Morgan Stanley (MS) has decided to lay off hundreds of workers from its wealth management (WM) division, impacting less than 1% of the unit’s employees. This move is part of the investment banking giant’s effort to trim costs in the face of economic uncertainty and concerns about the Federal Reserve’s interest rate cuts trajectory.
The Strategy Shift
In recent years, Morgan Stanley has shifted its focus towards its WM segment, moving away from the institutional securities segment. This strategic change reflects a deliberate effort to reduce its dependence on the capital markets and seek a more stable revenue stream.
Under former CEO James Gorman, the WM segment gained significance for MS after the acquisitions of Eaton Vance and E*Trade Financial. However, despite these efforts, the segment’s revenues remained stagnant last year.
The decision to downsize comes as one of the first major moves under the leadership of the newly appointed CEO, Ted Pick, who has reaffirmed the company’s goal of reaching $10 trillion in assets under management.
Industry-Wide Cuts
MS isn’t the only financial firm looking to trim its workforce. Citigroup also plans to reduce 51 job roles across its wealth segment in London, affecting 10% of its workforce in the wealth segment. Additionally, BlackRock announced its plan to eliminate 600 jobs, constituting 3% of the company’s global workforce, as part of an effort to adapt to a changing operating environment.
How will Morgan Stanley’s strategical shift affect the investment landscape? Will other financial firms follow suit?
