Hiring freezes, automation, and a shrinking talent funnel point to a structural reset in America’s financial sector. One with growing implications for Europe.
A shift is underway in the world’s finance capital. Firms are pulling back on junior hiring. Entry-level roles are disappearing without announcements, and for many younger professionals, artificial intelligence is starting to look less like a tool, and more like a replacement.
“I’m seeing real headcount savings,” said Michael Schopf, chief investment officer at MHS CapInvest and an adviser on artificial intelligence for investment firms. “Many companies simply stop filling open positions.”
PE giants like Apollo Global Management and General Atlantic have paused on-cycle recruiting for their 2027 associate classes, telling applicants it would not conduct interviews this year. The firms have framed the pause as a response to an overheated recruiting timeline, arguing that asking students to commit to roles years in advance leads to rushed decisions and unnecessary turnover.
But others see a more structural motive. “AI can handle routine tasks far more cheaply than a human junior, so it makes sense firms are pausing hiring”, Schopf said. “It’s often a passive cut. Open roles quietly vanish. If an analyst leaves, AI takes over instead of hiring a replacement.”
Bloomberg Opinion columnist Matt Levine too offered an unsettling explanation: there may not be many private equity jobs left in two years. “The fundraising market isn’t great, so it’s not clear that they’ll have many deals to do, and in two years maybe the associates can be replaced by artificial intelligence anyway. Then what?,” he wrote.
White-collar squeeze begins with Gen Z
The pressure is showing in the data. The American unemployment rate for Gen Z graduates with a master’s degree or higher averaged 5.8 percent in the first half of 2025, up from 3 percent a year earlier, according to figures from the St. Louis Federal Reserve Bank.
That’s well above the national average of 4.1 percent. Analysts at Oxford Economics say the rise is concentrated in technical fields like finance and computer science, sectors where AI adoption has moved fastest.
Similar signs are emerging in Europe. Swedish fintech Klarna recently automated hundreds of roles that were traditionally filled by humans. CEO Sebastian Siemiatkowski warned the shift could trigger a recession if the broader economy fails to absorb displaced workers.
In the Netherlands, ING announced it would eliminate 230 senior roles at its wholesale bank. Earlier this year, ABN Amro imposed a bank-wide hiring freeze, ending all temporary contracts and suspending external hiring regardless of performance. Officially, the moves are about cost, but Georgina Roesle, co-lead of the European AI practice at recruitment giant Egon Zehnder and advisor to global financial institutions, said AI is definitely making an impact.
Analysts used to spend their early careers building models, structuring data, and summarizing transcripts. Today, those tasks take minutes with a well-trained language model.
“AI and LLMs can now analyse balance sheets, sift through transcripts, and even draft full investment cases,” said Schopf. Among investment bankers in New York, group chats are lighting up with links to tools like Shortcut.ai. That AI agent can ingest complex spreadsheets, perform requested changes, and explain its reasoning in plain English. “It does exactly what investment banking associates do,” one user said.
That’s changing more than just workflows. It’s reshaping staffing logic. “One good prompt engineer with a finance background can replace two or three traditional analysts,” Schopf said. “Writing effective prompts is almost the new alpha source. Technology already displaced blue-collar jobs. Now white-collar grunt work is next.”
It’s still a peoples business
For now, the biggest cuts are seen in the back office, Roesle said. “We’ve seen firms reduce certain back-office functions by over 50 percent. That includes finance, compliance, legal, and documentation teams.”
The front-office dealmaking remains more insulated, thanks to its reliance on trust, negotiation, and judgment. One associate at a mid-sized wealth manager in New York—who recently learned his contract would not be renewed after three years—put it bluntly.
“All the haggling around the numbers requires a lot of human handholding,” he said. “This is a relationship-driven industry. At the end of the day, as cynical as it sounds, the numbers are bullshit. People build relationships, make deals, and then the analysts reverse-engineer the numbers into said deals.”
That logic, deals first, analysis second, has so far protected many junior roles on the investment side. But it’s unlikely to hold, said Roesle. “Machines are getting better at generating decent first drafts,” she said. “But someone still needs to evaluate the quality of the output. That’s where judgment and experience matter.”
For younger professionals entering finance, the shift raises uncomfortable questions. If AI can do the baseline work, and firms want judgment from day one, what’s left for a 25-year-old with a finance degree?
“The future belongs to finance cyborgs, analysts who think like Warren Buffett but execute like a machine,” Schopf said. His advice: master accounting, valuation, and the CFA curriculum, but layer in data science and AI. “That kind of cross-disciplinary knowledge will be invaluable.” The CFA Institute has already begun adapting, launching a new certification focused on data and technology skills.
Still, hard skills aren’t enough. “We increasingly hear from clients that new grads are technically strong, but struggle with communication,” said Roesle. “If you can’t present, argue, or hold a conversation, it’s hard to lead. Especially in finance, which still runs on relationships.”
According to Roesle, the firms that are still hiring are no longer looking for narrow specialists. They want people who understand how large language models work, how to build simple tools, and how to think critically about what the machine produces. Curiosity and adaptability, she said, are becoming “just as valuable as technical competence.”