Morgan Stanley 2014 Annual Report Download - page 10

other intermediaries. Closed-end funds managed by the Company are available to individual investors through
affiliated and unaffiliated broker-dealers. The Company also distributes mutual funds through numerous
retirement plan platforms. Internationally, the Company distributes traditional investment products to individuals
outside the U.S. through non-proprietary distributors and distributes alternative investment products through
broker-dealers and banks.
Alternative Investments, Merchant Banking and Real Estate Investing.
The Company offers a range of alternative investment, real estate investing and merchant banking products for
institutional investors and high net worth individuals. The Company’s alternative investments product mix
includes funds of hedge funds, funds of private equity and real estate funds, portable alpha strategies and
managed futures. The Company also holds minority stakes in Lansdowne Partners and Avenue Capital Group.
The Company’s real estate and merchant banking businesses include its real estate investing business, private
equity funds, credit investing group and infrastructure investing group. The Company typically acts as general
partner of, and investment adviser to, its alternative investment, real estate and merchant banking funds and
typically commits to invest a minority of the capital of such funds with subscribing investors contributing the
majority.
Operations and Information Technology.
The Company’s Operations and Information Technology departments provide or oversee the process and
technology platform required to support its Investment Management business segment, including transfer agency,
mutual fund accounting and administration, transaction processing and certain fiduciary services on behalf of
institutional, intermediary and high net worth clients. This activity is undertaken through the Company’s own
facilities, through membership in various clearing and settlement organizations, and through agreements with
unaffiliated third parties.
Competition.
All aspects of the Company’s businesses are highly competitive, and the Company expects them to remain so.
The Company competes in the U.S. and globally for clients, market share and human talent in all aspects of its
business segments. The Company’s competitive position depends on its reputation and the quality and
consistency of its long-term investment performance. The Company’s ability to sustain or improve its
competitive position also depends substantially on its ability to continue to attract and retain highly qualified
employees while managing compensation and other costs. The Company competes with commercial banks,
brokerage firms, insurance companies, electronic trading and clearing platforms, financial data repositories,
sponsors of mutual funds, hedge funds and private equity funds, energy companies and other companies offering
financial or ancillary services in the U.S., globally and through the internet. Over time, certain sectors of the
financial services industry have become more concentrated, as institutions involved in a broad range of financial
services have left businesses, been acquired by or merged into other firms or have declared bankruptcy. Such
changes could result in the Company’s remaining competitors gaining greater capital and other resources, such as
the ability to offer a broader range of products and services and geographic diversity, or new competitors may
emerge. See also “—Supervision and Regulation” below and “Risk Factors” in Part I, Item 1A.
Institutional Securities and Wealth Management.
The Company’s competitive position for its Institutional Securities and Wealth Management business segments
depends on innovation, execution capability and relative pricing. The Company competes directly in the U.S. and
globally with other securities and financial services firms and broker-dealers and with others on a regional or
product basis.
The Company’s ability to access capital at competitive rates (which is generally impacted by the Company’s
credit ratings) and to commit capital efficiently, particularly in its capital-intensive underwriting and sales,
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