Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • Consultants
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • SECURE 2.0
    • Special Reports
    • Washington
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2023
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. MONEY MANAGEMENT
December 24, 2018 12:00 AM

Money managers turn to job cuts to steady ship

Some firms acting early; others are doing so out of need due to less business

Danielle Walker
  • Tweet
  • Share
  • Share
  • Email
  • More
    Michael Fitzgerald said firms facing stiff headwinds are having to make decisions 'that are maybe a little more drastic.'

    Faced with the weight of fee pressures and industry consolidation, many money managers are quietly cutting staff, either in a pre-emptive attempt to buckle down against headwinds and shift their business focus or more urgent cuts out of necessity, sources said.

    "Every single firm is taking a look at costs and strategy," said Michael Fitzgerald, a Boston-based managing director within the asset management practice at RSR Partners, an executive search and leadership consulting firm.

    "Some firms are doing it from a position of strength where they know the business is changing and (are) looking at how (to) get ahead of this and structure (themselves). The other firms are doing it out of necessity, whether from pressure on flows, AUM or increased volatility that may have exposed managers living on the effects of market appreciation. They've had to make decisions that are maybe a little more drastic," Mr. Fitzgerald continued in a telephone interview.

    When job cuts are occurring, they are "much more tactical or strategic, even surgical, where (managers) are merging certain distribution channels and investment teams as well as (sales) teams," he added later.

    In 2018, several managers put dozens, in some cases hundreds, of jobs on the chopping block.

    In August, J.P. Morgan Asset Management, New York, said it was laying off about 100 people, representative of 1% to 2% of staff in the J.P. Morgan Chase & Co. division.

    The cuts came despite the fact the asset management unit reported $1.8 billion in revenue in the second quarter, up 2% year-over-year. Assets under management in the unit were $2.028 trillion as of June 30, an 8% increase from the year prior, according to J.P. Morgan Chase's quarterly earnings statement. JPMAM managed $2.077 trillion as of Sept. 30.

    800 cuts over 3 years

    Standard Life Aberdeen PLC, Edinburgh, is in the midst of cutting around 800 jobs across its global business over a three-year integration period related to the merger of Standard Life PLC and Aberdeen Asset Management PLC. The company confirmed the planned job losses in May 2017, just months before the deal closed that August.

    Meanwhile, Zurich-based GAM Holding AG announced this month a restructuring plan that will include the elimination of approximately 10% of its more than 900-person staff during 2019. The cuts include previously announced efforts in November to consolidate investment teams across its fixed-income and equities business, a news release said.

    GAM faces job cuts as its overall AUM dropped 4.8% to 139.1 billion Swiss francs ($140.3 billion) over the two-month period ended Nov. 30, the money manager said in a Dec. 13 news release, following a period of upheaval at the firm where Tim Haywood, investment director business unit head for the unconstrained/absolute-return bond strategy, was suspended following an investigation, resulting in the liquidation of bond funds.

    For asset managers weighing cuts, such decisions primarily are being driven by two factors, said Alan Johnson, managing director of compensation consulting firm Johnson Associates Inc., New York.

    "One, is the continual, gradual erosion of fee levels, which reduces revenue," as investor clients move to passive strategies from active, Mr. Johnson said. Additionally, managers might put jobs on the line in response to declining firmwide or product assets, he said.

    Johnson Associates published a report in November that predicted there will be asset manager layoffs or downsizings coming in the first quarter of 2019. The moves may come with firms' "recognition of business dynamics and productivity increases/automation," the report said.

    Mr. Johnson believes the positions that would be affected the most by cuts are operations, sales and general management roles.

    "I think, by and large, the investment side will be protected even though they are more expensive per person … with automation and technology, you don't necessarily need as many people as you needed five or so years ago. I think most of the impact of technology is probably going to fall on operations staff," Mr. Johnson said.

    Firms likely will aim to make these adjustments as quietly as possible, he added.

    "I think everyone wants to be as quiet as can be. It will be layoffs (and) not filling positions as they open up … a combination of both," Mr. Johnson said.

    Johnson Associates' November compensation report also suggested firms will be eyeing costs associated with their locations.

    The impact of cost-of-living differences is expected to increase for financial services firms, including money managers, the report said. In fact, "financial services' overconcentration in select cities will diminish," the report predicted. The industry will see "more aggressive strategies to minimize costly locations."

