been performing strongly, 85% of our Long-Only strategy has been beating their benchmarks on a five-year basis. This is up from 69% five years ago. As you will know beating a benchmark translates into a strong asset growth and the team has received significant recognition accolades Dennis Lynch and his growth named Morningstar's 2013 U.S. domestic fund manager of the year.
Our Global Fixed Income Opportunities Fund was named best global fund income fund for three and five years by LIPA and our AIP program or our Alternative Investment Partners was named the 2013 fund of hedge fund group of the year by InvestHedge.
Great team, strong growth and we think a lot of opportunity and on the fund of funds business a lot of synergy with those with wealthy clients I pointed to earlier inside our wealth management business.
Again, we are seeing fundraising and asset gathering not just in the merchant bank, but in the traditional space. We are investing in North American distribution. We are cross-selling through Mitsubishi and through our wealth management business and we continue to see asset management as another growth opportunity requiring very little capital from the firm for the years ahead, building off with a strong performance of very stable and strong teams with a broad product set.
Let me summarize where Morgan Stanley is. We believe we have accomplished great deal, but we've got a lot more to do. Our Basel III capital ratios is well above requirements as is our liquidity coverage ratio. We received an unqualified non-objection about 2013 CCAR process and as you know we applied to double our dividend and we apply to do a $1 billion buyback at first major CCAR buyback and we have continued to make significant investments in governance and risk management to ensure the firm is stable for whatever might come around the corner in future years.
In meeting whatever those challenges might be, of course, it's important to have the employees in a talent-driven organization firmly supporting the firm and its strategy. We recently conducted a survey across our 55,000 employees. Over 40,000 of them responded to that survey and one of the questions we asked them was whether they were proud to work at Morgan Stanley, and the results were that 85% with favorable 10% neutral and 5% were unfavorable.
Now, I think given the environment this industry has been through and the changes that firms including ours have had to go through, I hope this give us tremendous support from the employee organization who are now firmly and squarely behind the strategy.
What do we plan to do in the future? We certainly plan to increase our capital returns. We believe we have burnt that rice. We believe we have great stability into the institution. We believe that we have complied with all the regulatory changes as needed and we plan to increase our capital returns over this year in 2015 and for future years. At the same time, we have a concrete plan to reach our 5% supplemental leverage ratio target, and 2015 and beyond, sustainably drive ROE at 10% and higher.
Final chart here, where are we? Most of the levers we have at Morgan Stanley are either stable or have an upside bias. There is ballast in the business model. We will be increasing capital returns subject of course to the annual regulatory approval. There is tremendous stability in our signature franchise businesses with ISG, investment banking and equity sales and trading.
We think there is huge organic growth opportunity in wealth investment management over the next several years and we are positioned to capture that. We are executing on upside from the bank strategy as we sit on top of $140 billion in deposits. We are aligning fixed-income and commodities both, through the transactions we announced one of yesterday and through the balance sheet reductions that we made and the resizing of the business to make them consistent with the kind of returns we think we should be able to generate in this new regulatory environment.
We are not going to take our eye off expense discipline, but non-comp and compensation expense and obviously we think there is significant upside to the firm's business model from interest rate increases over the next several years whenever they come.
Thank you for your time and for your support as investors and I now look forward to answering your questions.
Betsy Graseck - Morgan Stanley
Super. Thanks, James. I will kick it off with one question and again, if you have a question please raise your hand. We can call on you.
James, you indicated a goal of increasing asset management, wealth management and also loans on the balance sheet. Can you just give a little color as to whether or not that is a function of net new clients or is it wallet share of existing?
Well, with the wealth management, it's a function of both, growing the client base and you saw the asset growth in the 10 million plus households, but it's also a function of improving the productivity of our financial advisors who are now managing over $100 million per financial advisor and approaching $1 million per financial advisor in revenue we are close to.
We have 16,000 financial advisors. We are closing on $15 billion in revenue, so it's both, the function of - we think there's client opportunity to grow, we are very focused on the U.S. We have sold our business in Europe, we sold our private bank in Switzerland, we have integrated our business in Latin America into North America and we have integrated our business in Asia into our equities platform, so we are very focused now on where have got scale and we think it's both, client growth - not necessarily financial advisor growth, but financial advisor stable, client growth and productivity growth from those financial advisors having more and more tools and technology.
In asset management, listen it's a two-part story. We have to raise these funds in the management bank which we are doing and early closes on a couple of them which are coming through the next several weeks, we are encouraged by the feedback we are getting from the client base.
In the Long-Only space, it drives up our performance and with the 89% numbers on five-year benchmarks, you look at very strong performance across emerging markets, real estate, deep value and growth, four great categories, so we think we can expand both, the product offering, the breadth of that and use the track-record of these individuals where we are building out assets for their teams.
Betsy Graseck - Morgan Stanley
Thanks. Yes. Question up here in the middle?
