Next up, we have Morgan Stanley. From Morgan Stanley, we have Jed Finn. Jed joined Morgan Stanley in 2011, has been integral to the wealth management strategy at Morgan Stanley, and recently was appointed Head of Wealth Management. So we're delighted to have Jed. But before I welcome Jed on the stage, there's a disclaimer I should read. This is the only thing I was missing all week, so. The discussion may include forward-looking statements which reflect Morgan Stanley management's current estimates and subject to risks and uncertainties that may cause actual results to differ materially. Morgan Stanley does not undertake to update the forward-looking statements. The discussion which is copyrighted by Morgan Stanley and may not be duplicated or reproduced without their consent is not an offer to buy any security. With that, Jed, welcome. I'm gonna have to bug off.
Thank you, Ebrahim. Good morning, everybody.
Good morning.
Oh, I got a response. It's good to be here with all of you. Ebrahim, thank you for having me. I'm looking forward to our conversation in a little bit. The goal of this presentation is to lay out the key steps of how we're gonna get to our 30% margin target. And as you can tell from the title, we're focused on getting there through driving growth. And so specifically, I'm gonna talk about two key areas that we're focused on in terms of our execution. The first is accelerating the path to advice. I think, people who've followed us know that we talk about that as the funnel. We start with winning new clients who bring in net new assets that we migrate into advisory relationships, which generates that recurring fee-based revenue. So that's area number one.
Then area number two is supporting that whole journey with our scaled and differentiated platform, which we use to deepen relationships with clients every step of the way. With that as an intro, let's jump in. Another disclaimer. I wanna start just by reminding everybody how incredibly strong the launching point is for the next leg of our growth journey. Regardless of whatever metric you look at, revenue, PBT, NNA, fee-based flows, growth period on period for any of those, we're in a unique position in the industry. We talk about it sometimes as a category of one because, while, of course, we have competitors who are formidable in the various business lines in which we operate, there is nobody else, and you can see from the slide, that has this aggregated set of capabilities all under one roof.
And so we get asked often, you know, who are we concerned about? And the answer is everybody because we're paranoid. But in reality, it would be very difficult for anybody else to replicate this model at scale. The digital direct players have for years been trying to build or buy a full-service advisor force, and to date, they have not been successful. If you go the other way, there are no more scaled stock plan businesses or digital direct platforms to buy, and building it is very, very difficult. And again, remember, and this will be a theme throughout the discussion, it's not just about acquiring the capabilities, but it's about investing to integrate those capabilities, which takes a lot of work. So regardless, we have a multi-year head start here. So the hand we're playing is incredibly strong.
Second, I think most of you are familiar with our origin story here, so I apologize in advance for the trip down memory lane. But I do wanna underscore upfront the fact that the position that we're in today did not happen overnight. This was a result of many years of focused and deliberate execution. And we think about it as happening across four phases. The first was building scale. That was the logic behind the Smith Barney acquisition. And still today, we benefit from that scale. We're able to outspend our peers, and yet we have the highest margins of any full-service wealth management firm. Phase two was about executing against our belief that the future of wealth management was going to be best-in-class human advice paired with best-in-class technology. This was the launch of our modern wealth management strategy.
Some of the capabilities we built during this time period, Aladdin for Wealth with our partners at BlackRock, Next Best Action with some of you might have seen, those are still unique today, 5+ years later. Phase three was about expanding our channels to include workplace and digital direct. We saw an opportunity there to build relationships with clients earlier in their wealth accumulation journey. And so we could use those relationships as a source of warm leads that we provided to our advisors. And again, to my other point, it's not just about acquiring those capabilities, but it's making the investments to integrate those capabilities. So we absorbed more infrastructure from the firms that we bought, and then we layered expense on top of that in order to deliver against conversion. And again, for those of you who are less familiar, conversion completed last year.
It was when we lifted and shifted the back office of E*TRADE and Solium onto the back office of Morgan Stanley, where we benefit from that increased scale. It was a tremendous amount of work, and now it's done. That's behind us. So where we find ourselves today is in phase four, which is purely about execution. We're taking the tools and the capabilities we built over the last several years and using them to migrate clients into advice relationships. So let's talk about the two key focus areas in more detail. Number one is the path to advice. For those clients who join us via one of those new channels, there are multiple entry points into the top of the funnel. It could be a self-directed investor who opens up an E*TRADE account for the first time.
