Morgan Stanley CEO James Gorman. (Photo: AP)

Morgan Stanley (MS) plans to cut 1,600 jobs, mainly in its investment banking and other institutional-services operations in the United States and overseas, a source said on Wednesday. No financial advisors are being let go as part of the latest cost-cutting move, according to the company, which is led by James Gorman.

The cuts represent about 6% of staff in the institutional operations, namely investment-banking traders and salespeople, which experienced a similar level of layoffs in 2012.

“It is a response to the continued, sluggish business environment as well as regulatory changes, and very much in line with what the other global banks are doing,” the source explained in a statement shared with AdvisorOne.

Very few of the cuts will be in the wealth-management business, added the source, noting that these operations have already gone through “a meaningful headcount reduction over the past two years as part of the Smith Barney integration process.”

“Retail [advisor business] has risen in stature at the major wirehouses, because it’s a Steady Eddie source of revenue,” said executive-search consultant Mark Elzweig, in an interview. “Taking risk is out, and plain vanilla fee-based business is in.”

Morgan Stanley is set to report its fourth-quarter 2012 earnings and full-year 2012 earnings on Jan. 18.

The wirehouse firm had 16,829 financial advisors as of Sept.30–down 1% from 16,934 in the second quarter and 5% from 17,661 a year ago. In the third period, it had $7.5 billion of new assets, up 83% from the second quarter and down 23% for a year ago.

On Monday, Morgan Stanley said it recruited a former-Merrill Lynch team in Paramus, N.J., with nearly $2.9 million in yearly fees and commissions and $500 million in assets under management, as well as an advisor from UBS in Shrewsbury, N.J., with close to $2.1 million in annual production and assets of $150 million.

“Like most of Wall Street, the firm will remain in a cost-cutting mode for the foreseeable future,” said Elzweig. “Other than revenue-generating advisors, there’s not going to be much hiring going on at major wirehouses.”