Morgan Stanley has reportedly cut about 2,500 jobs — roughly 3% of its workforce — across its three core business lines. The reductions span investment banking and trading, wealth management, and investment management, but do not affect the bank’s financial advisors.
The job cuts follow a year in which Morgan Stanley reported record annual revenue and beat Wall Street profit expectations for the fourth quarter. In January, the bank said full-year 2025 net revenues were $70.6bn and net income was $16.9bn, with a return on tangible common equity (ROTCE) of 21.6%, according to its full-year results release.
Reuters reported the reductions were “based on strategy and individual performance”, and that the bank intends to add headcount in other areas.
The timing is notable because Wall Street entered 2026 expecting stronger capital markets activity, with banking leaders pointing to healthier pipelines for mergers and acquisitions and IPOs. Market volatility has also supported trading activity as clients reposition portfolios in response to geopolitical risk and shifting views on AI’s impact on legacy technology businesses.
AI is one lens through which the strategy shift is likely to be read, even if Morgan Stanley has not tied this round of layoffs to automation. Over the past three years, the bank has repeatedly described generative AI as a tool designed to compress internal workflows, particularly in wealth management.
In March 2023, Morgan Stanley Wealth Management announced a “bespoke solution” with OpenAI to help financial advisors search and use the bank’s internal knowledge base faster, in a press release outlining the initiative.
By June 2024, the bank launched “AI @ Morgan Stanley Debrief”, an OpenAI-powered note-taking and follow-up tool for client meetings that can generate summaries, draft emails for advisors to edit, and save notes into Salesforce, with client consent. In that release, Morgan Stanley said 98% of financial advisor teams had adopted the AI @ Morgan Stanley Assistant, which it said was rolled out in September 2023.
That same month, Morgan Stanley CEO Ted Pick told investors that AI could save advisors 10 to 15 hours a week.
Morgan Stanley has also pushed generative AI into its institutional businesses. In October 2024, the bank’s Research division announced AskResearchGPT, a GPT-4-powered assistant for investment banking, sales and trading, and research staff, built to search and summarise insights from more than 70,000 proprietary research reports published annually.
Some of the latest round of cuts in wealth management hit private bankers and support staff, including roles linked to client mortgage services. The reductions also follow a prior cut of about 2,000 roles in spring 2025.
To reiterate, there is no explicit connection between the trimmed roles and the uptake of AI at Morgan Stanley. But at a time when many companies are making cuts along those lines, and more still are discussing the impact of AI adoption on the labour force, the news comes at a particularly uncomfortable time.
And for many, the question is what the cuts signal about Morgan Stanley’s operating model: a routine reshaping after a strong year, or a sharper efficiency drive as internal AI tools spread beyond wealth management.
