As firms brace for the financial impact of COVID-19, money managers and large banks with investment management staff, like Morgan Stanley, Goldman Sachs and T. Rowe Price Group, say they have no immediate plans to turn to layoffs amid the pandemic.
For most firms it remains unclear how long this will be the case, however, as the coronavirus continues to wreak havoc on the economy and businesses, pushing U.S. unemployment claims to new highs.
On March 26, Morgan Stanley CEO James Gorman told employees that there will not be a reduction in the workforce in 2020, according to an internal memo obtained by Pensions & Investments.
The move includes assurances for all staff, including New York-based Morgan Stanley's investment management unit.
"Aside from a performance issue or a breach of the Code of Conduct, your jobs are secure," Mr. Gorman wrote in the memo to staff. At the end of the year, he said the firm "will know what we are dealing with, and hopefully the economy will be on the mend by then."
Goldman Sachs Group Inc., which has an asset management unit and investment consultant Rocaton Investment Advisors LLC, along with money managers Amundi, T. Rowe Price Group Inc., Capital Group Cos., and AXA Investment Managers Inc. also confirmed through spokespeople that, at this time, the companies have no layoff plans related to COVID-19 concerns.
But layoffs, "from moderate to severe," will eventually occur at money management firms as a result of the market downturn and the "severe recession" that is expected to follow the pandemic, said Alan Johnson, managing director of New York-based compensation consultant Johnson Associates Inc.
Despite this, he has advised money management clients to not panic and "do sensible things" regarding decisions about their workforces.
"I know there will be stories of bad HR practices, and if you're a business, you don't want that headline," Mr. Johnson said. In addition to negatively impacting company morale, sudden decisions about layoffs amid the pandemic may also carry legal implications, particularly if employees become or are sick, he added.
Still, layoffs, even if put off for a time, seem inevitable.
"(Layoffs) are coming and they are going to come in waves ... Hopefully they are done compassionately," Mr. Johnson said.