Fresh off of a competitive basketball game on Morgan Stanley Smith Barney's sprawling Purchase, N.Y. campus, Paul Hatch says it is just as important to fail as it is to win.

That may sound strange to hear from Hatch, who currently oversees one of Morgan Stanley Smith Barney's most successful businesses as part of his role as managing director and head of investment strategy and solutions. That business, Consulting Group, has consistently ranked number one over the competition in managed accounts.

"We fail often and we fail quickly," Hatch says. "Many things that have failed we figured out very quickly weren't exactly what the consumer wanted. But we were able to figure out what they were, and then move quickly into those."

Quickly is just what Morgan Stanley Smith Barney plans to do as it focuses on growing its Consulting Group division, where it aims to double the assets in the managed account group to more than $1 trillion within the next five years.

Specifically, that calls for $500 billion in new assets in the next five years. In recognition of those numbers, the firm has dubbed its strategy the "5 in 5 Campaign." Obviously, the goal is aggressive. Consider that Consulting Group had $1.6 billion in assets in 1981, which rose to $42 billion in 1991, and $241.6 billion in 2001. Today, Morgan Stanley Smith Barney says its Consulting Group's fee-based assets totaled $509 billion as of the second quarter of this year. Bank of America Merrill Lynch, is well behind in second place with $ 403.4 billion, according to Boston-based research firm Cerulli Associates.

To reach that $1 trillion goal, Hatch enlisted James Walker to serve as managing director and director of Consulting Group in September 2010. Before that, Walker had served as chief operating officer of investment strategy and solutions at the firm under Hatch.

The two also share a Citigroup heritage. Hatch came to his current role in 2009 from his position as head of investments at Citi Global Wealth Management. Before joining Morgan Stanley Smith Barney, Walker was director of finance, risk and strategy for Citi Global Wealth Management Investments.

Together, they developed the plan to increase Morgan Stanley Smith Barney's managed account assets. They were inspired by the prospective flows that the Morgan Stanley and Smith Barney combination, first formed in 2009, could generate. The plan also ties in with a new regulatory reality, where advisors could be held to a heightened fiduciary standard.

Even with the unpredictability of upcoming new regulations and market conditions, both Hatch and Walker are confident in their five-year target to reach $1 trillion in assets. "We're very comfortable with this five years," Hatch says. "Nobody in the industry could come close to this. We know that, but we just believe that culturally, this is the right thing for us to do."

From Failure To Success

One of the most prominent examples of a Morgan Stanley Smith Barney success born from failure is its unified managed account program, now a successful part of its managed accounts group. When the UMA accounts that exist today first took off in the industry about seven years ago, Hatch says, the firm was not the first to market, even though they had developed a form of the account years as early as 1997.

The path to success was not necessarily smooth. As the firm moved toward other versions of the UMA product, they found they were too complex, requiring too many signatures, generating too many reports and presenting complicated pricing. Ultimately, clients and financial advisors were not choosing to use it.

"We had a couple billion dollars in it, and that sounds like a success, but for us a couple billion dollars is not a success," Hatch says. "For us, a couple billion dollars is a failure," he says. "We figured out very quickly as we incorporated it into the marketplace, made a very quick switch and literally changed 180 degrees in our approach and were able to bring out the industry-leading UMA shortly thereafter. By the way, we would have never had the industry-leading UMA without making that mistake."

The idea for Morgan Stanley Smith Barney's current UMA account first began in 2007, followed by predecessor firm Citigroup's early 2008 acquisition of Legg Mason Inc.'s Private Portfolio Group. That deal brought in the "best overlay technology," which took about a year to process, Walker says.

And it is better technology that has put Morgan Stanley Smith Barney's UMA product in the lead. The firm has buried the upfront complexity that was once a deterrent to both advisors and clients when they would initially access the accounts, Walker says. But more complex options are still accessible to those who want those features. The product also offers three levels of discretion that can put all investment decisions under the control of the client, the firm or the advisor.