    As such, money managers are determining: "how many people do we need, and where do we need them?" Mr. Johnson said in a telephone interview.

    Heading to Nashville

    AllianceBernstein LP announced last May that it was moving its headquarters to downtown Nashville from New York and expects to complete all phases of the move by 2024.

    In October, the $550 billion money manager reported to the New York State Department of Labor it would be laying off 35 of 244 employees in its White Plains, N.Y., offices throughout 2019, citing the relocation to Nashville, a public notice on the department's website showed.

    An AB spokeswoman declined to comment on the layoffs beyond the notice.

    While one recruiter shared that she has not seen widespread layoffs at money managers, "there have been a number of organizations that have come up and are doing this. And some are doing it discreetly," said Debra "Deb" Brown, a senior member of the investment management practice at Russell Reynolds Associates Inc., New York.

    Generally speaking, however, she said the the asset management industry has been resilient despite headwinds that could drag on costs for firms.

    Still, "There is some cutting going on in underperforming active strategies," Ms. Brown said, later adding: "Where you've got a dependence on active strategies, yes, (money managers) are prudent on how they can improve the economics."

    Ms. Brown also noted that cuts aren't always indicative of "an overall contraction of the firm," but a reallocation of resources.

    In June, it surfaced that Swiss bank UBS Group AG was eliminating at least 100 positions in its asset management unit as it shifted its focus to key areas such as growth in China, as well as passive and sustainable investing, sources told Bloomberg at the time.

    A UBS spokeswoman declined this month to comment on the matter, but an October company presentation for investors shows the company has pegged five strategic areas for growth: wholesale and platform services, investment solutions, sustainable and impact investing, China and indexed products, including exchange-traded funds.

    UBS Asset Management's total invested assets have grown to 810 billion Swiss francs ($1.065 trillion) as of June 30 from 656 billion Swiss francs at the end of 2016, the investor presentation showed.

    AXA lets 200 go

    Separately, AXA Investment Managers completed around 200 job cuts in the second half of this year under an internal restructuring, a company spokeswoman confirmed in an email. The cuts, which were initially announced in June, affected roughly 160 positions in France, with the remainder in the U.K.

    Savings from the job cuts will go toward AXA's plan to invest around €100 million ($114 million) by 2020 in focus areas, which include alternatives, multiasset and fixed-income specialty investment strategies; ESG integration across investment teams; digital and advanced data analytics capabilities; and quantitative and data science skills.

    Katie Vande Water, a Boston-based partner in the financial services practice of executive search firm DHR International Inc., said money managers resorting to layoffs are often doing so to consolidate products — in the process, leaving an investment team or distribution professionals without a place at the firm — or to weed out staff whose performance has been lackluster.

    Related Articles
    UBS said to be cutting asset management jobs amid China pivot
    AXA Investment Managers eyes cutting about 200 jobs as part of reorganization
    J.P. Morgan Asset Management laying off 100 people
    BlackRock to cut 500 jobs amid corporate restructuring and market uncertainty
    BlackRock cuts 500 staff amid market uncertainty
    Fitch: Management fee rates for publicly traded alternatives firms expected to …
    JPMAM assets down 4% in quarter, 2% for year
    Commentary: Unconscious bias in new hire compensation
    AllianceBernstein layoffs include institutional sales and marketing personnel
    UBS said to weigh asset management options including merger
    Recommended for You
    Lazard Asset Management taps global head of small-cap equity platform
    Ng_Vera_Combo_i.jpg
    DWS appoints CIOs for Asia-Pacific, Western Europe regions
    Exchange_Traded_Funds_Tablet_i.jpg
    McKinsey predicts tougher times ahead for U.S. asset managers
    Private Markets: A Thriving Space
    Sponsored Content: Private Markets: A Thriving Space
    Sponsored
    White Papers
    What a Fed pivot and ‘higher for longer’ mean for emerging markets
    A Guide to Home Equity Investments: The Untapped Real Estate Asset Class
    How to Modernize a School District Retirement Plan
    Q4 2023 Credit Outlook: Price Is What You Pay, Value Is What You Get
    There's More Than One Way to Be a Climate Investor
    Exploring the Commercial Application of Artificial Intelligence
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    October 23, 2023 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • Consultants
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • SECURE 2.0
      • Special Reports
      • Washington
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2023
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print