The three largest U.S. wirehouses—Merrill Lynch, Morgan Stanley, and Wells Fargo—are deepening their push into alternative investments and artificial intelligence, according to third-quarter earnings reports released this week. Together, these firms employ roughly 40,000 financial advisors, who rank among the highest revenue producers in the industry. Their growing focus on alternatives such as private credit, real estate, and infrastructure funds is significant because these products typically carry higher fees than traditional stocks and bonds, and advisors are using them to help wealthy clients seek higher yields and diversification.
Morgan Stanley reported $15.2 billion in net flows to alternative investments for the quarter ended September 30, down 8% from the same period in 2025 but up 20% from the second quarter of 2026. CFO Sharon Yeshaya noted that retail engagement remains healthy, with alternatives delivering "another quarter of record sales." She also highlighted the transformative impact of AI on operations, saying that senior management sees "fewer errors and fewer mistakes" as AI tools are deployed.
Merrill Lynch saw client sales of alternative investments rise 19% in the quarter, according to Eric Schimpf, president and co-head of Merrill Wealth Management. While Schimpf did not detail new AI tools, he emphasized the firm's continued investment in digital capabilities. Wells Fargo CEO Charlie Scharf reported a 30% increase in the number of alternative product offerings on its platform this year, and the launch of an AI-powered tool for advisors that streamlines routine work and improves client service.
The surge in alternatives comes even as some advisors have retreated from private credit funds and nontraded business development companies, which invest in loans to private firms. Industry data suggests that semiliquid funds have seen redemptions, while alternative ETFs have attracted $10.7 billion in 2026. This shift reflects a broader trend toward more liquid and transparent structures, even as wirehouses expand their private asset menus.
According to a senior executive in the alternative investment industry, the next wave of offerings is centered on private equity and infrastructure, with model portfolios that make it easier for advisors to allocate without making a strict allocation. "That's how the wires are driving the adoption of alts," the executive said. This approach is likely to accelerate as advisors target a $2 trillion alternatives surge, with infrastructure gaining on private credit.
The adoption of AI is also a key theme. Morgan Stanley's Yeshaya noted that AI is "fundamentally changing what our teams do," with controls in place to ensure accuracy. Wells Fargo's new AI tool is the first of several planned capabilities in its wealth and investment management division. These investments are expected to yield significant cost savings and productivity gains, as AI replaces routine back-office tasks.
Despite the strong sales, the wirehouses are navigating a complex environment. The retreat from private credit funds suggests that advisors are becoming more selective, favoring strategies with clearer liquidity profiles. Meanwhile, the push into infrastructure and private equity aligns with long-term trends such as the need for retirement assets hitting $51.2 trillion, where advisors are shifting focus to spending strategies.
For financial advisors, the message is clear: wirehouses are committed to expanding alternatives and AI capabilities, but they are doing so with an eye toward product quality and client suitability. As the market evolves, advisors will need to stay informed about the latest offerings and regulatory developments, such as those highlighted in InvestmentNews' 5-Star Technology 2026, which showcases AI and data tools leading advisor-focused innovation.
