McColgan’s role unclear in MSSB venture
Ellyn McColgan, the hard-charging executive who was drafted to run Morgan Stanley’s recovering Global Wealth Management Group last year, appears to have been sidelined by the firm’s decision to combine forces with Smith Barney.
Ellyn McColgan, the hard-charging executive who was drafted to run Morgan Stanley’s recovering Global Wealth Management Group last year, appears to have been sidelined by the firm’s decision to combine forces with Smith Barney.
Ms. McColgan, who was personally recruited by Morgan Stanley co-president James Gorman in December 2007 to become president and chief operating officer of the New York-based company’s retail brokerage operations, was absent last week when he announced the deal that will create the world’s biggest brokerage force.
“I will serve as chairman of the joint venture and will continue to serve as co-president of Morgan Stanley,” Mr. Gorman said in announcing the deal, which is expected to close in the third quarter. “[Smith Barney president and chief executive] Charlie Johnston will be president of the joint venture, reporting to me.”
Asked about Ms. McColgan’s role during a call with reporters, Mr. Gorman said that he hadn’t reached down to the next level of management.
“[Mr. Gorman] thinks the world of the job she has done at Global Wealth Management, and he’s hopeful that as we put the management team together for the [joint venture] there will be a role she’ll be excited about filling,” said Jim Wiggins, a Morgan Stanley spokesman.
That is a far cry from December 2007, when Morgan Stanley chairman and chief executive John Mack welcomed Ms. McColgan as “the ideal executive to carry forward the tremendous progress that James Gorman and his team have made in transforming our global wealth management business into an industry leader. She will bring to our management committee a breadth and depth of experience that is unmatched in our industry.”
There is a strong base of talented managers at Morgan Stanley and Smith Barney, leaving room for “only so many presidents,” said Andrew Tasnady, a compensation consultant in Port Washington, N.Y., who specializes in the retail brokerage business.
Mr. Wiggins declined to comment, other than to say that it is “customary” to split the chairman and president titles of a joint venture between the top leaders.
Ms. McColgan didn’t return a telephone call seeking comment.
Mr. Wiggins declined to comment about speculation from some insiders and Morgan Stanley alumni that she could be asked to assume the enormous task of integrating operations of the combined brokerage firms, which on a pro forma basis will have more than 20,000 registered representatives. Ms. McColgan also may be lying low as she negotiates a severance or modification of her compensation package, according to some industry observers.
Morgan Stanley is paying Citigroup Inc., the troubled New York banking giant, $2.1 billion for a 51% stake in the joint venture that will be known as Morgan Stanley Smith Barney. Morgan Stanley also has an option exercisable over five years to buy out Citigroup’s stake in Smith Barney of New York.
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