Morgan Stanley CEO James Gorman led the firm through a spate of acquisitions that greatly elevated its position in the wealth management sector and his successor may emerge from that part of the firm.
Long-serving Morgan Stanley CEO James Gorman has said he intends to step down within the next year, signaling a race to the top among those tipped to succeed the veteran Wall Street banker. Gorman’s decision comes at a time of turmoil in the US banking system and concern over fiscal policy and the federal debt ceiling. Gorman will become executive chairman for “a period of time” after his departure.
Drawing on his experience of the 2008 global financial crisis that almost sunk Morgan Stanley, Gorman led the firm through a spate of acquisitions that greatly elevated its position in wealth management. During a January investor update, Gorman, 64, said Morgan Stanley expected its assets under management to reach $10 trillion, up from $6.5 trillion. Last year, 42 of the firm’s financial advisers were named in Barron’s Top 100 Financial Advisors Ranking, more than any other firm.
Under Gorman’s watch, Morgan Stanley acquired money manager Eaton Vance, online broker E*Trade, investment manager Solium Capital and real estate credit platform Mesa West. He is also widely associated with Morgan Stanley’s 2009 purchase of brokerage Smith Barney. Candidates in the the running to succeed him, all nominated by Morgan Stanley’s board, include Ted Pick, head of the Institutional Securities group; Andy Saperstein, head of Morgan Stanley Wealth Management; and Dan Simkowitz, head of Investment Management and co-head of Firm Strategy and Execution.
The firm’s blockbuster performance in wealth management reportedly favors Saperstein.
However, the fact that no successor was announced took a toll on Morgan Stanley’s stock price. In the immediate aftermath of Gorman’s announcement, Morgan Stanley shares fell more than 2% as some investors fretted over the firm’s direction.
There’s also a concern that US banks could also come under renewed pressure in the wake of several high-profile bank failures and near-failures. Coming during the lead-up to Washington’s debt-ceiling X-date—when US Treasury Secretary Janet Yellen said that it is “highly likely” the federal government would run out of cash—Gorman’s announcement only added to concerns as to how Wall Street’s biggest firms might respond to a more uncertain environment going forward.