Morgan Stanley 2005 Annual Report Download - page 23

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Q8.
You’ve talked about some
of Morgan Stanley’s misses
in strategy and execution.
Why did the firm fail to
make the most of these areas,
and how will it do better
moving forward?
Answer:
Past strategic decisions precluded us from participating in a number
of profitable and attractive opportunities—but we can change
that by relentlessly focusing on execution, driving decision making
down through the organization and holding people accountable
for results. For instance, we did not make the necessary investments
in our Retail Brokerage and Asset Management businesses. But
we have already begun to do so, and we are committed to getting
these businesses where we want them to be. We largely missed
the expansion in the mortgage business, where our competitors
grew aggressively. Now we can and will make sure that our role
in the mortgage markets is commensurate with the scope of our
fixed income operation. We also missed out in equity derivatives.
Given our leading cash equities franchise and derivatives expertise,
we have the ability to fill that gap, too. Our balance sheet was
underleveraged; now we are going to consider more acquisitions
to drive growth and commit sufficient capital to attractive
principal investment opportunities.
Q7.
What steps is Morgan
Stanley taking to broaden
its retail product offering?
Answer:
One of our biggest priorities in the Retail Brokerage business is
filling out our product platform and leveraging our Institutional
Securities capabilities to deliver new and attractive products to
our more sophisticated retail clients. The success of our recent
offering of a BlackRock closed-end fund, our first such launch
since 1998, illustrates our ability to do just that. We also intend
to add structured products developed by our equity capital
markets division and alternative investments developed by both
our Institutional Securities and Asset Management businesses.
The progress we have made in new product development is help-
ing to energize our broker sales force and will help us create a
best-in-class platform with best-in-class products.
Q9.
You have said you plan
to increase your principal
investments by about
$1 billion over time.
Does Morgan Stanley
have the expertise and
orientation to be successful
in this business?
Answer:
Without question, Morgan Stanley has the expertise to successfully
make principal investments. Our global franchise presents us with
a vast array of investment ideas. We have successfully pursued
a number of principal investments in the past, although less
frequently than we should have and on an ad hoc basis. Now we
are formalizing the process for making equity-based principal
investments, enabling us to be more focused on these investment
ideas and to make decisions in an expeditious manner. In the
process, we hope to strengthen our client relationships and lever-
age our intellectual capital and global capabilities while striving to
enhance returns to the firm.
MORGAN STANLEY ANSWERS YOUR QUESTIONS