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When BlackRock announced 600 layoffs to its workforce in January, Chief Executive Officer Larry Fink and President Rob Capito said that since the New York-based company was founded in 1988, He argued that the wealth management industry is “changing at an unprecedented rate.”
The world’s largest fund house, which oversees $10 trillion, said the cuts were necessary to remain “agile and efficient” and allow investments to be made in areas with the most potential for growth.
The job cuts at BlackRock, which accounts for about 3% of its global workforce, come a year after the company announced it would cut 500 jobs.
Mr. Abdon, Baillie Gifford and other asset managers have also cut staff in recent months, citing the need to adapt to tough market conditions and become leaner organizations.
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“There is a huge focus on performance and operational efficiency. Retrenchments are inevitable,” said Amin Rajan, chief executive of wealth management consultancy Create Research.
“There was hope that the start of the bear market in 2022 would reverse the fortunes of active managers. This does not appear to be happening.”
join the crowd
Fidelity International is the latest company to announce job cuts. On March 6, less than a week after appointing Keith Metters to replace Dame Ann Richards in its executive team, the company told employees it would cut 1,000 jobs worldwide.
The $776 billion group said the job cuts would ensure “future resilience in light of a challenging economic environment.”
It will also provide “more flexibility and agility to innovate, invest, and provide customers with capabilities that differentiate them from others in the industry.”
The London-based Fidelity International veteran said 2024 was the “most uncertain period” he had experienced in his more than 15-year career as an asset manager.
But Fidelity International is not alone. The asset management company has announced more than 2,000 job cuts since the beginning of the year.
For example, Edinburgh-headquartered asset management firm Abdon has struggled to rebuild its operations since Stephen Bird took over as chief executive in September 2021. In January, the company announced 500 job cuts as part of a program aimed at cutting costs by £150m. .
In a memo to staff announcing the layoffs, Byrd said they were a “necessary step to build a sustainable organization for the future.”
Fellow Scottish asset manager Baillie Gifford quickly followed suit. That same month, it revealed it was making a small number of job cuts after overhauling its fixed income business.
Still, asset managers are not giving up as many roles as other financial services companies. U.S. banks cut about 60,000 jobs last year, with job losses continuing through 2024. European financial institutions such as Barclays and Deutsche Bank have also announced new job cuts.
Further in the future
But fund management experts warn that despite the sector having relatively few job cuts compared to banking, it must brace for more pain ahead.
Increasing competition from passive funds and ETFs is likely to increase pressure on active managers. Companies will also aim to further reduce costs by making effective use of technology.
Chris Connors, principal at payroll consultancy Johnson Associates, said headcount at asset managers “continues to trend down in the medium to long term.”
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He added that fund companies, which have become “overstaffed” in their rush to fill roles post-pandemic, will continue to cut staff.
“Technological efficiencies through AI, which are not yet fully realized, will also help reduce headcount over time,” Connors added.
Argus Research analyst Stephen Biggar said there were also job cuts across fund groups as asset levels in some companies hit record highs.
“Never before have we made cost savings like this when market values were at their peak,” he said. “Current cost cuts are voluntary and asset managers are putting a lot of pressure on themselves.”
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To contact the author of this article with feedback or news, email David Ricketts.
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