James Gorman was chosen as the future chief executive of Morgan Stanley for his management skills and strategic expertise rather than to signal a shift away from the company's trading business, observers say.

Analysts are worried about his lack of investment banking experience. But Gorman told employees in a town hall meeting Friday, according to one who attended: "The heart, the DNA, the fabric of this place has always been the institutional securities business and, frankly, should always be the institutional securities business."

Morgan's appointment of Gorman comes as it struggles to determine how much it must change in order to thrive after the financial crisis.

Unlike Goldman Sachs Group Inc., which emerged from the crisis with its strategy unchanged, Morgan has cut back, then recently boosted, its proprietary trading business. It also has made changes to obtain a stable funding base for its operations.

It fell to Gorman, as Morgan's co-head of corporate strategy and head of its retail business, to develop more stable funding and decide how much traditional banking it will do. Half of the funding of its assets now stems from deposits, equity and long-term debt, an increase from before the financial crisis. The brokerage arm is still building its retail banking business, which has little interest in consumer banking but does seek more deposits from wealthy individuals and business customers.

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