The upheaval on Wall Street is ushering in a new round of leadership for the battered financial industry.
Vision is not a luxury on Wall Street (or, for that matter, on the much greater stages of politics and religion). The last firms standing have survived in part by stint of luck but also by virtue of good leadership.
Dick Fuld, captain of Lehman Brothers, will be remembered for the pride that blinded him to the dangers that smothered his firm. Stan O'Neal – the Merrill Lynch CEO — will stand out as a leader who preferred yes-men to constructive critics who tried to warn about the huge risks the firm had assumed. By contrast, JPMorgan CEO Jamie Dimon has won the respect of many for his foresight in managing treacherous waters.
Financial advisors able to choose where they work would do well to take into consideration the quality of leadership at the top – not just deals or payout schedules but where a firm sees itself in five years. Do you want to be part of that journey? Below, I consider three stories of leadership – one in process and the others object lessons for advisors thinking about where they might fit on Wall Street.
Morgan Stanley
The leadership story is just taking shape at Morgan Stanley, where James Gorman is set to take over the helm next year. Gorman is an excellent communicator. He is decisive.
When he took over the combined brokerage force of Dean Witter Reynolds and Morgan Stanley, he re-set the bar for professionalism. He shed lower-producing advisors who made sense for the firm in the bygone Dean Witter era of proprietary product pushing.
He launched an aggressive recruitment program to attract high-end advice-oriented producers because in his vision, high-end advice is the future (if not the present). Furthermore, Gorman recently sold its retail asset management arm so that the firm could focus on the institutional business.
The swift changes Gorman implemented turn Morgan Stanley into the go-to firm for high level advisors – at least until the Great Recession hit and the basic health of so many Wall Street firms came into question.
Now Gorman faces the challenge of running the joint venture with the Smith Barney retail financial advisory force. He has already delivered a message to shareholders: He's slashing costs, $1 billion. Advisors can count on a no-nonsense executive who understands the business and who makes decisions. How disruptive the joint venture will be for advisors and whether they will truly benefit, only time will tell.
Merrill Lynch
One of the most legendary leaders was Daniel P. Tully, CEO of Merrill Lynch from 1992 to 1996. Tully shaped Merrill into an innovative retail powerhouse and investment banking presence.
When Tully innovated, the rest of Wall Street followed – if sometimes kicking and screaming.
A graduate of West Point, Tully applied his military discipline to his workforce but he didn't do it by brute force. He inspired. He spearheaded the firm's transition to fee-based accounts and introduced the initially much-maligned cash management account. He enabled stock jockeys to evolve into wealth managers who became asset gatherers. Under Tully, assets doubled and the stock price tripled.
Merrill, in fact, became the first firm to pay brokers for asset gathering.
