Overview: JP Morgan vs. Morgan Stanley vs. Goldman Sachs | Ranking & Comparison


After the collapse of the financial systems during the 2008 economic turmoil, many people around the country began to seriously doubt the security and ethics of the largest banks reigning over thebiggest sectors of our economy.

However, as the economy has slowly but assuredly rebounded, many investors, corporations, and individuals are, once again, placing their trust in these giants of the financial system.

JP Morgan, Morgan Stanley, and Goldman Sachs are three of the largest investment banks that have emerged solidly from the crisis. This article will compare JP Morgan vs. Morgan Stanley, Morgan Stanley vs. Goldman Sachs,and Goldman Sachs vs. JP Morgan. 

We will take a look at the business models of each of these three mega investment banks as well as look at how JP Morgan and Morgan Stanley differ. Furthermore, we will help you decide between Morgan Stanley vs. JP Morgan, Goldman Sachs vs. Morgan Stanley, and JP Morgan vs. Goldman Sachsso that you can determine which investment bank is best for your own personal financial needs. 



What Is an Investment Bank?

According to investinganswers.com, an “investment bank is a financial intermediary that specializes primarily in selling securities and underwriting the issuance of new equity shares to raise capital funds.” 

Traditional banks – the ones located more on Main Street than on Wall Street – specialize more in small deposits and commercial loans. Investment banks, however, are the intermediates between large corporations that distribute securities and the individuals, businesses or corporations that buy up these securities. JP Morgan and Morgan Stanley are two of the most well-known investment banks. 

Many investors, then, usually have to decide between Morgan Stanley or Goldman Sachs or JP Morgan when they wish to purchase expensive securities issued by different companies. In order to choose the best investment bank, it is important to know the differences between JP Morgan vs. Morgan Stanley, Morgan Stanley vs. Goldman Sachs, and Goldman Sachs vs. JP Morgan. 

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Are JP Morgan and Morgan Stanley the Same?

Despite the fact that they share similar names, the JP Morgan and Morgan Stanley differences are actually quite profound. Members of the famous Morgan family founded both companies over a century ago.

However, in 1933, the U.S. government passed the Glass Steagall Act, requiring retail and investment banks to be different. Thus, the Morgan family divided their company into JP Morgan and Morgan Stanley.

JP Morgan was actually purchased by Chase Bank in recent years and no longer exists as a separate entity, though Chase continues to use the JP Morgan name for certain business. Thus, the difference between JP Morgan and Morgan Stanley dates back to the 1930s, and they are two very separate financial entities. 

When we look at JP Morgan vs. Morgan Stanley, it is easy to see why they are so easily confused. The Morgan Stanley bank was founded in 1935 when Henry Morgan and Harold Stanley joined up to begin the company. Today, the bank is one of the largest in the world and specializes in institutional securities, investment management, and global wealth management. 

In comparison of Morgan Stanley vs. JP Morgan, the Morgan Stanley Bank works mostly with corporations, governments, and high-net-worth individuals. On the investment side, it specializes in technology as it works with Google Inc., Compaq, and Cisco Systems. Furthermore, Morgan Stanley was at the forefront of the initial public offering (IPO) of tech giant Apple, Inc. and Facebook Inc. 

The wealth management branch of Morgan Stanley is the largest sector of the company. After purchasing Smith Barney from Citigroup back in 2013, Moran Stanley has become the largest wealth management entity in the world. When comparing JP Morgan vs. Morgan Stanley, it is obvious that Morgan Stanley has much more of a wealth management portfolio. 

If we look at JP Morgan vs. Morgan Stanley, after being bought by Chase, JP Morgan Chase has come to be recognized as a leading multinational banking and financial services holding company. It is now the largest bank in the United States and the world’s sixth largest public company. The Chase brand is used mostly for credit card services whereas the JP Morgan name is attached to the banking services provided. JP Morgan Chase Bank has assets totaling more than 2.35 trillion dollars.

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About Goldman Sachs

Goldman Sachs was founded in 1869. Though the firm was hit particularly hard by the economic crisis of 2008, it continues to provide asset management, prime brokerage, and underwriting services to its clients. Furthermore,one thing about Goldman Sachs is that it is an important dealer in the U.S. Treasury security market. 

