James Gorman’s plan to step down as Morgan Stanley's CEO in the next 12 months sets up a battle among three of the Wall Street giant’s top executives for their boss’s job.
Duking it out are Andy Saperstein, whose operation manages money for the rich — the same business Gorman transformed into a $4.5 trillion Wall Street juggernaut — as well as Ted Pick, who runs the riskier institutional securities group involved in trading and dealmaking. Dan Simkowitz, who oversees asset management, is the only candidate with extensive experience on both sides of the firm, though analysts say he’s the least likely winner.
Gorman took over at a time when the bank’s business model was under fire and Morgan Stanley was struggling to recover from the financial crisis, but his successor will face a different challenge: How to build on the CEO’s success in turning the firm around and posting the best share performance among major US banks over the past decade.
The task facing Saperstein, 56, is to prove he can emerge from under the shadow of Gorman — who has been his boss across three different firms — and win support from a company that still relies on Pick’s bankers and traders to generate multibillion-dollar windfalls. Another obstacle might be his lack of experience overseas.
Saperstein’s business has been “the engine” behind Morgan Stanley’s growth in recent years, according to Mike Mayo, an analyst at Wells Fargo & Co., who said wealth management represents two-thirds of the company’s market valuation.
The Disney World-loving executive grew up in the working-class New York City borough of Staten Island. His first stint on Wall Street was at Salomon Brothers at the end of the 1980s, after obtaining degrees in finance and economics from the Wharton School of the University of Pennsylvania. He left for Harvard Law School, but abandoned the idea of a legal career after an internship at McKinsey & Co.
It was at McKinsey that Gorman became his mentor, and the pair have been tied together ever since — jumping to Merrill Lynch from the consulting giant and then to the New York-based Morgan Stanley.
Arguing in favor of Pick, 54, is his success in taking on Goldman Sachs Group Inc. in the battle for Wall Street riches — and helping revive the trading business.
“Pick may be a slightly more likely choice, running the institutional group, including its top-tier global investment banking and equities businesses,” KBW analyst David Konrad wrote in a note. “Importantly, Ted was instrumental in turning around Morgan’s FICC business.”
Pick’s rise is an unlikely arc for a man who was the last person hired into his analyst class three decades ago. Once known for his colorful vocabulary, Pick has made Morgan Stanley his lifelong home, except for a stint in business school. He spent most of his early career there as a capital markets banker, helping companies raise money by selling stock. But that changed after the 2008 financial crisis.
He was thrust into leading the equities unit at a time when the bank was hemorrhaging clients and rivals were openly disparaging its viability. Under Pick, the unit went from hobbled to healthy, and it soon charged past competitors to a No. 1 ranking. After his success in equities, he got another challenge: resuscitate the fixed-income division, the bank’s perennial sick child that struggled to keep pace with larger rivals. The division’s recovery since then is touted as a success story by the bank’s leadership.
One very public misstep: The prime brokerage division that Pick helped build into Morgan Stanley’s crown jewel got caught wrong-footed in 2021, when Bill Hwang’s Archegos Capital Management collapsed. The revelation that Morgan Stanley lost $911 million on dealings with the family office outed it as U.S. banking’s biggest loser in the debacle. The bank also recently disclosed it is in conversations with US prosecutors to resolve a probe into its block trading practices — a business that falls under Pick’s command.
Simkowitz has been with the firm for more than three decades, and oversees a roughly $1.4 trillion asset management business that has expanded with the acquisition of Eaton Vance, completed in March 2021.
Simko, as he’s known by colleagues, has a background as a capital markets banker, a role that took on increased importance when he worked with the Treasury and Federal Reserve in the aftermath of the 2008 financial crisis and clean-up.
Once a captain of the Harvard swim team, Simkowitz began his career at the bank in 1990 and has previously worked in Hong Kong and Japan.
"Shares of alternative assets managers have lagged this year as investors grow wary of private-credit exposure."
The fintech platform is touting a new AI-free Planning Observations feature, which draws on IRS tax records to uncover opportunities for advisors.
The Omaha, Nebraska-based RIA's latest acquisition expands its Rocky Mountain footprint after two prior Colorado deals last year.
Operational drag between an advisor signing and accounts going live is emerging as a competitive liability for wealth management firms.
Bain says companies face a "winner's paradox" as AI transformation collides with complex integrations.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
