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As Morgan Stanley reported record profits, the bank has begun cutting jobs, displacing about 2,500 employees as it accelerates the use of artificial intelligence (AI) and automation across parts of its business.
According to reports cited by Reuters and The Wall Street Journal, Morgan Stanley is cutting about 3% of its global workforce. The reductions are described as spanning investment banking, trading, and asset management.
Financial advisors are reported to be temporarily spared, but private bankers (PBs)—who depend on close relationships with ultra-high-net-worth clients—are among those affected, leaving parts of the industry unsettled.
The move comes shortly after Morgan Stanley posted a strong year. In 2025, the bank reported revenue and profits at record levels. In Q4, profits exceeded expectations, supported by a 47% surge in investment banking revenue, while debt underwriting fees nearly doubled.
Despite the strong performance, the bank’s actions align with broader cost-cutting efforts and automation trends in large U.S. banks.
Bloomberg reported that the combined headcount of the six largest U.S. banks—JPMorgan Chase, Bank of America, Morgan Stanley, Wells Fargo, Citigroup, and Goldman Sachs—fell to its lowest level since 2021, at about 1.09 million people as of the end of December.
Fortune reported that the Big 6 banks’ total headcount is at its lowest since 2021, even as they earned $157 billion in net income and spent $140 billion on share buybacks.
The employment pressure is not limited to traditional finance. The article notes that Block cut as many as 4,000 roles—nearly half its workforce—to push AI into operations. It also cites that Coinbase and Atlassian have discussed AI’s role in helping engineers accomplish tasks faster.
A McKinsey report estimated that AI could create an additional $200 to $340 billion in annual value for the banking sector. The same shift, however, is described as coming with the disappearance of traditional white-collar roles, including functions such as data analysis, market research, and investment portfolio management.
At Morgan Stanley, the reported firing of private bankers in asset management is presented as a warning sign for advisory work that has historically relied on face-to-face relationship building and human judgment.
The article also highlights concerns about how productivity gains may not translate into household income. It refers to the idea of “Ghost GDP,” where output rises but wages do not, as staff reductions limit consumption.
Citrine Research warns of a “Left-tail Risk”: if high-income professionals lose jobs in large numbers, consumer purchasing could weaken, potentially affecting credit, insurance, real estate, and broader global financial stability.
The article frames a difficult trade-off for CEOs: use AI to reduce headcount and costs, or keep employees but raise workloads to compete with machine-driven efficiency.
It cites Meta CFO Susan Li, who said, “We really don’t know what the optimal size of a company in the future will be.”
For Wall Street workers, the article concludes that the question is shifting from how much profit banks generate to whether roles will remain in future headcount plans.
Source: WSJ, Fortune
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