James Gorman, Morgan Stanley’s CEO, announced that he will step down from his position within the next 12 months and become the executive chair. Gorman has led the bank for 13 years, and under his watch, the bank’s revenue more than doubled to $66bn this year. The bank’s success in growing its wealth and asset management businesses has given it an edge over rivals like Goldman Sachs and JPMorgan. Morgan Stanley’s revenues have also been stabilised by its deposits from high-net-worth clients, which reduced its reliance on wholesale funding.
Gorman, who transformed the bank with bets on acquisitions like E-Trade, is credited with turning the bank into a Wall Street powerhouse through strategic acquisitions. Under his leadership, Morgan Stanley’s wealth management arm has accounted for nearly 50% of the firm’s revenue. The bank acquired E*Trade financial in February last year to boost its retail investment management offerings. In October the same year, it purchased wealth manager Eaton Vance Corp for $7bn, bringing on $500bn in assets under management.
Gorman has been open about the succession process, and there are reportedly several internal potential successors. Three executives are being touted to take over from Gorman as co-presidents, namely Ted Pick, head of institutional securities; Andy Saperstein, co-president and head of wealth management; and Dan Simkowitz, head of investment management. Any successor has big shoes to fill — since 2010, Gorman is one of only three megabank CEOs still at the helm since the global financial crisis of 2008-09, along with JPMorgan Chase’s Jamie Dimon and Bank of America’s Brian Moynihan.
Following his announcement, Morgan Stanley’s shares reduced by just over 1% to trade at $83.49 per share. The market’s reaction is by no means an initial reaction to negative news. Morgan Stanley’s share price has risen more than 180% in Gorman’s 13 years of leading the bank. In 2021, Morgan Stanley has been one of the best-performing US banks, and last week it reported revenue and net income that beat analysts’ estimates, driven by continued business momentum.
James Gorman has been recognised as one of the most influential people in finance this year by Barron’s magazine. Gorman ranks fourth on the publication’s list of the 100 most influential people in global finance after rising from seventh place in 2020.
In conclusion, James Gorman’s legacy at Morgan Stanley is a formidable one. He leaves behind a bank that has been transformed by strategic acquisitions into a true Wall Street powerhouse. He has been instrumental in the bank’s focus on wealth management and investment advice. Gorman’s successor has big shoes to fill, but the CEO has left the bank with a strong momentum that should continue to serve it well as it navigates the post-pandemic landscape.
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