By Justin Baer
Morgan Stanley elevated two of its longtime executives to bigger
jobs, highlighting a pair of strategic priorities for the Wall
Street firm while offering additional clues on its succession
plans.
Edward Pick, 46 years old, who oversaw the revival of Morgan
Stanley's stock-trading arm after the financial crisis, was named
global head of sales and trading, according to a memorandum sent to
Morgan Stanley employees Thursday. The new role gives Mr. Pick
oversight of fixed-income trading, a key profit driver for banks
that has been challenged by new regulations.
Morgan Stanley also tabbed Dan Simkowitz, an investment banker
who co-led the firm's stock- and debt-underwriting business, to be
head of investment management, reporting directly to Chairman and
CEO James Gorman, the memo said. Overshadowed by the firm's
wealth-advisory business, which had doubled in size in recent years
through the acquisition of Citigroup Inc.'s Smith Barney brokerage,
the money-management division had previously fit within the remit
of Gregory Fleming, one of the firm's two presidents serving under
Mr. Gorman.
Mr. Simkowitz, 50 years old, will join Mr. Pick on the firm's
operating committee, said the memo, signed by Mr. Gorman, Mr.
Fleming and Colm Kelleher, president of Morgan Stanley's
investment-banking and trading businesses.
"We always need to look to our future while managing the
present," the three executives wrote in the memo. "Our future
includes developing strong executives to serve at the most senior
levels of the firm, ensuring we regularly bring new energy and
intensity to areas where we can move the needle over the next five
years."
Messrs. Pick and Simkowitz each ran one of the firm's flagship
businesses, and both joined Morgan Stanley in 1990. They will now
be tasked with overseeing divisions with less impressive track
records, fixed income and investment management. Their promotions
follow other moves Mr. Gorman has made this year to cultivate a
group of managers who may one day succeed him or his top two
deputies, Messrs. Kelleher and Fleming.
"They're grooming the next generation, and the only way to do
that is to give them more responsibility," said Glenn Schorr, an
analyst with Evercore ISI.
As Mr. Gorman's turnaround plan gained steam, lifting the firm's
returns and its stock price, the CEO has increasingly focused on
ensuring the transition to a new generation of leaders is more
orderly than those in the recent past. In the years before the
financial crisis, Morgan Stanley's merger with Dean Witter gave way
to a bitter power struggle, an exodus of senior executives, and the
return of its former chieftain, John Mack.
While Mr. Gorman was Mr. Mack's choice as Morgan Stanley's next
CEO, the decision seemed far from settled when the former
management consultant and brokerage executive had arrived at the
firm from Merrill Lynch & Co. in 2006.
Left unsaid in Thursday's memo was the belief by many Morgan
Stanley executives that Mr. Gorman, 57 years old, is expected to
remain in his post for the foreseeable future. Indeed, all of the
significant management moves of the past year, including Jonathan
Pruzan's appointment as finance chief, appear to presage future
changes closer to the top.
Mr. Simkowitz's appointment marks the latest Morgan Stanley
investment banker to cross over into another division, part of a
push by Mr. Gorman to round out the experience of rising executives
at the firm. The decision to give Mr. Simkowitz a direct line to
Mr. Gorman was made to make the job more attractive, and to
highlight the division's potential, people familiar with the matter
said.
Nevertheless, it was difficult for some outsiders to avoid
concluding that Mr. Fleming had lost something in the latest
reshuffle. A former Merrill executive who once sat on BlackRock
Inc.'s board, Mr. Fleming is often cited as a potential CEO
candidate for financial-services companies considering a leadership
change.
People familiar with Morgan Stanley executives' thinking
rejected the notion that Mr. Fleming was losing favor with Mr.
Gorman or the firm's board. Mr. Fleming remains in a top lieutenant
to the CEO and, at 52 years old, is five years younger than Mr.
Gorman.
Messrs. Gorman and Fleming had discussed since early 2014 a plan
to hive off the money-management division from the latter's main
responsibilities running the wealth business, a unit that comprises
more than 40% of the firm's revenue, the people said.
Mr. Fleming is expected to push hard in building out the wealth
unit's banking arm, considered one of the firm's most-promising
areas of untapped growth. The bank has about $140 billion in
deposits, and that figure could surge above $200 billion in the
coming years as Morgan Stanley persuades its wealthy brokerage
clients to park more of their cash with the firm, one person
familiar with the matter said.
Investment management now accounts for just 10% of the firm's
revenue. The gradual strengthening of Morgan Stanley's balance
sheet, and its improved standing with regulators, has emboldened
its executives to consider more aggressive ways to build out the
unit, the people said.
Morgan Stanley may consider acquiring other money managers, the
people said. Many of the potential deals are expected to be
smaller, given the Federal Reserve's role in limiting how much
stockpiled capital big banks can deploy, but Morgan Stanley could
now be a player in larger acquisitions as businesses become
available.
The firm is also considering a further push into retail money
management, , one person familiar with the matter said.
Morgan Stanley executives had privately speculated for months
that Mr. Gorman would promote Mr. Pick, whose group has overtaken
Goldman Sachs Group Inc. as Wall Street's biggest equities business
in recent quarters.
Gradual changes to the way investors buy and sell bonds and
other debt securities, and the possibility that those markets will
eventually more closely resemble how the stock market functions,
convinced Morgan Stanley executives that the time was now to give
Mr. Pick these broader responsibilities, one person familiar with
the matter said.
Mr. Simkowitz had worked on some of biggest initial public
offerings in history, including Alibaba Group Holding Ltd. and
Facebook Inc. and served as a key adviser to the U.S . government
on General Motors Co.'s share sale.
In a separate memo, Morgan Stanley announced that Mo Assomull,
42, will become the firm's sole head of global capital markets.
Write to Justin Baer at justin.baer@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 01, 2015 13:39 ET (17:39 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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