It could be an employee who joins a company where Morgan Stanley at Work is administering the equity plan. It could be a group of participants in a 401(k) plan that join at once because we win a new mandate, and we attach to that a financial wellness offering where we're providing advice and guidance to those participants as an added benefit to the company. But regardless of how a client initially establishes a relationship with us, we start to see the same pattern emerge over time. In fact, we start to drive that pattern. First, we demonstrate credibility in whatever it is the service that we're providing: a best-in-class active trader experience, helping a corporate client with their equity admin plan, helping a private market company execute a tender. Once we do that, it earns us the right to demonstrate more of the capabilities of our platform.
Maybe a client joins one of our Webinar Wednesdays where we cover wealth management topics specifically for our workplace participants. Or maybe a self-directed investor calls the call center and is engaged in a conversation about 529 plans and then agrees to meet with an advisor to get more information. Ultimately, though, the relationship escalates and the client takes an action. And it might be small at first. It might be experimenting with a single sleeve in Parametric testing their tax overlay capabilities. Or maybe they wanna test out an advice relationship for the first time, so they use our remote advisor channel, which is lower cost, and it's we call it MSVA, Morgan Stanley Virtual Advisor. But the point is, once the relationships are here, they grow over time. For clients who are added directly by a financial advisor, obviously, the starting point in the funnel is much deeper.
That's what financial advisors do. But those two, we see, grow over time. It might start in a brokerage account, and then they open a fee-based advisory relationship. Or maybe it goes directly into advisory, and then they do a mortgage. Or they bring their checking account here. Or they decide they want help with our philanthropy or philanthropic advisory services, and they wanna open up a foundation, and we help them with that. Or maybe they don't need a foundation, and so they just use a donor-advised fund. But again, once the relationship is established, we see it consistently growing over time, adding more assets, adding more revenue as they deepen and get greater exposure to our platform, which is why the second focus area is around maintaining that scaled and differentiated platform.
From the intellectual capital that we source from our global research team to our expansive product shelf to the tools and capabilities that we've built, we believe our platform is a competitive advantage. And I said before, it's a competitive advantage at scale, meaning we could add significantly more clients, significantly more assets, significantly more revenue without significantly adding to the infrastructure. So let's talk a little bit about that in more detail. This slide just shows the performance at each step of the funnel in 2023 relative to 2019 before we started this multi-channel asset gathering growth strategy. And you can see across new clients, NNA, fee-based flows, and asset management revenues, the growth has been significant. And so let's talk about each one of these in detail. First, on the client side, we closed on the E*TRADE acquisition at the end of 2020.
Since then, we've steadily increased the number of client relationships. Even last year, in 2023, you'll recall at the beginning of the year, there was a slowdown in the tech industry. Historically, we had relied on the tech industry as a big source of participant growth in the workplace businesses. And yet, despite that slowdown, we still added 600,000 new client relationships over the course of 2023. I'm not gonna go through all of the drivers on the right, but this is what gives us confidence that we're gonna be able to continue to increase the number of client relationships, the starting point of our funnel. We're not reliant on any single driver. NNA. So over the last three years, we added over $1 trillion in net new assets.
These were the first three years, the first three full years since we've been on this new multi-channel strategy: 2021, 2022, and 2023. We put up those results despite the fact that we were still figuring out how to build this integrated ecosystem essentially from first principles because nobody had done it before. There was nobody else that we could point to and say, "Oh, that's how this is supposed to work." There was no one we could hire. There was nobody we could learn from. We put up the results despite the fact that we didn't have an integrated data platform. It was really hard for us at the time to track client behavior as it moves across channels.
We put up the results despite the fact that we hadn't trained the 2,500 reps in our call center on how to drive service to sales, meaning whenever anyone calls for any reason, can they engage them in a conversation, unearth a need, and make a referral to a financial advisor when appropriate. We did it before we knew which advisors were actually really good at closing these leads. At 35%, that is the average of our top quartile advisors. They close 1 out of every lead we send to them. Or who is gonna be in the bottom quartile? 10% conversions, 1 out of 10. It's a very different number in terms of throughput. We didn't know any of that. We know that now. We've built out the infrastructure. It all exists, which is why we're confident that the engine is gonna continue to grow over time.
