Morgan Stanley makes its choice: how Ted Pick won the CEO succession race

Morgan Stanley chief executive James Gorman remembers being instantly impressed by Ted Pick the first time he saw him almost 20 years ago.

It was during a 2006 town hall held by the bank’s then chief executive, John Mack, and Pick — at the time co-head of global equity capital markets — stepped up to ask a question.

“I thought, that guy’s sharp,” Gorman told the Financial Times.

Pick, 54, is now weeks away from leading the US bank that Gorman, 65, transformed in 14 years as chief executive, from an investment bank with an uncertain future into a thriving wealth and asset manager with aspirations to oversee $10tn — or even more — in client money.

Morgan Stanley announced on Wednesday evening that its board of directors had unanimously selected Pick to succeed Gorman. Pick, who runs investment banking and trading, will take over on January 1, with Gorman staying on as executive chair for an unspecified period.

Pick had been seen as the frontrunner for the job ahead of two other internal candidates, after Gorman said this year that he planned to step down before the bank’s next annual general meeting in May.

In Gorman, Morgan Stanley had an urbane Australian who was a relative outsider when he inherited the top job from Mack in 2010. Pick is a 33-year Morgan Stanley veteran, steeped in the firm’s culture but still working on polishing his public persona.

In Gorman’s words, he is being succeeded by someone who has “never disappointed” at Morgan Stanley.

A graduate of Middlebury College with an MBA from Harvard, Pick started at Morgan Stanley in 1990 as an analyst. He quickly specialised in equity capital markets, rising to run that business in 2005 and helping Morgan Stanley raise capital during the 2008 financial crisis.

From 2009, Pick helped run global equities trading until 2015 when he was promoted to global head of sales and trading and given the job of turning around Morgan Stanley’s struggling fixed-income business.

He cut staff in fixed income by 25 per cent and still increased revenues, a revival that left a big impression on the bank’s board of directors. Each quarter, the trading floor would stop to listen when Pick used the speaker to run briskly through what they had got right or wrong.

When it became clear that he had a chance at the top job, Pick began working with a coach to tone down his language and improve his softer skills. He also made a visible effort to engage with geopolitics.

He is seen as an intense and exacting manager by people who have worked with him but also someone who generates deep loyalty.

“He drills and demands the best out of his teams,” said Huw van Steenis, vice chair of Oliver Wyman, who worked with Pick when he was at Morgan Stanley.

One immediate hurdle for Pick will be to clarify the optics of an investment banker having got the job ahead of the bosses of Morgan Stanley’s wealth and asset management divisions, its two major growth drivers.

“The downside is a perceived de-emphasis of wealth management within the company,” said Christian Bolu, banking analyst at Autonomous Research. “That certainly to investors is a risk. So I think he has to communicate very early on that wealth management is still the driver of the long-term growth of the business.”

Helping that cause is the fact that the two other leading contenders to be chief executive — wealth management head Andy Saperstein and asset management boss Dan Simkowitz — have agreed to stay on and have accepted expanded roles. That sort of continuation is not common on Wall Street, which is littered with messy succession battles.

Saperstein, 56, will take over Morgan Stanley’s asset management division in addition to his role running wealth management. Simkowitz, 58, will take Pick’s job running trading and the investment bank. The two men will also be Pick’s co-presidents.

In an interview with the Financial Times, Pick referred to Saperstein and Simkowitz as “my good friends” and said his appointment was “not a change in strategy”.

There have been blotches on Pick’s copybook. Morgan Stanley’s investment banking business consistently lags behind JPMorgan Chase and Goldman Sachs in league tables.

Morgan Stanley also lost almost $1bn from the collapse in 2021 of Archegos, Bill Hwang’s family office, which caused enormous losses across several global investment banks.

And Morgan Stanley is still facing a highly publicised investigation by the Securities and Exchange Commission and the US attorney’s office in Manhattan over its handling of block trades — a way to sell bulk volumes of stock.

Nevertheless, Pick’s running of investment banking and his head for risk was seen as a big selling point to Morgan Stanley’s board of directors during the selection process, according to people familiar with the matter.

A major challenge will be to decide on Morgan Stanley’s next strategic move, with the business set up by Gorman as an asset-gathering machine. The bank has about $6tn in assets under management, with a target of eventually reaching $10tn, and the strategy has helped Morgan Stanley’s market capitalisation to eclipse that of longtime Wall Street rival Goldman.

“The toughest challenge is figuring out what the next act is,” said Brennan Hawken, analyst at UBS. “You’re stepping into massive shoes . . . Gorman took the underdog firm on Wall Street and he re-engineered it. That is hard. He is going out on a high. It’s exactly the way he should go out.”

During Morgan Stanley’s third-quarter earnings call last week, Gorman hinted that the bank might look to do more outside the US, which under his leadership was the centre for growth in wealth management. “I would be very surprised if this firm doesn’t do some transactions in both wealth and asset management over the next three years outside the US,” Gorman said.

Pick only found out he got the job about an hour before the news was announced publicly.

“James came by a little after 16:30 and asked me if I wanted to join him for a walk and I happily agreed,” Pick told the FT in a joint interview with Gorman. “I grabbed my jacket and we walked into the boardroom and the board was there and welcomed us. It was a magical moment.”

“What he’s not telling you is he got a standing ovation,” Gorman added. “That’s how he learnt he got the job.”