for richer or richer

Why this Morgan Stanley banker could be the poster boy for post-crisis Wall Street

February 12, 2014
February 12, 2014

Does Morgan Stanley’s Greg Fleming have the new Wall Street all figured out?

Based on this latest profile in Reuters, Fleming, head of Morgan Stanley’s wealth management business, may be perfectly positioned to rise to the top ranks of post-financial crisis Wall Street.

As big banks de-emphasize trading in the wake of the crisis, thanks in part to new US regulations such as the Volcker Rule, they’re beefing up businesses aimed at managing other people’s wealth. Among them, Morgan Stanley seems to have emerged from its aimless wandering as well-suited to the task. Its chief executive James Gorman championed a push into wealth management when its trading business proved riskier during the Great Recession. (In Jan. 2009 Morgan Stanley agreed to a joint venture with Citigroup for a piece of Smith Barney’s wealth management business.) 

Integrating the business with Morgan Stanley wasn’t easy (paywall), and Fleming is credited with moving it forward. Morgan Stanley received approval to acquire the entire brokerage business from Citigroup last year. And now the brokerage division—with some 17,000 brokers and $1.7 trillion in assets under management—has become the most stable and best performing segment of the bank.

The Morgan Stanley model is worth noting. Sources tell Quartz that Goldman Sachs has explored making an acquisition in wealth management to round out its own asset management franchise. But it hasn’t found a buying opportunity that regulators would approve, nor one that would prove profitable after the purchase. (In the wake of a crisis that made “Too Big To Fail” a political rallying cry in the US, bank watchdogs are less inclined to see firms make major acquisitions.)

Another firm eyeing a similar push into wealth management is Jamie Dimon’s JPMorgan Chase. JPMorgan has courted wealthy individuals by hiring more brokers rather than acquiring new businesses. Sanford C. Bernstein banking analyst Brad Hintz tells Quartz that this echoes the old Merrill Lynch model: employ a thundering herd of wealth managers and focus less on trading. It’s worth noting that Merrill was purchased by Bank of America after its aggressive mortgage-backed securities play blew up—and Greg Fleming made that deal happen.

Hintz says he sees Greg Fleming’s Morgan Stanley as “a better version of Merrill Lynch from 20 years ago.”

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