Two years ago, at an Italian dinner at Elio’s on New York’s Upper East Side, Ted Pick and Andy Saperstein committed to each other, and Morgan Stanley’s brewing succession The battle for winners will not devolve into the kind of backstabbing that is common at other banks.
Colleagues of 15 years, they have just been promoted to co-presidents, marking them as the main contenders to finally take over one of the biggest jobs on Wall Street from long-serving CEO James Gorman.
They knew that good relationships were important to their bosses — Gorman had privately warned that internal politics were a surefire way to eliminate a candidate for the CEO job.
And now, after Gorman announced last week that he plans to step down within 12 months, their brotherhood will be tested as Morgan Stanley’s board tries to achieve something rare on Wall Street: a bloodless succession.
“(Gorman) keeps mentioning that Wall Street is absolutely terrible in terms of succession, and he’s the one to change that,” said a former Morgan Stanley executive.
Gorman, 64, told Morgan Stanley’s annual meeting that the bank’s board had identified “three very strong internal senior candidates for consideration as the next chief executive,” referring to Peek. , Saperstein and another executive, Dansim Kowitz.
“In terms of who takes over, I’m not envious of who has to make that decision,” said Christian Bolu, a banking analyst at Autonomous Research. “What you don’t want is another person leaving. unfavorable.”
All three candidates have gone out of their way to show the world that any ambition to become chief executive will not interfere with their jobs. Together they meet clients. Pick, Saperstein, and Simkowitz have also interviewed each other at company events.
Morgan Stanley declined to comment.
Wall Street history is littered with bitter succession battles, including David Solomon’s 2018 victory over co-president Harvey Schwartz to succeed Lloyd Blankfein’s Goldman Sachs.
Twenty years ago, Morgan Stanley was mired in infighting under the turbulent leadership of Philip Purcell. Early in Gorman’s tenure as CEO, Paul Taubman left the bank after a dispute with his internal rival, Colm Kelleher. Taubman now runs boutique investment bank PJT Partners, while Kelleher is chairman of Swiss bank UBS.
Since taking office in 2010, Gorman has focused on a smooth leadership transition. He presented his succession plan to the board just three weeks after taking the job, according to people familiar with the matter.
Whoever wins will face the daunting task of succeeding the widely acclaimed and beloved leader of Gorman, whose growth strategy in wealth and asset management has been welcomed by investors. Morgan Stanley is now worth more than its perennial rival in investment banking and trading, Goldman Sachs.
“Replacing James is tough because he’s done a great job. He’s masterful in strategy and execution,” said one executive who has worked with all three candidates.
In a speech last week, Gorman left some wiggle room with his plans, telling shareholders he would succeed as long as the economy remained stable. He plans to stay on as executive chairman for some time after handing over the duties.
According to people familiar with the succession process, Pique, Saperstein and Simkowitz are all given the chance to take over, but Piqué is considered the frontrunner.
In addition to their co-president titles, Pick is head of Morgan Stanley’s institutional securities division, which covers investment banking and trading, and Saperstein, which covers wealth management. Simkowitz manages the Investment Management division and, together with Pick, serves as Head of Strategy.
Pick, 54, and Saperstein, 56, oversee the business that generated 90% of Morgan Stanley’s $53.7 billion in revenue last year.
Ted Pick
After graduating from Middlebury College and receiving an MBA from Harvard Business School, Peek began working at Morgan Stanley in 1990 as a capital markets investment banker. He moved to Morgan Stanley’s trading practice, where he engineered turns in the fixed income division.
“The decision to reduce fixed-income costs and staffing . . . and then see it flourish was a no-brainer for anyone,” said a person with knowledge of the succession plan.
Benefit from his experience running trading and investment banking, the riskiest part of a bank that can incur huge losses if not managed properly. He’s seen as doing well, but his record isn’t without blemishes — Morgan Stanley lost $911 million during the collapse of family office Archegos.
In investment banking, Morgan Stanley has struggled to break free from the shackles of JPMorgan and Goldman Sachs as top fee-paying firms. Pick’s old capital markets team was also at the center of a U.S. government investigation into his block trading business. The bank said this month it was in talks to resolve the case.
Andy Saperstein
Saperstein, who still speaks with the distinctive accent of New York City’s Staten Island district, has a background most similar to Gorman’s.
After graduating with degrees from Harvard Law School and the Wharton School of the University of Pennsylvania, Gorman and Saperstein worked together at consulting firm McKinsey.
In 2006, Saperstein followed Gorman first to Merrill Lynch and then to Morgan Stanley, and in 2009 became the head of the US wealth management department.
While his experience in Morgan Stanley’s trading business remains limited, his solid work in wealth management makes him a contender. Since 2019, he has run the entire wealth management unit, which has become a key driver of Morgan Stanley stock, responsible for about 45% of revenue and $4.5 trillion in client assets.
While Saperstein was “closer to James,” Peake developed a relationship with Gorman in recent years, according to another executive who has worked with all three.
and Simkowitz
Simkowitz, 58, joined Morgan Stanley in 1990, the same year as Peake, and is seen by some as the best candidate of the three.
“He’s someone I can see in congressional hearings,” said another person who has worked with all three.
He joined the bank after graduating from Harvard University and earning an MBA from Columbia University. Like Peek, he has a background in capital markets and worked at the U.S. Treasury and Federal Reserve after the 2008 financial crisis. He worked in Asia for a while before returning to New York.
“James obviously thinks highly of his intellect and he’s a very good capital markets banker,” said a former colleague.
Simkowitz runs the smallest of Morgan Stanley’s three businesses — investment management accounts for about 10 percent of the bank’s revenue — but the bank’s recent acquisition of Eaton Vance gives him more opportunities to impress impression.
Regardless of which of the trio does get the job, one glaring problem in Morgan Stanley’s otherwise orderly succession process will remain: an all-male lineup.
The initial four leading candidates, including former Morgan Stanley veteran Jonathan Pruzan who left earlier this year, were known internally as the “Four Horsemen.”
With up-and-coming female executives such as chief financial officer Sharon Yeshaya and Emea head Clare Woodman, whoever succeeds Gorman will depend on ensuring that the next succession race is more diverse.