But it's not gonna be in a straight line. We've said many times, NNA is lumpy, and it's subject to the environment in which we are operating. So for example, last year, in 2023, in the second half of the year, NNA dropped relative to the first half of the year. And everybody did the comparison and questioned whether, you know, the engine was healthy. And it's true. NNA did drop in the second half of last year relative to the first half, except for we still outperformed everybody else. We outperformed all of our traditional peers. We outperformed the digital direct players. We even outperformed a leading asset manager. That company on the right is BlackRock, who's obviously not a competitor of ours but a pretty good barometer for what's happening in the market.
In our challenging second half of 2023, we outperformed them from a growth rate perspective by over 50%. So we're doing exactly what we're supposed to be doing as a category of one. We're taking share in difficult markets. And that's kinda where we find ourselves right now. This slide lays out some of the key macro factors that affect NNA. And the punchline is we're facing headwinds now relative to a normalized environment. On the left, again, looking backwards, capital markets have been a big driver of NNA. On our Shareworks private platform, there are 120 companies whose valuation is north of $1 billion, 120 unicorns. There's 15 companies whose valuation is north of $10 billion. There's three companies whose valuation is north of $50 billion.
We're covering these companies across the business lines of Morgan Stanley consistent with the vision Ted laid out about an integrated firm. And going from private to public starts a very important catalyst within the system. Our investment bankers execute the IPO. The client becomes a public equity admin client in our workplace business. Our FAs cover the individuals and the employees and the founders and the early investors. We add financial wellness programs to support the company as they broaden out their employee base. MSIM manages the corporate cash. So it creates a flywheel in our system that drives NNA. Now, obviously, 2021 was an extreme. That's why we averaged it. But so were 2022 and 2023. And you don't have to get back all the way to the highs before you start to see some real benefit from an NNA perspective.
In the middle, I think everybody knows the story pretty well. The highest-yielding cash environment in 15 years has attracted clients' excess cash. Now, obviously, some of that is just left pocket, right pocket, so it doesn't affect NNA. But we know that our clients are holding cash balances outside of Morgan Stanley, sitting in savings accounts, sitting in money market funds, getting a really nice yield while they're waiting for a catalyst. The recent run, we've started to see some redeployment. If you really squint, you can see it. But we're nowhere near the historical averages. And then finally, the higher-rate environment is leading to more paydowns, fewer draws, which obviously impacts NNA, and it impacts NII. So look, I'm not making a market call here. I'm just saying the likelihood of us staying at these cyclical lows indefinitely is really low.
And when things do start to normalize, we're positively levered to the upside. Okay. Let's switch to fee-based flows. But I'm gonna have some water first. NNA, as we've discussed, is critically important over time because it brings in the raw material that we use to migrate into advisory relationships and then generate that recurring fee-based revenue that we all love. But in any given quarter, in any given year, it is not a binding constraint for us. What does that mean? The left side of the slide shows our non-advisory assets across the firm, so brokerage assets across channels. They're paying commissions as they work with their financial advisor from a self-directed perspective. In 2019, $1.4 trillion. In 2023, $3.1 trillion. Some of that was the E*TRADE acquisition, obviously. But some of that was just the organic growth of the advisor-led channel.
The point is the opportunity currently within the four walls of Morgan Stanley to migrate assets into advisory relationships and generate that recurring fee-based revenue is massive. And we're doing it. If you look at last year again, again, the second half of the year dropped from an NNA perspective by 60% relative to the first half of the year. Fee-based flows grew 40% in the second half of the year relative to the first year. So the funnel still works regardless of what happens in any time period as it relates to NNA. That's point one. Point number two is while we've dramatically increased our advisory assets, we doubled over the last five years to over $2 trillion. That's just the inverse of the slide. You can see on the bottom that in our advisor-led channel, it's still just 50% of total assets.
We are the high watermark in the industry, so we don't know what the ceiling is. We don't know if it's 70%. What we do know, though, is that there is still a significant opportunity within our own book to continue to migrate assets into advisory accounts. And let me give you some examples. Fixed income. There are $several hundred billion of fixed-income assets in brokerage accounts today purely because of the fact that historically, the yield environment didn't justify the higher advisory fee. We're not in that yield environment anymore. And there are lots of examples of our clients who would benefit from a net yield perspective, a net performance perspective, by taking advantage of the intellectual capital that we have resident within our advisory programs. Alts.
