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Abigail with attitude: What has Morgan Stanley's Gorman achieved after 3 years at the top?

Pandit and Havens used to work at Morgan Stanley. In fact, at one time, Pandit was president of the firm. As James Gorman struggles with John Mack’s legacy, a wild thought crosses my mind. Might Pandit one day return to run his alma mater? Over at Morgan Stanley, Gorman is facing the third anniversary of his ascension to the chief executive throne. And the going has not been easy.

"It’s a mixed bag," a source grumbled. "Revenues are probably a bit light. Costs are arguably too high and they have too much capital, so the return on equity is poor. You have to ask: is the strategy working?" Gorman is trying to rebalance the volatile institutional securities business with a complementary wealth management platform. Ironically, in the third quarter of 2012, institutional securities’ revenues rose some 20% whereas wealth management’s net revenues were static.

Morgan Stanley still has some excellent businesses, such as its advisory and equity capital markets franchises, but the wealth management road remains bumpy. Gorman’s targeted 20% pre-tax profit margin for the division is still a mirage and there have been problems with integrating technology. At the end of the summer, Reuters reported that a group of high-profile advisers were threatening a mass exodus due to problems with a new technology platform.

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