When we compare Goldman Sachs vs. JP Morgan and Goldman Sachs vs. Morgan Stanley, it is interesting that Goldman Sachs used to deal heavily in subprime mortgages and, for that reason, was bailed out by the U.S. government in 2008. Today, it depends heavily on trading revenues and continues to bet on the potential of lending, hedge funds, and private equity. 



Morgan Stanleyvs. JP Morgan

When we look at JP Morgan vs. Morgan Stanley, both banks provide a variety of financial services. JP Morgan Chase offers consumer and community banking and commercial banking while Morgan Stanley focuses more on financial holdings and offers its services to larger entities, such as multinational corporations, governments, and high-net-worth individuals. 

When reviewing JP Morgan vs. Morgan Stanley, it is important to understand what financial services you are interested in. The biggest difference between JP Morgan and Morgan Stanley is that JP Morgan Chase is a commercial bank, meaning that it has branches, ATM services, and online banking. When looking at JP Morgan vs. Morgan Stanley,you should choose JP Morgan if you are looking for more local bank services, such as home mortgages, auto finance, educational loans, retirement, and investing. 

Though both JP Morgan and Morgan Stanley also offer large-scale investment services, Morgan Stanley mostly caters to corporations, governments, and wealthy individuals. In a head-to-head comparison between Morgan Stanley vs. JP Morgan, Morgan Stanley is best suited for corporations and wealthy individuals. 

According to businessinsider.com, at the end of last year, JP Morgan “ranked marginally ahead of Goldman Sachs and Morgan Stanley. A little more than $50 million splits the three banks.” Both JP Morgan and Moran Stanley are continually ranked in the top three of the largest banks in the country. 

During the financial crisis of 2008, both JP Morgan and Morgan Stanley were affected. When we compare JP Morgan vs. Morgan Stanley, we see that Morgan Stanley borrowed over $107 billion from the Fed during the crisis, which was considerably more than any other bank. JP Morgan was also implicated in the crisis and was recently fined over $13 billion for allegedly selling fraudulent mortgage-backed securities. In Morgan Stanley vs. JP Morgan, JP Morgan received a heftier fine. 

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Goldman Sachs vs. Morgan Stanley

When we look at Morgan Stanley vs. Goldman Sachs, both are mega investment banks whose main clientele are wealthy individuals and corporations. However, there are fundamental differences when we compare Goldman Sachs vs. Morgan Stanley, especially in relation to their business models. 

According to Investopedia.com, “Morgan Stanley is conservative and cautious, while Goldman Sachs focuses on upside potential in lending, private equity and hedge funds. The differences are as stark as they have ever been, and the two companies are competing for fewer of the same dollars than ever before.”

In recent years, Morgan Stanley has begun to move away from the high risk and high reward financial sector in order to focus more of its energiy on money management, which is widely considered to be more conservative and dependable though with less opportunity for quick profits.When comparing Morgan Stanley vs. Goldman Sachs, it is clear that Morgan Stanley has chosen the more conservative business model.

One of the biggest differences between Goldman Sachs vs. Morgan Stanley can be seen in the purchase of Citigroup’s Smith Barney Venture by Morgan Stanley. Morgan Stanley’s website claims that “Morgan Stanley Wealth Management is an industry leader, managing $1.7 trillion in client assets through a network of 17,000 representatives in 740 locations.”

With this purchase, Morgan Stanley solidly reaffirmed that it was moving away from the high revenue and high risk business of trading in order to focus more attention on its wealth management services. When comparing Goldman Sachs vs. Morgan Stanley wealth management practices, in the first quarter of 2015 alone, Morgan Stanley brought in three times more investment and wealth management funds than Goldman Sachs.

JP Morgan vs. Morgan Stanley

Image source: Big Stock

Goldman Sachs, however, continues to focus its business model around trading revenues. It maintains a business model that is unashamedly similar to the way finance worked before the financial crisis of 2008. When looking at Goldman Sachs vs. Morgan Stanley, Goldman Sachs offers a much more precarious investment model that, though cyclical, does offer the possibility of fast earnings. The Morgan Stanley vs. Goldman Sachs comparison is important for those people interested in matching their investment portfolio with the business model that best suits their interests.

