Edinburgh-based asset manager Abrdn on Wednesday said it plans to slash 500 jobs this year, or about 10% of its workforce, in a push to bring down costs and restore profitability as the industry continues to be plagued by a growing uptake of low-cost competitors and a broad switch among clients to passive investment strategies.
The news comes shortly after New York-based Blackrock, the world’s biggest asset manager, announced it would cut 600 jobs, or 3% of its workforce. Charles Schwab, Prudential and Invesco have recently also unveiled plans to reduce costs. Schwab plans to make 2,000 people redundant and Prudential 200. Luxembourg-based private bank Quintet last year announced 165 jobcuts, or 9% of its staff.
Abrdn, in a trading statement, said it experienced net outflows of some 12.4 billion pounds during the second half of 2023, representing 3% of its assets under management, referred to as AUMA. At the end of December, its total assets under management declined to 494.9 billion pounds, from 495.7 billion. Assets managed in Abrdn’s personal wealth business more than halved to 4.3 billion from 10.6 billion at the end of June.
‘Challenging’ conditions
“Market conditions have remained challenging for our mix of business, and this is reflected in our year-end AUMA, flow numbers, and margins,” said Stephen Bird (photo), CEO of Abrdn plc. “The Board and I are committed to taking these significant cost actions now to restore our core Investments business to a more acceptable level of profitability.”
Abrdn now targets additional annual savings of 150 million pounds, after exceeding its 2023 cost reduction target of 75 million. “We recognise more needs to be done,” Bird said.
The additional cost savings should come most from group functions and support services this year and next. Some 80% of these savings will need to come from Abrdn’s investments business, which includes its retail, personal wealth and insurance activities.
The target excludes any cost reduction from previously announced divestments, including the sale of our European-headquartered private equity business, which Abrdn last year sold to Nasdaq-listed and Cayman Islands-headquartered Patria Investments for 60 million pounds.
Further reading on Investment Officer Luxembourg:
- New generation of active ETFs takes market by storm
- ‘EU sustainability reporting rules need global alignment’
- Quintet plans to cut 165 jobs this year, 9% of workforce