The Feud at the Top of Morgan Stanley

(Last Updated On: September 25, 2011)

Colm Kelleher and Paul Taubman clash as they vie to run the company


Wow – Excellent article. In 2010, I worked on contract for President Cece Stewart’s Management Team @ Morgan Stanley to help source, identify and hire the talent the business needed to launch the NEW MS Private Bank – which received its charter from the Federal Reserve that same summer. In my view, this public feud between Colm Kelleher and Paul Taubman was somewhat of an obsession & distraction across the company; and in my view – it definitely hurt Morgan Stanley’s business and corporate culture.

I felt this charade undermined the trust & respect that must exist inside any corporate environment for Morgan Stanley to be successful long-term. Customer-sharing between diverse FINRA licensed professionals with giant egos became required in 2010 in order for Morgan Stanley to reach it’s evolving goal of maximizing Assets Under Management (AUM) for every high net worth & ultra high net worth customer any business development employee brought to Morgan Stanley’s table, (i.e. Why would Paul Taubman create the opportunity for Colm Kelleher to sell financial solutions to his best clients if Paul hated Colm’s guts, style, aggressive approach, whatever? If Colm is in a relationship with customers for 20 years, does he invite them to subject themselves to Paul when he personally doesn’t respect or trust Paul? ).

For Morgan Stanely Executive Mgmt to accept ‘the feud’ as ‘the norm’ and to allow ‘disrespect’ to rule this corporate culture made it difficult for others including hundreds of new Private Bankers who were joining the firm in 2010 and for Cece Stewart, who was president of Morgan Stanley’s Retail Banking Unit and was tapped in 2009 to launch the NEW Private Bank. She was disrespected by ‘some’ of the big players inside Morgan Stanley Smith Barney who stated that they didn’t think her amazing 30-year background of progressive accomplishments @ Wachovia measured up to the flattering self-images they had of themselves and their own career paths. She didn’t ‘start’ her career focused in Wealth Management, so her 30 years in branch management only really equated to 10 years experience all-in inside of Morgan Stanley. Can you imagine? What happened to hugging diversity of backgrounds so you can look at Morgan Stanley’s challenges through the window and paradigm of varied experiences, successes & failures?

MSSB employed 18,600 Financial Advisors at the time and some of the loudest offenders were born into affluence & they weren’t impressed that Ms. Stewart wasn’t ‘one of them.’ Many of the FA careers started in high net worth circles after these people fell out of prestigious universities. As I mentioned, Ms. Stewart started in a bank branch 30 years ago; she went to school while she worked; executed with excellence in every position she was promoted into; and lasted through every merger & acquisition. She was serving as President of Wachovia when Morgan Stanley made her President of it’s Retail Banking Unit in preparation for the launch of the Private Bank. As an executive recruiter who has followed Ms. Stewart’s career, I can attest that she is a professional of the highest caliber by every standard in the global banking industry.

Only two months after launching the Private Bank, Ms. Stewart resigned from Morgan Stanely in September 2010 to become the President of Citi’s North American Retail Bank. She left a lot of like-minded business development professionals behind @ Morgan Stanley who represented nothing less than than a mirror image of that pompous ‘Kelleher – Taubman Clash,’ so I screamed – “Bravo!”

But… make no mistake, it was James Gorman who allowed this corporate culture to thrive. Perhaps he believes ‘internal tension’ leads to fierce internal competition which ends in profitable growth. Some would agree, he may have a point.



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