Thank you. What's the right way to think about what ROE should be for this new reconfiguration of the investment banking/brokerage industry? Also, what's the right way to think about what the right amount of leverage?
I don't think you can talk about the industry anymore, because listen once upon a time these were private partnerships that all did the same sort of thing and there were fixed income shops, there were strong equity shops, there were strong M&A shops and banking shops.
What is the industry now? You have many of the players are subsumed on the large universal banking franchise. There are very few sizable in fact none independent investment bank. They have all become fed bank holding companies, so you have to look at what each firm has to offer and what is the risk-adjusted return for each of the businesses, each of those firms have, so we don't look at industry and performance, we look at each of our product groups in each of our businesses and how they doing in their industry.
If you take Morgan Stanley, essentially think of it as two integrated firms. Wealth and asset management should generate a significant premium to tangible book and full book value. They should trade at high-teen multiples. In fact they do when you have sold investment management or asset management firms and we think there is enormous growth for those, so they are clearly well north of 10% ROE-type returns.
We think that securities business, again, it depends on your mix. Banking is a high return. Fixed income uses more balance sheet and equities is somewhere in between, but has a high leverage ratio, so we are trying to optimize around those three, where we are generating returns for that business only north of 10% combined with the wealth asset management half of the firm, which is significantly lower north of that and you are getting into sort of low to mid-teen returns ultimately when the things stabilizes.
That's the outlook, but we are not there yet, so what we are talking about right now is we obviously have been operating at 2%, 4%, 6% for last couple of years. We have focused on getting to 10%. Once we get to the 10%. We will then layout the next [goal].
Betsy Graseck - Morgan Stanley
We have question over here. Peter.
Can you get to the 10% with that rate?
Betsy Graseck - Morgan Stanley
Anyone else? You have question upfront.
Can you get there without returning as much capital as you think? In other words, how much is dependent on which one you mix FX capitals as opposed to being trapped capital?
You know it's an interesting question, but at some point there is an incentive not to make money. There are two ways to get to 10% return, right? We could reduce our equity by creating losses. I mean, clearly we have to be the one with our regulators and what is a sensible capital return and look at what our trajectory has been.
For two years we did nothing on the capital front. Then we said, we want to use our capital to do something strategic, which is to buying the balance of Smith Barney. We did that. Having successfully done that, we then sit with our regulators, we want to test the waters with a $500 million buyback to just establish a baseline the way capital is sufficient. We did that. Then we went to the regulators after a reasonable year another great and frankly with a lot of legal expenses in it.
We said now that we have tested the water and now that we have accreted another $3 billion-plus last year, we think we are well-positioned to both, increase the dividend and to increase the buyback. The buyback was easy.
The dividend, justification what that is we no longer dividending 49% of the earnings as Smith Barney to Citigroup, so by definition this is money which is being held in-house that ought to be money which is free and available for our shareholders. That was the logic taking you down the increase the dividend part, so we build our models with reasonably conservative assumptions around future capital actions which we think are consistent with the performance of the firm what all the regulators would be comfortable with.
Obviously if we can do more, we will do more, but our approach and we could be accused of being too conservative as been very deliberate on this. We have no intention of having a rejection on our capital plan.
Betsy Graseck - Morgan Stanley
In one of your slides that you are targeting compensation net revenue and wealth management of some-55% and I think that's well below what you are currently accruing 159 and even analysts' projections in the out years are north of 55, so can you talk about what you need that level?
Yes. I mean, this is an industry. If you recall, if you look at - before this recent wave of consolidation, what I would describe as the weaker national firms had come to revenue ratios of high 60s. The reason I had that was, they had to pay basically to keep the talent there.
Thermo has been as strong as the offering for financial advisors somewhere. In of platform support, research, product whatever might be, what cards that you have in your sleeve? The card you have was comp, so you saw sort of 68% numbers at one end of the industry, down to very high 50% numbers depending on business mix for some.
You are quite right. When we started all this, our comp to revenue ratios were mid-60s, 63 and we finished last year at 60%. I don't know if we are at 59% or 60% in the first quarter this year, but it's a function of both, the revenue base, because it is a beautiful business.
Once you have covered your fixed costs, you cover them and it's all scale, so the incremental operating margin on the incremental dollar revenue is very different at above 14 billion numbers between 10 and 14 or between zero and 10.
The second is, if you look to the products as a result, some product are sold dollar-for-dollar revenue is paid out at $0.40 or $0.50 or $0.60 on the dollar. Some products to dollar revenue is paid out at zero, so it's business mix. It's a function of what you are putting through the system and we think the combination of both of those are reasonable target. I am not talking about this year to be clear. This is a long-term target, but we believe it's not unreasonable to expect comp to revenue be below 55.
Betsy Graseck - Morgan Stanley
Any other questions? Thank you very much, James.
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