According to Bloomberg, “even as trading languished across the industry in recent years, Goldman Sachs has outperformed Morgan Stanley by most financial measures. Its return on equity of 11.2 percent last year was twice as high, and it produced more revenue with 40 percent fewer employees.”

When comparing Morgan Stanley vs. Goldman Sachs, Goldman Sachs is considered to have rebounded from the financial crisis faster than Morgan Stanley or any other bank.  An interesting fact about Goldman Sachs is that it posted its largest profit in the summer of 2009, shortly after the financial crisis came to an end. 

If you are thinking about whether to invest in Goldman Sachs or Morgan Stanley, the most important thing to consider is what type of investment portfolio defines your finances. If you are interested in high-risk, high reward investments, then Goldman Sachs is the best investment bank for you. However, if you are more interested in long-term wealth management, Morgan Stanley is the better option. 

After the financial crisis of 2008, the Dodd-Frank Wall Street Reform Act allowed greater regulatory measures by the U.S. government over the financial sector of the economy. The U.S. government didn’t discriminate between Goldman Sachs or Morgan Stanley and forced both companies to reorganize into traditional holding companies.  Thus, the Goldman Sachs vs. Morgan Stanley debate is different today since both countries have had to scale down following the 2008 economic crisis. 

Despite the forced reorganization, the post-crisis rebound between Morgan Stanley vs. Goldman Sachs is telling. Goldman Sachs posted a total net income of $13.4 billion the year after the financial crisis while Morgan Stanley declared an effective loss. 

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JP Morgan vs. Goldman Sachs

When comparing Goldman Sachs vs. JP Morgan, the contrast is similar to the JP Morgan vs. Morgan Stanley comparison. Neither Goldman Sachs nor Morgan Stanley offer commercial banking services as does JP Morgan. In recent years, both companies have benefitted from low interest rates and certain Fed policies to increase their financial returns.  

When comparing the return on equity between Goldman Sachs vs. JP Morgan, both banks had impressive numbers. In 2015, Goldman Sachs posted a 10.47% return on equity while JP Morgan came in just behind them at 9.82% during the same period.

Goldman Sachs vs. JP Morgan

Image source: Big Stock

When comparing JP Morgan vs. Goldman Sachs statistically, both are seen to be sending out strong numeric indicators. In 2015, Goldman Sachs investment banking generated $6.46 billion in revenue while its investment management generated a record $6.04 billion. JP Morgan’s focus on commercial banking was equally impressive. The investment assets of its mostly small clientele were up a record 13% in the same time period.  Furthermore, its business loan originations were up close to 20% as well. The credit card services offered by JP Morgan Chase were also at record highs. Thus, when comparing Goldman Sachs vs. JP Morgan, both are seen to have very good economic indicators.

Though Goldman Sachs vs. JP Morgan definitely offer different financial services, both seem to be financially sound. This shows that both Wall Street and Main Street are currently booming as the economy continues to gain resiliency and strength. 



Which Investment Bank Is for Me?

There are a number of choices for your investment banking needs, and the three largest financial institutions in the country offer distinct services and expertise that can be tailored to your personal financial needs. When comparing Goldman Sachs to JP Morgan or Morgan Stanley to JP Morgan, the main difference is in relation to the commercial banking services offered by JP Morgan.

If you are interested in large-scale investments but still want your personal banking needs to be met by the same bank, then JP Morgan is probably your best option. However, if you prefer to separate your large-scale investments from your day-to-day finances, then Morgan Stanley or Goldman Sachs offers purely investment banking services.  

When choosing between Goldman Sachs vs. Morgan Stanley, you will want to consider what business model best suits your financial interests and long-term investment plan.  If you are mostly interested in wealth management, Morgan Stanley easily has the upper hand. If, however, you prefer the high-risk, high reward financial system that characterized the pre-crisis economy, then Goldman Sachs is your bank. 

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