David i dont consider myself a journalist. And nobody else would consider myself a journalist. I began to take on the life of being an interviewer even though i have a day job running a private equity firm. How do you define leadership . What is it that makes somebody tick . James, thank you for doing this. James honor to be here. David you have an accent compared to me. Abn australia dont have an accent. You have an australian accent. I assume that is because you grew up in australia. James it is. After 30 years, i have not been able to get rid of it. David i am an only child and dont know what it is like to be in a big family. 11 children . James 12. David what was that like . James it was very noisy. Deal ofned a great empathy for others because you are in an environment where something was going bad every day in our household, and something was going good. David when your parents are producing new children regularly come it did you ever asked him what was going on . Not quite thought about it in that language. We did not think of it as a production line. David your father had a job where he could afford all those kids . James he was an engineer working for a large corporation, and ironically he counseled me my whole life to never work for big business. You need to be independent and control your own firm. He was an engineer. He set up his own practice when he had seven children at the age of 37 with no income. He obviously was successful. He was not particularly financially motivated. He was intellectually curious. To him, education, reading, ideas, debate where the essence of the family function. David you go back and see your siblings come and now wouldnt think you are a famous person in the United States . We of you . N all o james you must not know my siblings well, or australians for that matter. Truism thats called the tall poppy syndrome. There are always one or two bank flowers that grow above and disrupt the beauty of the field, and you chop them off. Tall poppya, syndrome is that if you are extremely successful, you have a higher burden to be more modest and give back more. It is reverse psychology. My family is great. I am close to my siblings. We always get for dinner when i am down there, and i have a terrific time. They have all been successful in lots of different ways. One was a standup comic for a while. One is a top judge down there. They have all done Different Things and have had fulfilling lives. There is no war, i can assure you of that. David you are educated as a lawyer in australia, so you could practice law there, but you chose to come to Business School in the United States. Why did you choose not to practice law and come all the way to the United States, and did you intend to stay here, or did you think youre going back . James i practice for four years, and i was not good at it. My two older sisters were lawyers and both terrific. I was more interested in being read the decisions are being made. Lawyers, their job is to create distraction so they can clean up after problems, to document and help the negotiation of things, but they are not the decision point. My career, i have always tried to get closer and closer to being the person or part of a team that is making decisions. This is the difference. Everybody has Different Things which excite them. David you are practicing lock up resume of the making money. U. K. That up to come to Business School at columbia. What was it like when you came here . De crocodile dundeee jokes . Did, actually. I have a scar on my arm from when i played football, which i was not good at, but i have a scar. People would say to me, is a true all australians russell crocodiles. I said, all of them. That leads to the question, did you wrestle a crocodile . Of course. Because, the states seriously, it was, there was an advertisement at the time which i think us are growing up in australia, but maybe i saw it in the u. S. , which essentially said it you can make it here, you can make it anywhere. This was a concept that this was , paidnd if you work hard for all my student loans, worked really hard, you could be successful here. I was fortunate enough to get the student visa and a green card and citizenship, which i took 12 years ago, and i felt the welcoming nature of the u. S. Economy and the people and willingness to accept people who are prepared to have a go here. I thought it was just wonderful. David you graduated from Business School and then went to work for mckenzie, is that right . You wanted to be a consultant . At least you joined a consulting firm. What was that like . James it was great. It was one step closer to where Business Decisions are getting done. You are working with management teams, helping companies to figure out their strategy, and prove operation. It was like going to business go for real every day. And you get paid to do it. I cannot believe my good luck. David then you were recruited by one of your clients. James i cannot keep a job here. David they recruited you. Merrill lynch recruited you. ,ou are so good as a consultant you could come and do the job here. What was your job . James first job was to run marketing, then it was to run the Sales Organization for the brokerage business. David you are doing that, then someone calls you for Morgan Stanley and says, you are doing a great job at merrill lynch, runandshoot come over here . Is that how it happened . They had a business that needed fixing, and i had some expertise in that business. It was a struggling business at the time. It was the old Wealth Management business. John called me when he got recruited back to Morgan Stanley and ask me to be part of the team, which i was a very exciting challenge, so i did that. David when you came over to run ,he Wealth Management business did you think you would be the ceo of Morgan Stanley . James i did not. I told john when he was interviewing me for the job, i said, we can fix this business. I am pretty