Because of our size, we can work with our alts partners to create custom fund structures, differentiated share classes that work within the constraints of our advisory program. That will reduce the barrier to entry for both advisors and clients 'cause they can put everything in one place. That will drive more alts adoption. That will also drive more flows into advisory. And then finally, enhanced accessibility. I talked earlier about the fact that part of our strategy was building relationships with clients who are earlier in their wealth accumulation journey and deepening with them over time. Well, if we're gonna do that, we have to make sure that they can benefit from the intellectual capital that we have. And historically, the advisory programs were set up for high-net-worth, ultra-high-net-worth clients. And so we're addressing that. We've already addressed a lot of it.
We're lowering the minimums in some of our different programs. We've added fractional shares. We're creating single-ticket portfolios at low or no management fee so they can just pay the advisory fee. Again, we want all of our clients to benefit from the intellectual capital that we have. So the point here is regardless of how NNA ebbs and flows over a time period, we still have huge opportunities. And we're executing on that opportunity to identify opportunities for our clients to get better returns, move assets into advisory, and generate recurring fee-based revenue. Next, number two. There's only two, though, so. The platform. Whatever lens you look at, whether it's from an advisor perspective, from a client perspective, from a third-party industry survey and research perspective, our platform is consistently viewed as among the broadest and deepest in the industry.
On the left of the slide, you can see the capabilities that we feel like we have already invested in, that we've already built, and that are already at scale. I talked about the infrastructure to the funnel earlier, but I wanna raise it again because it was a tremendous amount of work, and now it's done. We have an integrated data and analytic platform that sits beneath our three channels. It can tell us now in real time how clients and advisors are engaging. We have all of the content that our advisors might need to build relationships, whether it's with a B2B corporate client or from a B2B2C participant or employee. We have a robust set of triggers that are generating leads on a daily basis for our financial advisors, digital marketing programs, self-service tools for investors.
We've trained those 2,500 call center reps on how to deliver service to sales. So all of this is built. Again, now we're just focused on turning those dials to continue to move clients into advice relationships. I touched on alts in private markets. I wanna raise it again because we think it's a real differentiator. We have 200 different products on the shelf. 15% of those are only available at Morgan Stanley. We did more in alt sales last year than our three traditional peers combined. Our view in this space is we wanna create a situation where every single high-net-worth or ultra-high-net-worth client in the country feels like they have to keep some portion of their wealth at Morgan Stanley to benefit from this differentiated offering. And then finally, the partnership with MSIM.
Now that MSIM and wealth management are closer together under Andy's leadership, Andy Saperstein, both sets of clients are benefiting from the broader capability set. We have integrated our OCIO capability. The vision there is we wanna be able to deliver customized solutions that scale across the client base, whether it's a multibillion-dollar institutional mandate or a $2 million traditional retail opportunity. Again, all of our clients are gonna benefit from the intellectual capital across both businesses. Another example is we're almost finished integrating the custom indexing and tax management capabilities of Parametric into our core advisory programs. Now we can leverage Parametric's overlay capabilities on other third-party active managers. So we're generating new sources of alpha for our clients that cannot be delivered anywhere else. On the right of the slide are the areas we're continuing to maintain our BAU investment.
And so I will touch on each of those briefly, and then we will be done. From an integrated firm perspective, you heard Ted talk about this on the earnings call. We're already benefiting from the partnership that comes with operating like an integrated firm. I touched on the private-to-public example earlier. Now when a company goes public, we can immediately assemble a cross-functional team of experts from investment banking, from capital markets, from workplace, from wealth management, from investment management. And we can help them navigate not just the many decisions they face as a company but the many decisions they face as individuals coming into liquidity. Now when our coverage bankers go and see CFOs or CEOs or boards, they're not just talking about M&A opportunities or financing strategies, but they're talking about things like financial wellness programs or retirement plan options that benefit the entire employee base.
The convenience that we can deliver and the goodwill we get from being a credible one-stop shop across the set of services is helping us capture client wallet share. On the left side of the slide, you see we've been effective at growing lending balances through increased household penetration. So in 2019, we had $80 billion in balances, 12% household penetration. In 2023, $147 billion in balances, 16% household penetration. And yet, there are peers who are north of 20%. So we're focused on closing that gap through a number of different initiatives, including AUM-based pricing options for our mortgage book, streamlined operational processes, expanding out the product set in our tailored book. We will continue to close that gap over time. On the right side, we have a checking account offering today that is underleveraged. It's called Cash Plus. We are incredibly focused on expanding the adoption and usage.
