Wall Street executives blame Morgan Stanleys latest layoffs on AI

Morgan Stanley’s surprise round of layoffs this past week was the result of “shifting business and location priorities,” and “individual job performance” issues here and abroad, according to the firm’s flacks.But insiders close to the Wall Street giant say the real culprit can be summed up in two letters: “A” and “I.”No doubt, some of the employees who were axed — amounting to 3% of the mega bank’s global workforce — were falling short of expectations.But Morgan Stanley is a tough place to get hired at in the first place.

I can’t imagine CEO Ted Pick and his team had loaded up with 2,500 bankers and traders who were dead weight.In fact, my sources at the firm say the cuts across the firm’s investment banking and trading, wealth management and investment management divisions are mostly about replacing back-office workers in these areas with artificial intelligence bots.Pick and his bean counters might not admit it, but they are said to believe that for an increasing number of jobs, chatbots are more efficient.Plus the bots don’t demand year-end bonuses, 401(k) matches or good health care.Look for the rest of Wall Street and much of corporate America to be doing the same.“Management just launched an awesome AI program with ChatGPT in the wealth management division,” one Morgan Stanley executive said.

“Lots of back offices getting the ax in this.”A Morgan Stanley spokesperson had no comment, though a source said such cuts are part of normal reductions even if this round was sparked by the AI revolution.One tell that AI was lurking in the shadows at Morgan Stanley was the insipid “strategic goals” excuse for job cuts that flacks spun to reporters.What strategy can one of the biggest brokerage firms on Wall Street really be changing?Maybe they’re thinking of merging back with JPMorgan to recreate the old House of Morgan that was broken up in the 1930s by regulators, but I seriously doubt it.Another tell that the cuts were ...