Morgan Stanley revives asset management
On his return to the firm, John Mack demanded a complete overhaul of the MSIM division. That required taking risks and laying bets, but the latest results suggest the division is back on track and might be building a formidable business. Peter Lee reports.
"Asset management is a very important part of this franchise and John Mack, like any CEO, wants to see results, but he is also aware that it will take some time, much work and a little patience"
WHEN JAMES DILWORTH, then head of Goldman Sachs Asset Management in Germany, took the call asking him for a chat with Morgan Stanley, he was initially sceptical. GSAM is a leading franchise in the institutional asset management business with a full array of cutting-edge alternative investment products and a wonderful brand name; Morgan Stanley Investment Management, by comparison, was a business that had suffered from years of under-investment and lacked many of the skills, especially in alternative asset classes such as hedge funds and private equity, that its customers now routinely demand.
Its leaders had sat pat, satisfied with decent pre-tax profits, while the entire asset management industry changed around them.