Morgan Stanley Inc. on Tuesday said it poached a top executive from rival Merrill Lynch & Co. to lead its ailing retail brokerage unit, a business critics of the Wall Street firm have often called to be sold off.
The securities firm named James P. Gorman as president and chief operating officer of the individual investor group, which has about 10,000 brokers worldwide. The division was shaken up last month when head John Schaefer stepped down and the firm later cut 1,000 brokers who were considered to be underperforming.
Gorman previously led Merrill Lynch's global private client group, managing the firm's 14,000 financial advisers. He will join Morgan Stanley in February, at which time he'll replace acting head Ray Harris.
"We are excited about the great potential of Morgan Stanley's retail business and believe that James is the right leader at the right time to help us realize that potential," Chairman and Chief Executive John Mack said in a statement. "He has consistently delivered record operating results and built an organization that is a clear leader in the industry."
Mack said last week he planned on turning around the retail brokerage business, and had no intention of selling it or spinning it off. Instead, the firm wants to shift the retail brokerage division's focus toward affluent clients and gradually bring on board more experienced brokers to serve them.
Shifting the focus to more affluent investors takes Morgan Stanley farther away from its retail brokerage roots. The company was formed with middle-income investors in mind with the merger between Morgan Stanley and Dean Witter, Discover & Co.