Over one year, Morgan Stanley beat its benchmark the S&P 500 by 18 per cent, 27 per cent over two years, 58 per cent over three years and 43 per cent over five years.

On Wednesday, Morgan Stanley shares rose 5.87 per cent following the release of fourth quarter and full year 2022 profit results, which showed full-year net revenues of $US53.7 billion compared with $59.8 billion in the prior year. Net income was $US11 billion, or $US6.15 per diluted share, compared with $US15 billion, or $8.03 per diluted share previously.

Four lessons learned

Following the release of the results Gorman shared with Chanticleer the lessons learned from the transformation.

His first lesson is: “Build a strategy around things you have a very high understanding of rather than things you would like to be good at,” he says.

It is heartening to see this piece of advice being put to work in Australia by the country’s leading bank, Commonwealth Bank of Australia.

Under the leadership of CEO Matt Comyn, CBA has been building a financial services ecosystem with 25 separate apps or services which ride of the central core business of lending and deposits.

Gorman’s second lesson is: “Be very aggressive when ‘you have the cards’. We have done three large deals since the crisis and two of them, Smith Barney and ETrade, are among if not the largest done by any bank since 2008.”

It is this aspect of Gorman’s expansion that deserves closer attention. Usually analysis of the Smith Barney deal focuses on the scale of the transaction and the number of clients and financial advisers acquired.

But the real genius of Gorman’s deal was the hard bargain he drove with Citi. He not only got the business on the cheap, he did it about a month after Morgan Stanley had faced an existential moment in the global financial crisis.

Gorman’s third lesson is: “Stick to your guns! Everyone is a critic but without new facts they are no more right than wrong. Opinions are not facts! Results are facts.”

This is clearly etched in Gorman’s mind because of the intense criticism he copped in 2011 and 2012 for allegedly buying a dud. When Morgan Stanley bought the business, it had a profit margin of 7 per cent.

The results released on Wednesday show that the wealth management division delivered record full-year net revenues of $US24.4 billion and a pre-tax margin of 27 per cent or 28.4 per cent excluding integration-related expenses.

The bank said the business added net new assets of $US311 billion, representing a full year 6 per cent annualised growth rate frombeginning period assets.

Gorman’s fourth lesson is: “Communicate with extreme clarity so that every investor, every employee and every client know exactly what you are trying to achieve and how you plan to get it done.”

Anyone who has not tapped into the Morgan Stanley information network should read the weekly “Five Ideas” email, which includes the bank’s latest thought leadership on markets, economics and global trends.

Gorman walks the talk on communication. He is one of the best public speakers on Wall St, and is regularly seen on business news channels and at summits and conferences.