The investment bank said Gorman, who has held the top job since 2010 and steered the bank in the aftermath of the 2008 financial crisis, will become executive chairman and may stay a full year to help with the transition.
Pick, 54, a three-decade company veteran who heads the institutional securities division, home to the bank's investment banking and trading unit, had been the favorite to win a three-man race against insiders Andy Saperstein and Dan Simkowitz.
"We have two great businesses, the strategy is intact, there is a change in leadership but no change in strategy," Pick said in an interview.
Still, Pick will have to deal with a tumultuous investment banking backdrop which has damaged earnings, an investigation by U.S. regulators into its block trading practices, and managing relationships with the two peers who lost out on the top job.
Meanwhile, the absence of women from the slate of potential candidates underscored Wall Street's diversity gap.
Saperstein, who leads wealth management, will remain co-president and head of wealth, and take on additional responsibilities overseeing investment management. Simkowitz, head of investment management, will become co-president and head of institutional securities.
Prior to his current role, Pick was the global head of sales and trading and engineered a turnaround of the firm's fixed income division.
That could stand him in good stead for the next chapter of the bank, some analysts said.
"The expectation is that the growth of mergers and acquisitions in the next couple of years will be high and that has been Pick's core competency so we view it as a good move," said Brian Mulberry, client portfolio manager at Zacks Investment Management, which held Morgan Stanley stock in the past.
Mulberry added that Pick also added "stability and experience" that the bank had been "missing as this succession discussion has been going on."
Gorman announced in May that he planned to step down within a year, and some investors had hoped the succession would be announced at the bank's Oct. 18 earnings. The stock sank, with one analyst citing the lack of a public plan on the new CEO.
Gorman said the bank had kept to timetable and had announced it after its October board meeting. The bank targeted this month so the new CEO could get a "running start" to begin in January, he said.
GORMAN'S LEGACY
Gorman joined Morgan Stanley in February 2006 and was named co-president the following year. As the 2008 financial crisis unfolded, threatening to topple some of Wall Street's biggest firms, Gorman had a front-row seat alongside then-CEO John Mack.
Gorman was named CEO in January 2010 at the same time as his counterpart Brian Moynihan at Bank of America (BAC.N). Both executives, along with JPMorgan Chase & Co's (JPM.N) Jamie Dimon, have led their respective firms through the wreckage of the financial crisis.
Analysts also hailed Gorman's transformative deals in 2020 which saw Morgan Stanley buy discount brokerage E*Trade Financial Corp and Eaton Vance Corp.
"Morgan Stanley is generally in very good shape as left by Gorman," said Stephen Biggar, analyst at Argus Research.
"Large integrations like E*Trade and Eaton Vance are behind it and created some great diversification," said Biggar.
Gorman, a music fan also known for his dry sense of humor, grew up in Australia. He earned bachelor's and law degrees from the University of Melbourne and an M.B.A. from Columbia University. He eventually became a U.S. citizen.
Gorman "guided a traditional, white-shoe investment bank through a transformative and successful evolution into a diversified, dynamic wealth management institution," said Ana Arsov, managing director at Moody's.
"As with all his endeavors, his succession has been well-planned, facilitating a smooth transition."
