Morgan Stanley CEO shift pleases all, thrills none
The departing boss has set a goal of managing $10 trillion of client assets in five years’ time versus $6 trillion now
Wall Street has served up its share of chaotic and ill-starred leadership transitions over the years. So the crushing conventionality of Morgan Stanley’s (MS.N)new chief executive selection, announced late on Wednesday, is almost certainly the point.
Ted Pick, who will replace James Gorman come January next year, is an easy choice. He’s a Morgan Stanley lifer who currently runs the $120 billion firm’s dealmaking division and its potentially combustible trading business, which he helped put on an even keel after the financial crisis. Notwithstanding a couple of black eyes, notably Morgan Stanley’s entanglement with collapsed hedge fund Archegos and the loans it made to Elon Musk so he could buy Twitter, since rebranded X, his division has held its own against big peers for a decade.
Nor is Pick likely to make any sudden strategic movements. While Morgan Stanley’s future growth is not in trading but in wealth – a business Pick has not run – as current co-head of strategy, he is neck-deep in Gorman’s trademark push into managing rich folks’ money. The departing boss has set a goal of managing $10 trillion of client assets in five years’ time versus $6 trillion now, and it’s safe to assume that still holds. Gorman will stick around as executive chairman for an unspecified time, which in any case makes it harder for Pick to stray from the script.
The handover should be fairly civil, since the two CEO also-rans, wealth chief Andy Saperstein and investment management head Dan Simkowitz, both get promotions too. It’s certainly smoother than the Goldman Sachs (GS.N) changeover in 2018 that ended with David Solomon in charge and his two competitors gone. Or the multiple CEO culls at scandal-plagued Wells Fargo (WFC.N). Or the non-changeover at JPMorgan (JPM.N), where Jamie Dimon regularly talks of retiring in five years but then never does.
Happily for the new broom, investors aren’t obviously asking for anything new. Pick’s firm trades at a 20% premium to cross-town rival and closest peer Goldman Sachs on a price-to-earnings basis, according to LSEG data. A dollar invested in Morgan Stanley when Gorman took over in 2010 is now worth more than $3, whereas the same investment in Goldman is $2. Pick is the drama-free candidate for a drama-free firm, picked in a drama-free way. That’s exactly what stakeholders ordered.
