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May 29, 2024

Pick Takes Charge at Morgan Stanley, Sets Sights on Continued Growth

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Jan 18, 2024

Morgan Stanley’s new CEO Ted Pick took charge this week, outlining his vision to continue growing the storied Wall Street firm founded during the Great Depression. The leadership change comes at a pivotal time for Morgan Stanley amid a shifting economic landscape.

New CEO Lays Out Restrained Growth Targets

On Wednesday, Ted Pick held his first earnings call as CEO, using the opportunity to articulate more restrained financial targets than his predecessor James Gorman. Pick set a goal to lift the bank’s wealth management profits to $6 billion by 2026, below the $7 billion target Gorman once envisioned. He also wants to achieve a medium-term return on tangible common equity between 15% and 17%, down from 17% to 19% under Gorman.

The new targets reflect Pick’s pragmatic approach as he takes the reins following 15 years under Gorman’s leadership. Gorman led Morgan Stanley through turbulent times coming out of the financial crisis, overseeing its transformation into a more balanced bank.

Morgan Stanley Financial Targets

Category            Gorman Target   Pick Target
Wealth Management   $7 billion      $6 billion 
ROTCE               17-19%          15-17%

While the new objectives represent a comedown from Gorman’s vision, Pick made clear Morgan Stanley still has “plenty of room in front of us in terms of growth.”

Wealth Management Remains Central Focus

Despite trimming the wealth management profit goal, Pick emphasized the firm’s continued focus on growing this key business segment. Wealth management delivered over half of Morgan Stanley’s profits last year.

Pick highlighted ambitions to gain more clients and deepen relationships with existing ones. He sees potential to capture more deposit flows and migrate assets into fee-based accounts.

The CEO also suggested the bank could make tuck-in acquisitions to add specialized capabilities in areas like banking and lending. But he downplayed expectations for larger wealth management deals on the heels of recent purchases under Gorman like Eaton Vance and E*Trade.

Navigating Post-Pandemic Markets

Pick takes the helm at a time of economic uncertainty, as markets brace for the impacts of rising rates and the Fed’s quantitative tightening. But the new CEO sees potential upside, predicting increased M&A activity could boost investment banking revenues.

Pick called the leadership transition “about as smooth as these things can be in terms of timing”, with Morgan Stanley on solid footing despite recent market turbulence. While Gorman led the bank through extreme crises like the Great Recession and COVID-19, Pick takes over amid a period of relative stability.

The new chief will need to prove he can drive profits while navigating the post-pandemic landscape. But for now, Pick plans to stay the course, focusing on Morgan Stanley’s transformation into a “calmer, contiguous” firm.

Conclusion: Steady Hand at the Helm

Ted Pick represents a study in contrasts from the brash, outspoken Gorman. Where Gorman boldly predicted the decline of brick-and-mortar banking, Pick comes off as more mild-mannered in tone.

But the low-key Pick is still confident Morgan Stanley can continue growing across its key business lines. While his strategic vision doesn’t represent a huge departure from Gorman’s, Pick seems ready to adapt to evolving conditions. That pragmatic approach could serve the firm well in the years ahead.

The leadership change marks the end of an era for Morgan Stanley after Gorman’s enormously successful 15-year run. Now the storied firm passes to Pick, a lifelong insider viewed as a steady hand who can build on Morgan Stanley’s rock-solid foundation.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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