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 AI-related is performance: Morgan Stanley has been killing it; last year it shattered revenue records.
And if the drama in the Middle East is short-lived, the markets should rebound.
That would power the firm, with its heavy reliance on retail investors, through yet another strong year.
Wall Street firms are among the most brutally efficient in the world, which means they never miss an opportunity to cut.
AI is providing that now, people at the firm say.
Pick might be reticent, but other companies like Block, the latest venture of Twitter founder Jack Dorsey, have readily admitted to big AI-driven cuts.
Following Block’s announcement, its shares soared because Wall Street loves productivity, even in its most cruel manifestations.
That means job cuts and the loss of health insurance and retirement funds for what could be millions of Americans in the coming years.
Chatbots will replace not only back-office workers, but also lawyers, computer programmers and — God forbid — reporters.
That’s why I’m sure Morgan Stanley will ultimately admit to the AI job reductions soon enough, as well as the rest of Wall Street and corporate America.
Caught in a war zone
John Tatum is one of the most plugged-in people I know, and yet when the bombs started flying over his hotel room in downtown Doha — just a few minutes from the embattled US military facility in Qatar — he was stranded and helpless.
“It was truly frightening,” Tatum, who runs the Dallas-based marketing firm Genesco Sports, told me late this past week.
Tatum is a legend on the sports business scene, a consummate salesman who matches some of the most recognizable brands (think PepsiCo, Verizon, Lowe’s, Anheuser-Busch, Frito-Lay) with some of the biggest stars in pro sports.
He counts Cowboys owner Jerry Jones as one of his mentors.
He raises serious dough for national politicians because of his deep ties to the burgeoning Texas business community.
And yet he tells me he just spent the scariest and most frustrating couple days of his life being one of nearly 3,000 Americans stranded as air traffic ceased in the region, and help from the US wasn’t on the way.
It all started last Saturday morning Qatar time just hours after meetings with his clients at Qatar Airways, the official global airline partner of the 2026 FIFA World Cup.
Something that sounded like an amber alert went off on Tatum’s iPhone.
The alert was from the Qatari government to shelter in place.
Tatum turned on his TV and watched President Trump announce we were at war.
That’s when the bombs really started flying — literally over his head.
Calls to the State Department went into voicemail.
None of his contacts in the US could help.
He traveled to Qatar with not an inkling that he would be going to a war zone; this was of course a sneak attack.
Finally, Qatar Airways found him a way out, a charter bus to Saudi Arabia and a charter flight to Frankfurt.
He’s on his way back to Dallas.
I asked him if he plans to go back.
Tatum’s response.
“I love Qatar.”
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