Why? Well, number one, even though it's a small sample size, the current checking account users have NNA and revenue and every other metric you can imagine that are off the charts relative to non-users. Number two, from the research that we've done, clients are increasingly not only comfortable doing investing and banking with one provider, they're actually demanding it because of the increased ease of use. And then finally, now that we're on the back end of the E*TRADE conversion, we have access to a best-in-class digital bank that we can use to address some of the historical operational challenges that we had where running a checking account on brokerage rails. I don't wanna get into a whole regulatory discussion here, but this will help us a lot. And so we're leaning into the opportunity through an enhanced set of features.
One thing we're testing right now is a 3% checking account yield. You can go and get that right now. We can actually be an attacker. As big as we are, we can be an attacker in the space 'cause we have no back book that we have to worry about repricing. So really excited about this opportunity. Then lastly, the other AI, artificial intelligence. So look, this is clearly gonna change everything about everything. And while no one knows how the technology is gonna evolve, for us, it falls clearly into the category of maintain-through-cycle investment. Last year, we launched our first AI-powered product, AIMS Assistant. AIMS is our naming convention. It stands for AI at MS. And it was essentially a chatbot. And it was very good. It is very good as a chatbot.
You can use natural language to query our entire knowledge base, whether you wanna know our research team's price targets of two companies and how those evolved over time or whether you need a step-by-step set of instructions around how to set up a GRAT. So it's very good as a chatbot. But where it was groundbreaking for us is we learned an incredible amount around how to communicate with our partners at OpenAI. And for those of you who aren't aware, we've had an exclusive partnership where they're only a financial services partner. Everybody else has to go through Microsoft. We're on our third year now of the relationship. But we learned an incredible amount around how to communicate with them in real time and in a cyber-protected way.
We learned how to put guardrails around large language models so that they can function in the highly regulated environment in which we operate. For AIMS Assistant, it was the journey more than it was the destination. The next two releases will be a step function forward in terms of efficiency for our advisors and ultimately our clients. AIMS Debrief can actually listen to a conversation between clients and advisors. It's a plug-in to Zoom. Eventually, it'll show up on your phone as well. It can listen to the conversation, summarize the key points, and pop up an email that mails the client around what the next steps are. The advisor then approves it, clicks send, and it updates the notes in our CRM system.
We have a couple hundred users in pilot right now, and it's an absolute game-changer in terms of hours saved with administrivia over the course of the week. AIMS Plus is just ChatGPT for Morgan Stanley employees but with the appropriate controls around it. So our advisors will be able to use it to send emails, do research, create newsletters, all of the things that you can imagine. There's probably 10 or 15 other examples behind this of products we're in the process of building. But if you ask us where this is all headed, we put a little schematic together to answer the question, which is we think AI, AIMS, is going to be an interaction layer that sits between the users, clients, and advisors, and the complexity of our platform and just makes everything more seamless.
By using just a command prompt or ultimately, you'll be able to use just your voice, you can do things like put together a proposal, rebalance a portfolio, move money, create an infinitely detailed reporting, performance reporting report instantaneously. And AIMS will take care of all of that. All of that is on the come. It's not gonna happen immediately, though. But we've been very deliberate about mapping out mapping out the different building blocks we need to achieve that vision over time 'cause we wanna make sure we get there before our peers, and we're confident that we will. So I wanna close where we started here, which is we have a clear, organic, growth-driven path to achieving our 30% margin goals through a couple of key levers. Number one, the path to advice, to advisory relationships.
We've averaged $100 billion in fee-based flows over the last couple of years at a blended 60 basis points ROA net of FA comp. That's $200 million in PBT each year if we don't grow from here. Hopefully, it's clear at this point that we believe we're gonna grow from here. Second, deepening the relationships, driving our non-advisory revenue. We're gonna drive NII through continuing to have lending penetration and through expanding our checking offering. We're gonna drive transactional revenue through more adoption of our alts platform and our capital markets business. Those together, we think, are gonna do another $200 million PBT, let's just say. Then finally, it's the benefits of scale. As I said before, the majority of the outsized investment that was required to build this engine has already happened.
