In his first earnings call with analysts, new Morgan Stanley CEO Ted Pick declared his financial advisor bona fides, saying that his family's roots in the wealth management business balanced his background in investment banking and trading.
Pick, 55, is in for a challenge this year as he takes control of Morgan Stanley from James Gorman, who last year said he was stepping down as chief executive but would remain as executive chairman in 2024. Gorman has been widely praised on Wall Street, particularly for engineering the purchase of Smith Barney over time starting in 2009, and for placing a greater emphasis on wealth management at the firm.
"The wealth business is actually in my blood," Pick said during the conference call Tuesday morning. "My dad and my father-in-law were both brokers once upon a time, and I grew up studying that business as a kid.
"And I think it is absolutely that which has differentiated Morgan Stanley during this 15-year period," he said. "The ability to integrate Smith Barney and build out something that's truly special is – has been existentially, but also thematically exactly what the firm has needed."
"I think that if wealth management is in the CEO's blood and he wants to prove that to financial advisors, it’s going to take time to get that kind of trust," said Casey Knight, executive vice president of ESP Financial Search. "Until then, advisors at Morgan Stanley will be either cautiously optimistic or cautiously pessimistic about the future there."
Pick added that he had visited a branch office in Manhattan and was spending time with staff who are driving the work at the firm.
Wealth management will be "the engine for further Morgan Stanley growth," he said.
Pick joined Morgan Stanley in 1990 after graduating from Middlebury College and was promoted to managing director in 2002, according to his biography on the company's website. Before becoming CEO this year, Pick was the firm's co-president, co-head of firm strategy and head of the institutional securities group, overseeing investment banking, equities, fixed Income, global capital markets and research.
According to a report last month by Reuters, Pick gained prominence for turning Morgan Stanley's equities business into a global leader while also tackling its challenges. He turned around its fixed-income division, cutting 25% of employees, and helped raise capital when the bank was on the brink of collapse in 2008.
Meanwhile, Morgan Stanley's wealth management group reported net revenues of $26.3 billion in 2023, compared with $24.4 billion a year earlier, an increase of 7.8%.
The wealth group also reported pre-tax profit of $6.53 billion for the year, down 1% from 2022, and a pre-tax margin of 25% versus 27% in 2022. Gorman's long-term target for pre-tax margin has been 30%.
That target, and eventually managing $10 trillion in assets, are goals Pick said the firm will continue to strive for in the future. Morgan Stanley currently manages close to $6.6 trillion in client assets.
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