Morgan Stanley defies bank diversity trend

After years of talking about the need for more equality on Wall Street, two of the biggest banks just previewed what the finance industry’s next generation of leaders will look like.

At Morgan Stanley, they’ll resemble the old guard.

Chief Executive James Gorman unveiled his biggest leadership change in over a decade, positioning a slate of potential successors that’s mostly white and male -- just as Wall Street’s bosses have been for decades. The group includes trading architect Ted Pick and wealth management leader Andy Saperstein, plus investment management’s Dan Simkowitz and new Chief Operating Officer Jon Pruzan.

The change came just after JPMorgan Chase & Co. pushed two women toward the front of the field to succeed Jamie Dimon, naming Marianne Lake and Jennifer Piepszak as co-heads of its massive consumer and community banking business. Daniel Pinto, whose co-President Gordon Smith is retiring, is widely seen as Dimon’s replacement in an emergency.

“We are committed to developing and promoting diverse talent at all levels including the most senior levels at the firm,” Gaston Terrones Dimant, a Morgan Stanley spokesperson, said. “There is a breadth of well-qualified, diverse people on our operating committee, both women and people of color, who are potential candidates for more senior positions at the firm, including CEO.”

Sharon Yeshaya, head of investor relations, is going to replace Pruzan as chief financial officer. Shelley O’Connor, who currently leads Morgan Stanley’s U.S. banks unit, will become a vice chairman and head of external affairs.

For years, banks have been under pressure from investors and Congress to diversify their leadership. There has been some progress, but the top jobs primarily are held by white men. Two months ago, Jane Fraser broke Wall Street’s glass ceiling by taking Citigroup Inc.’s top spot.

“There are so many amazing women in financial services,” Fraser said when she got the nod to run Citigroup last year. “I’ve been very fortunate to be the first, but I’m going to be the first of many.”

Morgan Stanley has had its share of female stars. Susie Huang is one of the most senior Asian women in the industry and currently co-leads the firm’s investment banking. Carla Harris serves as a Morgan Stanley vice chairman; Clare Woodman runs European, Middle Eastern and African operations.

Yet a handful have also exited over the years. Former CFO Ruth Porat left around six years ago to take a top role at Alphabet Inc. Others took the fall. Zoe Cruz, a former president of Morgan Stanley, was ousted in 2007.

Within the U.S. at JPMorgan, where just more than half of the firm is female, the executive ranks are 28% female, up from 27% in 2019, according to company data. Among Morgan Stanley’s U.S. executives, there are 1,402 men and 303 women — which means that the group is about 18% female.

Rachel Robasciotti, who runs asset manager Adasina Social Capital, said Morgan Stanley’s news “is not only unsurprising, it’s entirely expected.”

Without change, Wall Street “will keep getting the same CEOs, with the same backgrounds, and a financial industry that creates more of the same,” Robasciotti said. “I encourage the board of directors at Morgan Stanley to consider their role as significant actors.”

Sherrese Clarke Soares, who was a Morgan Stanley managing director until 2019, said that Simkowitz, Pick and Saperstein are strong leaders who mentored her. But, she added, industry-wide change requires creative thinking. “We have to think differently about how we source talent and how you mentor talent through the process,” she said.

She said it was good to see that “rock star” Yeshaya will be CFO.

Cate Luzio, a former JPMorgan managing director who now runs Luminary, a women’s network, attributed the differing succession plans to the types of businesses the banks run.

“When you look at Morgan Stanley, historically, who are they dealing with on the investment banking side — they’re dealing with white men,” she said. “I’m generalizing, but it’s a different story when you look at the bank that JPMorgan is, or even Citigroup, which are not just investment banks, but consumer banks.”

Mandell Crawley, one of the Morgan Stanley’s most prominent Black leaders, gave up his role as head of private wealth management a few months ago to become chief human resources officer. Marilyn Booker, the firm’s first global head of diversity, sued Morgan Stanley last year, saying that “White male-centric leadership” refused to adopt her plan to address racial bias and instead terminated her.

Morgan Stanley has said it rejects her claims and will “vigorously defend” itself.

Almost two decades ago, Morgan Stanley agreed to pay $54 million to settle a suit brought by former derivatives saleswoman Allison Schieffelin and the Equal Employment Opportunity Commission, then the second-biggest EEOC settlement of a sex discrimination suit. After the management shakeup, Schieffelin said she wants to see more change.

“Morgan Stanley should do the right thing for the long-term benefit of all the constituents that they serve,” she said. “It’s still too freakin’ white and male.”