So by definition, the marginal dollar of revenue will be more profitable than the prior dollar of revenue. That obviously shows up in the first two levers, but on a like-to-like basis, we think that that's another $200 million of PBT. So you put the whole thing together, and hopefully, you start to see why we're confident about achieving the targets that have been laid out. We benefit from the scale of being the largest wealth management, full-service wealth management platform in the world. We have a differentiated set of products and capabilities that our advisors are using to attract and retain and deepen relationships with their clients. We're ahead of the curve in terms of using innovative technology, which will continue to separate us from our peers.
We're attached to a world-class investment bank and a world-class investment management firm that is thinking every day about how they can deliver more value to our wealth management clients. Needless to say, we are excited about the path ahead. Thank you.
Look, it's more to go.
I appreciate the tepid applause.
But if not, I guess I'll go ahead.
So, can you guys?
I like that we're starting off script.
Thank you. You mentioned about growth. Can you maybe discuss a little bit about what you're doing to reduce churn, churn levels, and what you're doing to reduce churn?
When you say churn.
breakaway advisors.
Well, we can look at it from a couple different perspectives. As we've said publicly before, our client retention is north of 99%, so we don't have it with clients. With advisors, it's really been very, very muted over the last couple of years. I mean, in any given year, the impact of advisors coming and going is not really gonna show up in a major way. Of course, over time, if we don't have a differentiated platform where folks can grow, then people are gonna vote with their feet. But we've had unbelievable success in bringing advisors from other firms and then actually seeing their businesses grow by, you know, double-digit percentages because they can take advantage of the platform here.
So the answer to your question is the investments that we've made in being able to deliver that alts capability, get them unique private market access, deliver them leads from E*TRADE and from workplace, that is a huge draw for advisors because we're helping them grow their business in a way that they're not able to do in other places. So we're not solving for churn for churn's sake. We're solving for a differentiated platform and a unique value proposition to the advisors and clients that churn takes care of itself.
Was I not supposed to do that?
You can do whatever you want, man.
Hey. When looking at your slides, especially through those three-year rolling periods, it's always or it's pretty significant that we had those extraordinary years, 2020- 2021, where we had huge amounts of liquidity in the market. But now, looking at the next decade, we got quantitative tightening, but we got an overall different setup in the economy. We got higher interest rates probably for a longer period of time. What makes you confident that historic flow levels, especially on the net new asset side, can continue to be still on this high level and maybe on your competitive position? What makes you confident that this taking market share from your competitors is something that continues over the next, let's say, 5 years?
Okay. Let me take the second one first, which is kind of the point behind the first several slides that we went through. There, it would be very difficult for somebody to replicate what we've built at scale. And some of the benefits that have helped us grow are now uniquely within the four walls of Morgan Stanley, and they're integrated. As I said during my comments, it is incredibly complicated to take different pieces of infrastructure and technology and systems, and particularly for companies that might have been regulated in a different way than Morgan Stanley, and bring them up to the standards of Morgan Stanley and then have the engine start to work. And you see this. So, I mean, on your second question, I mean, just look at what we've done, and we feel pretty confident. On your first question, it's a good question.
I mean, it's, it's completely fair. If rates stay high forever and if, you know, there's no capital markets activity and if clients decide they never need to borrow again, it's gonna be a more challenging environment. But again, these things ebb and flow through cycles, and we're solving less for a particular time period and more for how do we get to our $10 trillion in assets across wealth and investment management. And so even if you have a situation where, all right, let's say the allocation to fixed income is higher, fixed income accounts are priced lower than equity accounts, and so that puts some pressure on mix, that still becomes a starting point on top of which we grow N&A and grow fee-based flows.
So yeah, the shape of the line will bounce around, but we're still quite confident that we can continue to drive it, and we've put up growth even in arguably one of the more challenging environments we've been in in the last several years.
All right. The two minutes I have. But.
You have 5.
I know. I guess just talk to you in terms of, just on that question, as we think about net new asset growth, one, it is a very competitive. So you highlighted just it's a hard-to-replicate franchise. But as we look forward, maybe if we can double-click on the life cycle of the journey once in terms of the customer coming in and those net new assets, how that goes through the franchise that you've built and why that's hard to replicate.
