When BlackRock told staff in January it was cutting 600 jobs, chief executive Larry Fink and president Rob Kapito claimed the asset management industry was “changing faster than at any time” since the New York-headquartered firm was founded in 1988.
The world’s largest fund house, which oversees $10tn, said the cuts were necessary to help it remain “agile and efficient” and allow for investment in areas offering the most growth potential.
The cuts at BlackRock, which represent around 3% of its global workforce, came a year after it announced a cull of 500 jobs.
Abrdn, Baillie Gifford and other asset managers have also taken the axe to headcount in recent months, citing the need to adapt to a challenging market environment and become much leaner organisations.
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“There is a razor-sharp focus on performance and operational efficiency. Job cuts have been inevitable,” said Amin Rajan, chief executive of asset management consultancy Create Research.
“There were hopes that the onset of the bear market in 2022 would reverse the fortunes of active managers. This does not seem to have happened.”
Join the crowd
Fidelity International is the latest to announce lay-offs. On 6 March, less than a week after naming Keith Metters as the successor to Dame Anne Richards at the helm of the business, it told its staff it would cut 1,000 jobs globally.
The $776bn group said the headcount reduction would ensure it was “resilient for the future given the challenging economic environment”.
It would also provide “additional flexibility and agility to innovate, invest, and provide capabilities to our clients that differentiate us from the rest of the industry.”
One London-based Fidelity International veteran said that 2024 was “the most uncertain period” he had experienced during his career of more than 15 years with the asset manager.
Fidelity International is far from alone, however. Asset managers have announced more than 2,000 job cuts since the start of the year.
Edinburgh-headquartered asset manager Abrdn, for example, has struggled to turn its fortunes around since Stephen Bird became its chief executive in September 2021. In January, it announced it was axing 500 jobs as part of a programme intended to save £150m in costs.
Bird said in his memo to staff announcing the cuts that they were “a necessary step to create a sustainable organisation for the future”.
Fellow Scottish asset manager Baillie Gifford swiftly followed suit. It revealed the same month it was making a small number of redundancies, after it had overhauled its fixed income business.
Even so, asset managers have not shed nearly as many roles as some other financial services firms. US banks cut around 60,000 jobs last year and the job losses have continued into 2024. European lenders including Barclays and Deutsche Bank are also announcing fresh rounds of lay-offs
More to come
Yet fund management professionals have been warned that despite the relatively low numbers of job cuts in their sector compared to banking, they should be braced for more pain to come.
Growing competition from passive funds and ETFs is likely to increase pressure on active managers. Firms will also be looking to cut more costs by making better use of technology.
Chris Connors, a principal at pay consultants Johnson Associates, said headcount at asset managers will “continue trending lower over the medium to long-term”.
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He added that fund firms that had “over-staffed” in the rush to fill roles following the pandemic will continue to shed employees.
“Technology efficiencies driven by AI, which have not yet been fully realised, will also contribute to lower headcount over time,” added Connors.
Job cuts are also taking place across fund groups amid record high asset levels for some firms, according to Stephen Biggar, an analyst with Argus Research.
“We never used to see this type of cost-cutting when market values were at peaks,” he said. “The current round of expense savings is voluntary — asset managers are putting a lot of the pressure on themselves.”
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To contact the author of this story with feedback or news, email David Ricketts