Layoffs could be coming to Morgan Stanley’s crucial wealth management business — a prudent step to improving the bank’s overall cost structure amid uncertainty over Federal Reserve interest rate moves. Morgan Stanley has plans to cut several hundred employees in the division as new CEO Ted Pick tries to keep costs in check, the Wall Street Journal reported on Wednesday. While impacting less than 1% of the division’s workforce, the cuts represent Pick’s first big move at the helm of the firm and Morgan Stanley’s need to drill down on expenses. Morgan Stanley declined CNBC’s request for comment. Pick, a veteran of the bank, officially took the reins from longtime CEO James Gorman on Jan. 1. During his tenure at the helm, Gorman pivoted Morgan Stanley to rely less on investment banking by building up wealth management, which has a more predictable revenue stream. MS YTD mountain Morgan Stanley (MS) year-to-date performance Possible layoffs in wealth management are important because it’s Morgan Stanley’s largest operating segment — making up roughly half of companywide revenue. Any reductions there can have an outsized benefit toward reducing costs to stay on track to meet, and hopefully exceed, Pick’s conservative reset guidance . Despite delivering in mid-January a better-than-expected fourth quarter, shares dropped more than 4% on earnings day as investors worried about the picture the new CEO was painting for the future. It didn’t help that Q4 results for all of the major banks were rather messy as they were forced to pay the FDIC back for rescuing regional lenders after last year’s failure of Silicon Valley Bank. On the post-earnings call, Pick said the bank was far from reaching management’s previously issued goal of 30% operating margins for wealth management. To make matters worse, he said that headwinds such as geopolitical conflicts and the state of the U.S. economy could weigh on profits. Elevated interest rates have continued to pressure margins….
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