MORGAN STANLEY’S Wall Street class of 2006 trainees were not, it seems, the sharpest knives in the drawer as 500 of their number flunked the course and were unceremoniously fired this week.

The hapless would-be Masters of the Universe were given their marching orders on Wednesday by James Gorman, the head of Morgan’s Global Wealth Management division.

In a memo to all staff, obtained by The Times, Mr Gorman said that 500 trainees who had failed to make the grade were “individuals who were not tracking toward long-term success in the business”.

The entire class consisted of 1,000 trainees, a Morgan source said, meaning that half of them were deemed to be no good.

Morgan’s wealth management arm is one of the worst-performing on Wall Street and has been undergoing a sweeping overhaul since Mr Gorman took over the department in February. He was poached from Merrill Lynch by John Mack, Morgan Stanley’s chief executive, who has long envied Merrill’s leading position in financial advice.

Morgan is also cutting the number of trainees it takes on every year in its wealth management division from as many as 2,500 to as few as 700, with insiders suggesting that the bank would probably train an average of about 1,000 prospective financial advisers a year.

The bank has taken on some 7,000 trainees in the past four years with a varying degree of success. Mr Gorman wrote: “Some of these individuals have been successful, many have not, and in fact are struggling to establish viable wealth management practices.”

Morgan’s retail brokerage has underperformed rivals on almost every measure. It has lower profit margins, lower revenue per broker and fewer client assets under management than its peers. In recent weeks Mr Gorman has shaken up management and renamed the unit to focus on attracting more rich clients. None of the bank’s traineeships or graduate programmes in the City are affected by Mr Gorman’s plans.

HOW BOSS BROKE THE NEWS

Dear Colleagues,

As we continue making a number of changes to strengthen our Global Wealth Management business, today we are announcing the redesign of our training program for Financial Advisors . . .

Going forward, we will reduce the number of new trainees entering the program . . . The program redesign is underway . . .

We have also reduced our current number of trainees by approximately 500 individuals. These are individuals who were not tracking toward long-term success in the business.

Sincerely, James Gorman

Times Recommends

• Tories’ green bank to revolutionise power policy
• UK car industry receives £2.6bn injection
• Pru chief turns down seat on board of bank