Sure. I think the starting point with the whole funnel is everybody, meaning we're not just focused on high-net-worth clients or people who use advisors or people who focus on one segment. We've built an engine that can address clients' needs wherever they are in their wealth management journey and however they wanna be served. The challenge with our model historically is we had a great wealth management firm if you wanted to work with a financial advisor. Now, our view is over time, everybody's gonna wanna work with a financial advisor, but it might not happen right now. So we have to have the ability to serve those clients across the franchise. Then as we go into some of the elements of the funnel, there's a lot of innovations that we have, added that have really driven growth. So for example, I talked about training the call center reps.
I talked about the triggers. I talked about, you know, digital marketing programs, just to put some numbers around it. In January of 2022, when we were kinda getting going, we had 2,000 referrals to advisors. That includes advisors in MSVA, our lower-cost remote advisor channel. Their salary plus bonus. 2,000 referrals. In January of 2023, we had 6,000 referrals, just that month. In January of 2024, so last month, we had over 14,000 referrals. And now we know when we're making a referral to a financial advisor, our top quartile is closing one out of every three. There's a lot of data to support that. In fact, there are some advisors who are north of 50%. I mean, it's unbelievable. I've listened to the phone calls because I didn't believe it, and they're just that good.
We know who's really good at closing those leads and who's less good. So we can think about the distribution of that. We're also experimenting across that funnel. So one of the things we learned is that when someone's ready to talk about their personal finances or think about advice or focus on their own wallet and think about it from all of your perspective, there's a very short window when you have their attention, and then they go back to their day-to-day life. And originally, they said they'd take a referral. Then we had someone call them to figure out what they wanted, and then we had someone else call them to actually deliver the advice. We first shortened that to a single hop, and that led to more.
Now what we're testing is no hop, meaning there's a bunch of advisors who've actually and they've raised their hands to do this because they see where we're trying to go. They've actually trained themselves on how to support workplace clients or self-directed clients. When the client calls, the phone rings directly to those advisors, and they call and they help them with the issue and then try to talk about how they can help them with their personal finances. That's unbelievably exciting for us because the fewer the hops, the higher the conversion, and we don't need as many call center folks if we have advisors answering the phone. So, yeah, we learn these things over time. It takes a while, and we've admittedly dug a lot of dry wells. We thought something was gonna work, and it didn't.
But we're kind of navigating the way there, too, we have a clear sense of what's actually driving conversion to advice. And again, that's part of our confidence, back to your question.
Thanks for that. I guess the other thing it's obviously a lot of focus on how we go get from 25%-30%. Part of that is just deepening client relationships. One of the outputs of that is better NII as you do more. Like, what's the outlook there in terms of as we move out of the cycle around NII?
Sure. I mean, for us, NII is an output of serving the entirety of the client. Like, you didn't hear me talk about driving NII but by like.
Right.
Optimizing our investment portfolio, right? Obviously, that's been a big focus on everyone. Just to put it out there, we're closer, we think. There's a floor. We think we're closer to that floor from a BDP perspective today than we were before, but we don't actually know where it is. We're not that focused on it because what we're focused on is deepening the relationships, taking the, you know, 15.5 million clients who are not with advisors right now, and introducing them to advisors and helping them have balanced portfolios and achieve their wealth management needs. They're gonna want mortgages. They're gonna wanna borrow. They're gonna wanna have checking accounts.
If you believe our thesis around checking and investing coming closer together because you can move money more easily, you can see total wealth more easily, etc., then we see a big growth on that, which is not subject to the same BDP sweep dynamics as what's historically moved NII a lot. So to us, it's an output of this strategy, not something we're solving in and of itself.
Last question. I think you alluded to in your prepared remarks. The environment, rate cuts will be helpful in sort of bridging the gap, capital markets picking up. If neither of those happen, like, is 30% pre-tax margin gonna be?
Yeah. It's just a question of time. I mean, again, the marginal profitability of every dollar of revenue now is significantly higher than it was in the past. So we can continue to move along. Again, with the $100 billion in fee-based flows, that's gonna continue to drive PBT, and it's gonna continue to expand the margins. So all we're talking about now is a question of time. But regardless of what happens to the macro environments, I think we've demonstrated that we can put up numbers. Some of them are admittedly muted because of the offsetting revenue or PBT headwinds. But we're gonna continue this slow, and maybe not so slow, depending on the environment, inexorable march to the $10 trillion and 30% margins.
Very good. Thank you so much, Jed.
Thank you.
Thank you.