Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Print
February 17, 1997 12:00 AM

INDUSTRY YAWNING OVER DEAL

Fred Williams and Mercedes M. Cardona
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The Dean Witter, Discover & Co.-Morgan Stanley Group deal is a yawner for the institutional money management business.

    Industry observers predict the $10.2 billion transaction won't increase the firms' market share in either the defined benefit or defined contribution plan area.

    Granted, the resulting company will have $271 billion under management. But Morgan Stanley already is a major institutional money manager, and Dean Witter doesn't add anything to that position, noted Brad Hearsh, managing director of PaineWebber Inc., New York.

    Before the deal, Morgan Stanley had $180 billion in assets housed in its subsidiaries Morgan Stanley Asset Management, New York; Van Kampen American Capital Management, Oakbrook Terrace, Ill.; and Miller, Anderson & Sherrerd, Philadelphia.

    Mr. Hearsh believes Morgan Stanley pursued the deal because executives there "want the retail asset-gathering business."

    Or as Bruce McEver, president of Berkshire Capital Corp., New York, put it: "They've got all the institutional (assets) they need, with Miller Anderson and Van Kampen."

    Neither is a major player on the defined contribution side, although shortly before the deal was announced, Morgan Stanley Asset Management revealed plans to offer to big 401(k) plans low-cost, institutionally priced mutual funds structured along the lines of its separate account strategies (Pensions & Investments, Feb. 3).

    Ruth Hughes-Guden, the principal hired last year to head MSAM's defined contribution marketing effort, is expected to continue to expand the firm's push into the large plan market. Of the total $104 billion currently under management at MSAM, only $3.5 billion is from defined contribution plans.

    Ms. Hughes-Guden said through a spokesman that she had no comment on the merger. The spokesman noted Dean Witter's limited defined contribution offerings don't overlap with Morgan Stanley's. Dean Witter has only $1.5 billion in 401(k) assets and total defined contribution assets of $4.5 billion, according to the 1996 401(k) Provider Directory.

    Dean Witter executives did not return repeated phone inquiries.

    Donald Leight, head of Donald Leight Consulting, Menlo Park, Calif., a financial services consulting firm, said the combination "doesn't take (Morgan Stanley) a lot further" toward its goal of becoming a major force in the market.

    "It gives them (MSAM) access to the Dean Witter brokers, but that is a channel aimed specifically at the small end of the market. It doesn't help them solve the problem of accessing the larger plans," Mr. Leight said.

    "The positive way of looking at it is that Morgan Stanley has added a new distribution channel to a new market segment. The problem is that they have to manage it. It will not manage itself," he said.

    The two companies will merge into a new company - Morgan Stanley, Dean Witter, Discover & Co. Dean Witter shareholders will own 55% of the company; Morgan Stanley shareholders will own the remaining 45%. The stock swap, valued at $10.2 billion, is expected to be completed in mid-1997.

    Altogether, the post-merger Morgan Dean will have approximately $271 billion in assets under management, including $146 billion in proprietary mutual funds from Morgan Stanley and Dean Witter families.

    While praising the "Wall Street to Main Street" connection the merger will achieve on the brokerage side, industry observers were underwhelmed by the institutional implications. Dean Witter's strong retail orientation makes it unlikely the merger will be much help to Morgan Stanley's efforts, the observers said.

    "I don't consider them to be a major player in the 401(k) market, but they have some product," said Mr. Hearsh. However, he added "they're not a name brand."

    Industry sources said Dean Witter's sales efforts have been confined to small plans through its retail brokerage network.

    But David W. Huntley, principal at HR Investment Consultants, Baltimore, said Dean Witter does have a "state-of-the-art" record-keeping and administration facility capable of handling larger plans.

    "They have all the right toys and they are a large mutual fund player and have utilized that," he said.

    "Dean Witter brings its marketing ability and large distribution force and some nice record-keeping operations, better than their position in the 401(k) business would indicate," he added.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 9, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Are Factors a Thing of the Past?
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    Out of the Shadows: The Revolution in Shadow Accounting
    The pivotal role of fixed income markets in the ESG revolution
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright Ā© 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference