Morgan Stanley’s incoming CEO, James Gorman, says focus is on trading, not wealth management — for now
James Gorman, in some of his first remarks since being tapped as Morgan Stanley's incoming chief executive, has said wealth management will be a priority for the brokerage firm — just maybe not its top priority.
James Gorman, in some of his first remarks since being tapped as Morgan Stanley’s incoming chief executive, has said wealth management will be a priority for the brokerage firm — just maybe not its top priority.
“We’re not about to become a wealth management firm. The heart, the DNA, the fabric of this place has always been the institutional securities business, and frankly, should always be,” said Mr. Gorman, who last week was named to succeed John Mack as Morgan Stanley’s chief executive. He will assume the post on Jan. 1.
Mr. Gorman, who is currently co-president of Morgan Stanley and chairman of its retail investment joint venture, Morgan Stanley Smith Barney, made the remarks when he addressed staffers at the firm’s Manhattan headquarters Friday
While Mr. Gorman said he was confident in the wealth management business’s prospects, his immediate attention when he becomes CEO will be turned to the firm’s trading operations, which have lagged behind peers in recent quarters.
A number of wealth management executives and observers said they found the remarks puzzling in light of Morgan Stanley’s recent heavy promotion and marketing of Morgan Stanley Smith Barney as a wealth management firm.
“It seems like an odd thing to say after emphasizing wealth management for the last several months in their ad campaign,” said Stephen McCarthy, a senior vice president for KCG Capital Advisers in New York. “You have to wonder what saying something like that does for troops in the field.”
One industry executive search consultant said that he thought although Mr. Gorman’s comments may have been ill-advised, they were most likely made spontaneously to please traders at the meeting.
“I think he said what he thought the traders wanted to hear,” the executive said. “The tension between retail and trading has existed in the firm forever.”
The fact that Mr. Gorman has a retail background may have also been a factor, said Jamie McLaughlin, the new chief executive of Geller Family Office Services LLC.
“I think it was a political bow to the traders,” Mr. McLaughlin said. “He is well-regarded for knowing all Morgan’s units, but he came up through retail. I think he wanted to make it clear he was going to be impartial to all parts of the firm competing for resources and capital.”
Don’t read too much into Mr. Gorman’s remarks, said Jim Wiggins, a Morgan Stanley spokesman.
“Nothing has changed,” Mr. Wiggins said. “Morgan Stanley Smith Barney will be a significant contributor to the overall results of Morgan Stanley.”
Mr. Gorman, he said, wanted to address the “inaccurate perception that because he came from the wealth management side of the business the institutional side would be de-emphasized, which is not correct.”
Before joining Morgan Stanley in 2007, Mr. Gorman headed Merrill Lynch & Co. Inc.’s global private businesses. He began his career as an attorney in Melbourne, Australia and also worked for the financial services practice of the McKinsey & Co. consulting firm.
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