Morgan Stanley to cut 2,000 jobs as AI reshapes Wall Street

Morgan Stanley is preparing to cut approximately 2,000 jobs later this month, marking the firm’s largest round of layoffs since Ted Pick became CEO in January 2024, according to multiple reports. The reductions reflect a broader industry trend, as automation and artificial intelligence (AI) increasingly streamline financial services.

The job cuts will affect multiple divisions but will not impact the firm’s 15,000 financial advisors, according to Bloomberg. Investopedia reports that the decision stems from lower-than-expected employee turnover, meaning voluntary departures haven’t been enough to reduce costs. While some employees are being let go for performance-related reasons, others are seeing their roles eliminated as AI-driven tools take over key tasks. A source told Bloomberg that Morgan Stanley anticipates further AI-driven workforce reductions in the coming years.

AI's role in Wall Street layoffs

Morgan Stanley’s move is part of a larger industry-wide shift toward automation. A recent Bloomberg Intelligence survey of tech executives from 93 major banks—including JPMorgan and Goldman Sachs—found that firms expect to reduce their workforce by 3% over the next three to five years due to AI and automation. That projection suggests as many as 200,000 financial sector jobs could be at risk.

To support this transition, Morgan Stanley has introduced several AI-powered tools aimed at boosting efficiency. In September 2023, the firm launched an AI-driven knowledge assistant to help financial advisors access internal research more quickly. More recently, in June 2024, it rolled out an AI tool that automatically takes notes and highlights action items during client video meetings.

CEO Ted Pick has been vocal about AI’s potential to enhance productivity. Speaking to investors in June, he noted that AI solutions could save employees between 10 and 15 hours per week. “This is potentially really game-changing,” Pick said, according to Reuters.

Strong financials, yet more cuts to come

Despite these job cuts, Morgan Stanley continues to report robust financial performance. In 2024, the bank posted record net revenues of $61.8 billion, up from $54.1 billion in 2023. Pick has credited AI for improving efficiency and helping boost profitability. In an October interview with CNBC, he emphasized that the technology is making the firm more cost-effective.

Morgan Stanley isn’t alone in trimming its workforce. Rival Goldman Sachs is also planning headcount reductions of 3% to 5% in the coming months. Some Goldman employees are being relocated from high-cost hubs like New York to lower-cost cities such as Salt Lake City and Dallas.

Market response and Fed impact

Wall Street’s focus remains on Federal Reserve policy, with investors reacting positively to the central bank’s recent decision to hold interest rates steady. Following Fed Chair Jerome Powell’s comments that inflationary pressures from tariffs would likely be temporary, futures for the Dow Jones Industrial Average and S&P 500 ticked higher.

As financial firms continue to adapt to an AI-driven future, industry professionals are preparing for further structural shifts in the workforce. With automation advancing at a rapid pace, AI’s influence on Wall Street appears set to grow.

Morgan Stanley: Fast facts

• Founded in 1935, Morgan Stanley was established by Henry S. Morgan and Harold Stanley after the Glass-Steagall Act forced the separation of commercial and investment banking.
• The firm operates in over 40 countries and provides services in investment banking, wealth management, and institutional securities.
• Morgan Stanley Wealth Management, bolstered by its acquisition of Smith Barney in 2009, oversees more than $6 trillion in client assets as of 2024.
• In recent years, Morgan Stanley has expanded through acquisitions such as E*TRADE (2020) for $13 billion and Eaton Vance (2021) for $7 billion, strengthening its wealth and investment management capabilities.
• The firm has committed to achieving net-zero financed emissions by 2050 and integrates ESG (Environmental, Social, and Governance) principles into its investment strategies.