confident about that. I knew a lot of people in the market. I felt immodestly that i understood with the issues were and that we could fix it. I said come i can only fix it to a certain level, and then you will have an important decision to make him and that is probably two years for now. That decision is do you double the business because it has scale economics and you need to double it, or sell it to somebody else who will double it . There was an avid ability about this outcome. I did not have any anticipation of being there longer than two years. David you did not think you would go back to australia . James no, but i did not think we would have a financial crisis. David australians seem even killed, and consultants are even killed, so you seem to be an even keel guy, but wall street ceos are thought to be people who throw things at walls, screen, yell, slim phones down. Is that image wrong . Or you actually throw things as well . You see modest and controlled in your personality. Are you used to ceos who are throwing things . Seventh ofou are the 12 children, thats likely to end so well. I think part of it honestly is just personality, and that probably helps shape you. A persons family obviously does , but i think these businesses have been on a 30 year transition from very hardly tell five partnerships were frankly personal behavior, taking more risks because its run money, etc. , etc. , was par for the course. Whereas now, these are big global corporations. We are relatively small among the big banks. We have 2 trillion in client assets, a 1 trillion balance sheet, 55,000 employees all over the world. These are major global corporations. They have to behave and act like major global corporations. I dont see any of those executives behaving maybe there is a historical caricature. David are you in favor of repealing doddfrank . James that is a terrifying thought. What will replace it . The world is not what the large banks to be unregulated. David the world for people running wall street firm seems to be pretty good in that sense that wall street profits are high, therefore expectations are so high that things will inevitably go down . James if you believe the u. S. Economy has turned, which i do, and the Federal Reserve of yourently concurs, and if believe that we are destined for economic growth, more like 3 and 1. 5 , particularly with unemployment where it is, and if you believe some of the policies the new administration is talking about on the economic front come true with little trade disruption him and then it is not a total surprise that markets reflect that. David you are the ceo of when the bestknown wall street firms in the world, so why do you think the image of wall street firms is not so great in the country . James first, i have to say i got a round of applause, which i appreciate good i will go anywhere for a round of applause these days. Are that absent the great depression, the Great Recession we all went through, wall street had a large part to do with it, if not the major part to do with it, and a lot of the synthetic type products that were created to gave rise to putting a level of risk in the Financial System that turned out , that led toc risk massive failures of institutions, which led to taxpayers bailing out the remaining institutions, it is not surprising that the public and the taxpayer would have such a negative reaction to those who cross it to happen. David why is the image not better now . James it is hard to love money unless you have it. Being attracted to wall street as a concept is not something most people just naturally gravitate to. Folks gravitate to new technology, gravitate to obviouslyervices that probably make their lives better. They gravitate towards entertainment. You levitate towards the things you can this early feel and touch, the flow of capital is not one of those things, so he gets back to where it causes problems. What we have not done a good job of is articulating why capital is what takes these incredibly innovative little companies that , like an like facebook apple, like a google and creates capital to let them grow and become these incredible success stories. David are you in favor as some people in the wall Street Community be of repealing doddfrank or you can live with it . James i would not repeal it. I think that would be a mistake. We have redesigned the way in which large Financial Institutions in this country aretion, how they capitalized, their liquidity they hold come of the leverage they operate under, the way they are managed and overseen by the Federal Reserve and other agencies, and what happens to them if they could into trouble. That has been a multiyour process. Certain elements have definitely gone too far, but the essence of that structure i think has been absolutely critical, and that is the reason the u. S. Financial system is so much better shape than almost anywhere in the world. Now, are the pieces of doddfrank that i clearly feel went too far, have unintended consequences, are disruptive to market liquidity . There is no question about that, but i would not start again. That is a terrifying thought. What will replace it . The world does not want a large banks to be unregulated. David did you know donald trump before he was president of the United States . James i met him once and spoke to him once about a transaction. David you never turned him down for a deal . James david i person have not. David have you seen him since he was president . James i have not. David you have any advice that you would like to give him or he doesnt need any advice from you . James he has a large team of advisers and people who want to be advisers. I dont think there is a shortage of advisors is a problem. Somebody once said to me the office of the president of the United States, it consumes people. Gender,e favorable to but at the same time, the world is not staying static. We have in or miss geopolitical uncertainty, issues