Layoffs looming in wild 2025?

With the broad stock market in decline at the start of 2025, on top of the uncertainty caused by President Trump’s global trade and tariff battles, some large financial advice firms appear ready to cut staff and potentially reduce costs.

Morgan Stanley in March was considering cutting close to 2,000 employees, according to a report by Bloomberg News. That would be the bank’s first major workforce reduction under CEO Ted Pick. 

Large financial institutions are particularly sensitive to rising costs because they eat into profits. The last time an industrywide pullback in staffing and hiring occurred was in the fall of 2023, well before President Trump’s unsettling tariff wars.

At that time, rising costs of acquisitions, higher salaries for employees, and competitive recruiting bonuses for financial advisors, along with the record spike in interest rates, were making it more costly to run large wealth management enterprises.

The Morgan Stanley cuts will take place across the firm, with the exception of its roughly 15,000 financial advisers, according to Bloomberg. Morgan Stanley has about 80,000 employees.

A Morgan Stanley spokesperson declined to comment on reports of layoffs at the bank.

Firms typically leave financial advisors alone when they decide to cut staff and reduce costs; advisors drive and create revenue and are therefore directly linked to a financial advice firm’s bottom line.

Edward Jones in March also said it was cutting home office workers at its St. Louis headquarters as a result of a companywide restructuring, according to a report by KMOV news in St. Louis.

“As we continue our journey to serve more clients more completely, Edward Jones will be making changes to its home office structure to strengthen our collaborative, client-first mindset and alignment with our firm goals,” said a statement from an Edward Jones spokesperson. “As we make changes to our structure, the size of our home office will be reduced.”

The spokesperson declined to give a specific figure as to the number of employees who may lose their jobs.

“There’s aways a certain level of fat to trim at firms,” says Alois Pirker, an industry consultant. “An unpredictable environment leads to these cuts in staff.”

Adding to the difficulties, the broad stock market had a terrible first quarter, which may have been expected after the S&P 500 posted annual returns in 2023 and 2024 of more than 20 percent.

The S&P 500 fell 4.6 percent in the first three months of the year, while the Nasdaq Composite gave up 10.4 percent, according to multiple news reports. That was the worst quarterly loss for the S&P 500 since 2002 and the Nasdaq's biggest decline since 2022, according to Investor’s Business Daily.

Still, the market’s bad start to the year only fuels concerns about layoffs at wealth management firms.

“Firms are buckling up for a rocky road ahead,” Pirker says. “Markets appear not as one-dimensional as [in the] past decade.

“We were spoiled by those markets. Now, all of a sudden, firms are getting ready and saying we need to be in better shape if push comes to shove.”

Meanwhile, Goldman Sachs is also preparing its annual round of layoffs, this time with a focus on its vice presidents, according to a March report from the Wall Street Journal.

“About 3 percent to 5 percent of the firm’s workforce is expected to be cut,” the report said. “Goldman’s overall head count, which ended 2024 at 46,500, is expected to remain flat this year when factoring in hiring.”

And with the rise of artificial intelligence, financial institutions will cut many more jobs in the coming years.

“Global banks will cut as many as 200,000 jobs in the next three to five years as artificial intelligence encroaches on tasks currently carried out by human workers,” according to Bloomberg News.

Chief information and technology officers surveyed earlier this year by Bloomberg indicated that on average they expect a net 3 percent of their workforce to be cut.

“Any jobs involving routine, repetitive tasks are at risk,” according to Bloomberg’s analysis. “But AI will not eliminate them fully; rather it will lead to workforce transformation.”

The peer group covered by the Bloomberg report included Citigroup, JPMorgan Chase & Co., and Goldman Sachs Group.

Others are still curious as to the full impact AI will have on the financial advice industry and any potential future job cuts.

“I don’t think we have any clarity of what AI is going to be like in three to five years,” says Sander Ressler, managing director at Essential Edge Compliance Outsourcing Services. “These recent layoffs are tied to the first three months of the Trump administration and the uncertainty of the economy going forward.

“There’s still no clarity in the practicality of AI when it comes to the day-to-day job activities of employees at wealth management firms, although it does help overall with productivity,” Ressler says.

“But these recent job cuts are directly linked to short-term economics. We don’t know where we’re going with the economy, and people are scared.”