James Gorman, who has served as CEO of Morgan Stanley since 2010 and Chairman since 2012, told shareholders at the firm’s annual shareholder meeting on Friday that he intends to step down from firm within the next year.
“The specific timing of the CEO transition has not been determined, but it is the Board’s and my expectation that it will occur at some point in the next 12 months,” Gorman noted, adding, “That is the current expectation in the absence of a major change in the external environment.”
While a successor has not been named, he shared that the firm’s Board has identified three possible candidates to succeed him. In his shareholder’s report, he did indicate that his successor would likely be an internal candidate. “We think about succession in a methodical and intentional way and have a comprehensive succession plan for the long-term benefit of the Firm, including the identification of strong internal CEO candidates. I fully expect one of these internal candidates to replace me when I step down,” Gorman stated.
Gorman, 64, joined Morgan Stanley in February 2006 and has been instrumental in the firm’s recent expansion into the wealth management space.
While Morgan Stanley had sold its retail asset-management business following the 2008 financial crisis, just a year later in 2009 he helped spearhead the purchase of Smith Barney from Citigroup. And in late 2020, the firm announced the purchase of Eaton Vance Corp. for about $7 billion, just one week after closing on its acquisition of E*TRADE.
At the time, the firm indicated that the combination will better position the organization to generate attractive financial returns through increased scale, improved distribution, cost savings and revenue opportunities.
The E*TRADE acquisition was an all-stock transaction valued at approximately $13 billion. At the time, E*TRADE apparently had over 5.2 million client accounts with more than $360 billion of retail client assets. When combined with Morgan Stanley’s existing book of business, the transaction would result in $3.1 trillion in client assets, 8.2 million client accounts and 4.6 million stock plan participants. The acquisition also allowed Morgan Stanley to enhance its workplace offerings through online brokerage and digital banking capabilities.
“E*TRADE represents an extraordinary growth opportunity for our Wealth Management business and a leap forward in our Wealth Management strategy,” Gorman had stated. “The combination adds an iconic brand in the direct-to-consumer channel to our leading advisor-driven model, while also creating a premier Workplace Wealth provider for corporations and their employees.”
Meanwhile, Eaton Vance had over $500 billion in AUM and brought to the table not only its own fund family, but also separately managed account services, and ESG investing through Calvert Funds.
Following the Eaton Vance acquisition, Morgan Stanley Investment Management was said to have about $1.2 trillion under management and more than $5 billion in revenue. What’s more, Morgan Stanley was said to oversee $4.4 trillion of client assets and AUM across its Wealth Management and Investment Management segments. Gorman had said two years prior to that announcement that he wanted his asset management unit to hit $1 trillion in client assets in coming years.
Before joining Morgan Stanley, Gorman held a succession of executive positions at Merrill Lynch. Prior to this, he was a senior partner of McKinsey & Co. and began his career as an attorney in Melbourne, Australia.
In addition, he previously served as a Director of the Federal Reserve Bank of New York, President of the Federal Advisory Council to the U.S. Federal Reserve Board, Co-Chairman of the Partnership for New York City, Chairman of the Board of the Securities Industry and Financial Markets Association and Co-Chairman of the Business Committee of the Metropolitan Museum of Art.