Ted Pick new CEO of Morgan Stanley, takes up helm from James Gorman

Investment lender Morgan Stanley has called on company veteran Ted Pick to fill in the boots of outbound CEO James Gorman. Pick in a statement affirmed the bank's commitment to investment banking and wealth management, as per a Reuters report. 

Pick has big boots to fill, taking over the helm from experienced banker Gorman who has served as CEO since 2010, and also led the bank through the aftermath of the 2008 financial crisis. Gorman will now be executive chairman and may assist with the transition for up to a year, it added.

Inside Man

Pick, aged 54 and with over 30 years of experience at Morgan Stanley, currently heads the institutional securities division, which includes the bank's investment banking and trading unit. He beat internal candidates Andy Saperstein and Dan Simkowitz. in a three-way competition for the role.

In an interview, Pick stated, “We have two great businesses, the strategy is intact, there is a change in leadership but no change in strategy.” 

However, Pick will face challenges in the investment banking sector due to recent difficulties affecting earnings, an investigation by United States regulators into block trading practices, and managing relationships with the two other contenders for the CEO position. 

Saperstein, responsible for wealth management, will continue as co-president and head of wealth. He will also take on additional responsibilities overseeing investment management. 

Simkowitz, the head of investment management, will become co-president and head of institutional securities. 

Notably, the absence of female candidates highlights the diversity gap on Wall Street.

Analysts Speak

Before his current role, Pick served as the global head of sales and trading and played a crucial role in revitalizing the firm's fixed income division, a competence that may be advantageous in the bank's next phase, according to some analysts.

Brian Mulberry, a client portfolio manager at Zacks Investment Management, commented, "The expectation is that the growth of mergers and acquisitions in the next couple of years will be high, and that has been Pick's core competency, so we view it as a good move." He also noted that Pick brings "stability and experience," qualities that the bank had been lacking during the succession discussions.

Gorman had announced his intention to step down within a year in May, and investors had anticipated the announcement of his successor during the bank's October 18 earnings report. The lack of a public plan for the new CEO led to a decline in the stock price, according to one analyst.

Gorman clarified that the bank adhered to its timetable and announced the decision after the October board meeting. The choice was made in October to allow the new CEO to begin in January and get a "running start."

Gorman's Legacy

James Gorman joined Morgan Stanley in February 2006 and became co-president the following year. During the 2008 financial crisis, as the threat loomed over some of Wall Street's major firms, he was in a prominent position alongside then-CEO John Mack. 

In January 2010, he was appointed CEO, coinciding with Brian Moynihan becoming CEO of Bank of America. Gorman, along with Jamie Dimon of JPMorgan Chase & Co., steered their respective institutions through the challenges of the financial crisis.

Analysts praised Gorman's significant deals in 2020, which included the acquisitions of discount brokerage E*Trade Financial Corp and Eaton Vance Corp. According to Stephen Biggar, an analyst at Argus Research, "Morgan Stanley is generally in very good shape as left by Gorman." He added, "Large integrations like E*Trade and Eaton Vance are behind it and created some great diversification."

Gorman, known for his love of music and dry sense of humor, grew up in Australia. He earned his bachelor's and law degrees from the University of Melbourne and obtained an M.B.A. from Columbia University. He later became a US citizen. 

Ana Arsov, managing director at Moody's, commended Gorman for guiding a traditional investment bank into a dynamic wealth management institution and noted that his succession has been well-planned to facilitate a smooth transition.