Morgan Stanley CEO James Gorman has announced that he plans to retire next spring after a 13-year stint transforming the investment bank into a Wall Street powerhouse — and a top contender to succeed him is the bank’s notoriously foul-mouthed head of investment management.
Edward “Ted” Pick, who has spent his entire career at Morgan Stanley beginning in 1990, fresh after graduating from Harvard Business School — has built the bank’s stock-trading operations in recent years.
That includes leading the bank to multiple back-to-back quarters of fixed-income revenue above $1 billion.
Pick also has doubled Morgan Stanley’s market share among the five big US investment firms since 2015, when he was elevated to oversee both stock and debt trading, according to The Wall Street Journal.
The sharp-edged executive is the epitome of a “Wall Street guy,” one of Pick’s 6,000 employees told Yahoo Finance of their hard-charging boss.
Gorman’s predecessor John Mack reportedly liked to prank Pick over his penchant for profanity, insiders told The Journal.
Once, Mack played a trick by having the firm’s compliance department tell Pick his emails had been flagged for excessive use of expletives, according to people familiar with the episode, per The Journal.
And though Pick may attribute his success to his lucky tie — a red Hermes tie with monkeys chasing tigers on it — he’s known at the bank for his painstaking diligence, earning him a reputation for “bleeding Morgan Stanley blue.”
“Ted just epitomizes all the things we love about the place: very smart, very client-focused, fiercely loyal, but a fun guy to have around,” a former colleague told the Financial Times of Pick back in 2017.
A New York-based senior trader also told the outlet at the time that Pick was “being groomed,” for the CEO role. “And he’s delivering.”
“He’s the future CEO, no doubt about it,” another London-based banker told FT. “Unless he shoots himself in the foot.”
Pick’s divisions didn’t score as big in the latest quarter — revenue from investment banking fell 27% to $938 million in the third quarter, and trading was also muted, with a 2% rise in equity trading and 11% drop in fixed income.
However, he remains primed to succeed Gorman, who has said that his longtime deputy — and his fiercest competition, Andy Saperstein — “have both played critical roles in our success.”
Saperstein, who runs the company’s $4.8 trillion wealth management and global marketing divisions, has managed to turn a revenue in recent quarters despite a slowdown in dealmaking across all Wall Street firms.
In the second quarter, Morgan Stanley’s wealth management unit’s net revenue rose 16% to a record $6.7 billion for the quarter, and it gained almost $90 billion in new assets as the bank reported a 13% tank in earnings to $2.2 billion.
In the latest quarter, however, the inflow of assets to wealth management fell to $35.7 billion from $64.8 billion a year earlier.
The 56-year-old has a storied career on Wall Street, beginning with an internship at McKinsey & Co. after obtaining degrees in finance and economics from the Wharton School of the University of Pennsylvania before landing his first full-time gig with Solomon Brothers in the late 1980s.
It was at McKinsey that Saperstein met Gorman, who became a type of mentor to Saperstein.
The pair have been tied together ever since, both jumping to Merrill Lynch from the consulting giant and then to New York-based Morgan Stanley in 2006, when Gorman assumed the role as CEO and Saperstein was named COO of National Sales.
However, Saperstein’s ability to step out of Pick’s shadow has been questioned.
Bloomberg cited the executive’s love of Disney World and choice to buy a pontoon boat in New York’s Finger Lakes — rather than a yacht in the Hamptons — as potential reasons why his Wall Street peers may be skeptical of his CEO potential.
Dark-horse candidate Dan Simkowitz’s name has also been thrown out as Gorman successor.
Simkowitz — or “Simko” as he’s known as by his colleagues — is a valued Morgan Stanley veteran for his smarts, sources told Business Insider, adding that he’s not given enough credit as a CEO contender.
“If I had to order and rank them from who could execute the job with the je nais se quois that the firm would want to have and be the most Gorman-esque, it would probably be Dan,” one ex-managing director told the outlet.
Now the head of investment management, Simkowitz joined Morgan Stanley more than three decades ago.
A Harvard grad who obtained his Masters of Business Administration from Columbia University, Simkowitz has led some of the largest IPOs in history, including for oil refiner Conoco and Verizon’s $49 billion bond offering.
“Dan is the consummate CEO,” another former managing director told Insider. “He is going to be a CEO somewhere if he doesn’t get this job. It just won’t be at Morgan Stanley.”
Morgan Stanley declined to comment on Gorman’s successor beyond what was said in the bank’s third-quarter earnings call on Wednesday, when executives notoriously voided discussing the next CEO.
Analysts at Evercore criticized the lack of an announcement on a long-anticipated CEO succession, which they said “is a mistake by the Board as more time can only increase angst and divide parties.”
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