around north korea, iran, the Immigration Crisis in syria. Pockets of lot of the world that could easily and gulf and consume the time of the president , so i think it is critical that they be very focused on a small number of achievable goals and that the team is very coordinated, delivered a deliberate and cooperative and working to get those done. Have the strategy you employed as ceo, and i think the market capitalization century have been ceo is up 110 , so i hope you get a big bonus for strategy has been to derisk the firm and go into Wealth Management. What was the reasoning behind that strategy . James the analogy i used it is an aircraft carrier. In markets, it might be down in revenues 10 . In really good markets, it might be up 15 to it is never going the day that Wealth Management business blows through the roof is the day you should be scared. You wanted stable. We have the balance from that with the speed in the engine room, and i thought in the board thought that mix, and john mack also was part of it, that mix was an incredibly powerful thing to present to investors and clients. David if i want to have my money managed by Morgan Stanley, what kind of rate of return should i get . What should i tell your Money Management people i want and would be happy to get . James it depends on who you are. If you are David Rubenstein and you have a lot of your money tied up in carlisle, very ill then youre probably going to be very conservative with that you put into markets, and i think prudently. You are not buying the hottest stocks. You have your risk already in your business. If you have 35,000 to invest, i would say you should buy and S P Index Fund and sit on it and never look at it again and wait until retirement. David who manages your money . James i have a wonderful financial advisor. David at Morgan Stanley . James at Morgan Stanley, and she does a terrific job. David did she call you up and she is worried that she does not do a good job for you that she might lose her job . James she is a professional. She treats me like hopefully like all of her clients. I probably get a little extra care and attention i suspect them up but they are a professional team and do what they should do. We sit down with my wife every year and do an annual review of our total financial situation and we adjust accordingly. David you told me a story recently that you went out to pick up some pizza. When the ceo, ken to get someone to deliver the pizza to you . James i dont regard the ceo thing as defining you as a person. David what is the greatest pleasure of being the ceo of Morgan Stanley . When you go to a restaurant you get people to give you your seat right away . You have people give you tickets to all the events you want to go to . You can go to hamilton easily . James i saw hamilton for the first time. Wow. David did you have trouble getting tickets . James of course. The greatest pleasure for me, and this will sound hokey but it is true, our firm has been around for a little over 80 years. Werebout 6570 years, we we had very few issues. You had your normal growth pains, if you will, then we had a decade where we try to become , firm we werent, prop trading participating and markets just for our benefit. There was no obvious client on the other side of it. A lot of firms do that. Hedge firms do that, but that isnt what was our core dna, and what we have tried to do is restore Morgan Stanley to its core dna, which is all about serving her clients. David so today, how do you spend your time . What percentage of your time to meet clients and prospective clients, 10 , 15 . James it changes. Each year i sit down and write the 10 things i want to get done that year, and in the early years in the job, they were very much problem issues. Remember,ow if you but we owned a half built casino in atlantic city. We wrote that off. A lot of things needed to get results. Happily as time has gone on, they will result and i am spending much, much more time on client activity. A much larger part of the job now is trying to help our teams do what we are supposed to, why we come to work every day, help our clients. David how much time do you spend rallying the troops . James we have our new managing director dinner, which we have all 142 new managing directors this year, and thousands of partners, and i will be speaking to them right after this, so every day i tried to do something that connects to a group of employees, whether it is summer interns or senior managing directors. David you travel what percentage of your time . James probably a third. David you have been the ceo since 2000 10, so in a lifespan of wall street ceos, seven years or so, that is pretty long. James what you telling me, david . David you are a young person, so when you decide you might want to do something else, have you ever thought about what you might want to do . James we all have fantasies of what we would like to do, then reality steps in and says are you any good at it . It is fun to dream, but you have to be true to what your real skills are, and i would certainly like to teach and i would like to spend more time i was more involved philanthropic lee and i have been in the lesson for because i have not had the time, more time to ring that, but probably teaching, investing, learn at the feet of the great like david here. It is a big world. I want to spend more time in australia. Very lowkey by wall street standards. You told me a story where you came back and went out to pick up some pizza. Now when the ceo of Morgan Stanley, cant you get somebody to deliver the pizza to you, or how come you have to go pick it up yourself . James i dont regard the ceo thing as defining you as a person. Different, but you onceto be able to do youre not ceo for that not to materially affect you as a person. A lot of people have seen it over many years, not everybody. Our life is very simple. We keep it very balanced, sort of downhome ki