Morgan Stanley's Pension Strategies Group Gains New Focus

While a company official contended that the move was made as part of a refocusing to allow Morgan Stanley to more effectively sell the institutional clients a broader range of products and services, sources say that the firm’s increasing unwillingness to take on risk in its transition and structured solutions area undermined the business logic of the PSG.

In an interview with PLANSPONSOR.com , managing director Barry Davis said the new Asset Owner unit is made up of about 20 people including two members of the original PSG. “Our clients’ needs are changing,” Davis said. “There are (answers to) many needs the firm was not bringing to this client base.”

While PSG members offered a more focused goods and services lineup, Davis said Morgan Stanley decided that the pension and foundation/endowment clients needed additional options. “(The PSG) was only doing some of that,” he said “We are aware that just some is not good enough anymore. The holistic approach around (meeting) the client’s needs is the way to go.”

For example, Davis said the company wants to offer a broader range of research capabilities including on the difficult subject of Social Security reform and its impact on pensions. “The firm is going to put in more effort (into providing research products) given how important this is to our clients – the whole pension and Social Security issue,” Davis said.

PSG had been headed by managing director Sarah Orsay and was focused in general on delivering value-added information to large pension funds, and in particular on providing transition services.Orsay has moved to Goldman Sachs, where she is currently a managing directorin the pension services group. Other members of the Morgan Stanley group have been moved to other parts of the firm, officials there say.