In a bid to streamline operations and reduce costs, Morgan Stanley, under the leadership of new CEO Ted Pick, is reportedly planning to slash several hundred bankers in its wealth management division. The Wall Street firm aims to cut managing directors and other non-customer-facing employees, with the anticipated layoffs expected to affect less than 1% of the division's approximately 40,000-strong workforce.

The decision to implement these job cuts follows flat revenue growth in the wealth management unit during the last quarter compared to the previous year. Furthermore, the medium-term margin forecast for the division fell below analysts' expectations, prompting the need for cost-saving measures.

Morgan Stanley's wealth management unit has taken on increased significance for the bank after successful acquisitions, including Eaton Vance and E*Trade, which were made under the leadership of former CEO James Gorman. With the absorption of E*Trade, the wealth management unit now oversees a staggering $5 trillion in assets, accounting for approximately half of the bank's total revenue. This diversification has helped reduce the bank's dependence on trading and investment banking, which can be volatile sources of revenue.

Sources indicate that these layoffs are primarily driven by redundancies arising from the $13 billion acquisition of E*Trade in 2020. The move to downsize the workforce is part of the bank's effort to optimize operations and ensure the efficient utilization of resources.

Last month, Morgan Stanley's newly appointed CEO, Ted Pick, reaffirmed the target set by his predecessor, James Gorman, of reaching $10 trillion in assets under management. With an eye towards future growth, the bank is actively recalibrating its operations to align with evolving market dynamics.

It is worth noting that these planned job cuts are the latest in a series of layoffs by Wall Street firms since the previous year. The financial industry has faced numerous challenges due to the ongoing economic uncertainties caused by the global pandemic.

Morgan Stanley, which had nearly 80,000 employees as of the end of last year, reported a decline in net income for the fourth quarter. The bank's net income fell to $1.5 billion in the three months ending December 31, compared to $2.2 billion in the same period a year earlier. The bank attributed this decline to various factors, including charges of $535 million. This amount included $286 million to replenish a government deposit insurance fund that was depleted as a result of the collapse of two regional lenders last year, and $249 million in legal charges to settle a government probe into its handling of large stock trades for customers.

As Morgan Stanley proceeds with its plans to streamline the wealth management division, the exact number of job cuts remains undisclosed. The bank's actions highlight its commitment to optimize costs and adapt to the ever-changing financial landscape, ensuring sustainable growth and profitability in the coming years. Morgan Stanley declined to comment on the reported layoffs.