- Morgan Stanley CEO James Gorman plans to retire by May 2024, leaving big shoes to fill.
- The two frontrunners are hard-charging trader Ted Pick and affable wealth manager Andy Saperstein.
Succession has traditionally been a bloody sport on Wall Street with the losers leaving and taking their lieutenants with them. Morgan Stanley CEO James Gorman, who plans to retire by May 2024, wants the buck the trend so the bank can hold onto all three candidates.
"Wall Street has had a history of that not happening," said Gorman in a July earnings call. "I think we will — frankly, we will challenge that history."
All three executives have their own bona fides. Ted Pick, the hard-charging investment bank boss, is credited with transforming Morgan Stanley's key equities and fixed-income businesses. His main competition, Andy Saperstein, leads the bank's $4.8 trillion wealth manager, which has buoyed the firm's revenue as dealmaking has ground to a halt. The dark horse Dan Simkowitz runs asset management, which is the bank's smallest business line but its assets have nearly quadrupled to $1.4 trillion under his eight-year tenure.
With Morgan Stanley at the top of its game, breaking up this well-oiled team could be disastrous.
"The company can still be as good as it is now under the leadership of whoever gets it. The goal should be to be an even better version of what they are now, which is pretty damn good," the analyst said. "And the one thing you don't want to do is put that at risk."
Insider spoke to analysts and nine former colleagues of the trio. Here is what you need to know about the three candidates to run the Wall Street megabank.
Ted Pick
The 54-year-old trader has made his name as Morgan Stanley's problem solver by turning around the bank's equities and fixed-income businesses. Pick, who has spent his entire career at Morgan Stanley, quickly earned a reputation as a hard-working "deal junkie."
"He's the guy in the middle of a really tough deal," a former superior said. "Ted is working the phones, he's talking, he's in communication with the investors who say no, and he understands it. He's just really good at closing and intense about that."
Pick, whose old habit of cursing has made headlines, is also known for not pulling punches, even with clients.
"It's easy to fall in love with your own line of patter," said Blackstone's Tony James, who chose Pick to advise on the private equity giant's initial public offering. "He'd call you out on that in a heartbeat and say, 'That's not gonna fly.'"
The biggest obstacle standing in Pick's way is a federal probe into Morgan Stanley's block-trading business, which falls under his purview. That same unit lost nearly a billion dollars in the 2021 implosion of investment firm Archegos Capital Management. (Morgan Stanley has stated it is cooperating with regulators). There are no indications that Pick or the bank have been implicated in wrongdoing. But it's possible that he could pay the price for these missteps, an analyst told Insider.
"In past administrations, it wouldn't have been the biggest surprise if a regulator said, 'Sorry, I need a bigger head than the person who ran block trading or equity-capital markets to be on the hook for this."
SUBSCRIBE TO READ THE FULL STORY: How top Morgan Stanley exec Ted Pick rose from rough-edged 'deal junkie' to leading CEO contender
Dan Simkowitz
The Morgan Stanley veteran is overshadowed by his rivals who run much larger businesses. His investment management arm only contributes about 10% of firmwide revenue.
But "Simko," as he is known at the bank, is praised for his smarts and poise by his supporters, who told Insider that he does not receive enough credit as a 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 said.
He ran equity capital markets before he took over the money-management business in late 2015. While Pick got more accolades, Simkowitz did work on record deals during his time in the investment bank, including the IPO of oil refiner Conoco and Verizon's $49 billion bond offering.
He also has experience in Washington, D.C., that could come in handy. Wall Street is girding itself for the government to impose higher capital requirements as part of what would be the most significant banking overhaul since the Dodd-Frank Act. Starting in 2008, Simkowitz spent four years advising the Federal Reserve and Treasury on the restructuring of Fannie Mae and Freddie Mac as well as the public offerings of General Motors, AIG, and Citigroup. Working on these thorny deals that were scrutinized on both sides of the aisle took great finesse.
"Dan is the consummate CEO," another former managing director said. "He is going to be a CEO somewhere if he doesn't get this job. It just won't be at Morgan Stanley."
SUBSCRIBE TO READ THE FULL STORY: This Morgan Stanley veteran is ready to be CEO — it just might be somewhere else
Andy Saperstein
Saperstein followed Gorman, his boss at McKinsey and Merrill Lynch, to Morgan Stanley in 2006, while Pick and Simkowitz have each spent more than three decades at the bank.
The Staten Island native, who prefers Disney World to the Hamptons, is cut from a different cloth than most Wall Street bosses. Colleagues told Bloomberg that his "aw-shucks demeanor and his disregard for Wall Street's usual status symbols disarm potential rivals and lead people to underestimate him."
Saperstein has emerged more recently as a serious contender due to the success of Morgan Stanley's wealth business. With $4.2 trillion in client assets, the wealth unit has buoyed the bank with steady fee-based revenue during this dealmaking lull. During his tenure, the bank has made successful acquisitions, including those of Solium Capital, a software provider for employee stock options, and retail brokerage ETrade.
"Andy's done an amazing job, and wealth management is the story of Morgan Stanley," an analyst who spoke on the condition of anonymity out of fear of reprisal said. "I think there are lots of investors that think it would be weird for the next CEO not to be the wealth-management person, and yet Ted's still there and done a very good job in the investment bank."
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