{"id":42431,"date":"2023-11-05T14:26:20","date_gmt":"2023-11-05T14:26:20","guid":{"rendered":"https:\/\/innodebt.com\/business\/us-asset-managers-launch-new-round-of-job-cuts-as-investors-seek-safety\/"},"modified":"2023-11-05T14:26:20","modified_gmt":"2023-11-05T14:26:20","slug":"us-asset-managers-launch-new-round-of-job-cuts-as-investors-seek-safety","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=42431","title":{"rendered":"US asset managers launch new round of job cuts as investors seek safety"},"content":{"rendered":"<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Simply sign up to the <!-- -->Financial services<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=ad93c178-cf15-4f30-a1ec-84ff4f12a9fa&amp;concept-id=a829e170-bd47-44e2-b504-bafcd70f1d38\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>US asset managers are launching their second wave of job cuts this year, with Charles Schwab, Prudential and Invesco each announcing cost controls amid a flight of customers into safer investments with lower fees.<\/p>\n<p>Schwab and Prudential have in recent days divulged plans to cut about 2,000 and 240 positions, respectively. Invesco last month reported severance and reorganisation expenses of about $39mn in the third quarter of 2023 \u2014 about twice as much as expected \u2014 while posting a marginal drop in headcount. <\/p>\n<p>Though not as substantial as widespread lay-offs in early 2023, the cost-cutting reflects the cautious outlook of asset managers after their hiring spree in 2021. They were then competing for talent in a roaring market but now face falling fees, outflows from active strategies and shrinking margins, said Chris Connors, principal at pay consultant Johnson Associates.<\/p>\n<p>\u201cI don\u2019t think there\u2019s too much of a sanguine outlook on 2024 in the traditional asset management space,\u201d Connors said. \u201cIt\u2019s more cautious and moderately pessimistic.\u201d<\/p>\n<p>Asset managers expect more of the same in 2024 and are taking steps to control costs, including through attrition and the combination of job functions. Connors said he estimated a 5 to 10 per cent decline in year-end asset management incentives in 2023 compared with 2022. <\/p>\n<p>The dour outlook has coincided with a flood of cash into money market funds, mainly in the US, as investors eye returns of 5 per cent or higher for lower risk. Those inflows spiked in the spring when the US regional banking crisis prompted investors to look for safer havens to park their funds.<\/p>\n<p>Asset managers have also been grappling with continued outflows from legacy mutual funds while exchange traded funds \u2014 which trade like stocks and enjoy preferential tax treatment \u2014 have enjoyed rising inflows in recent years. <\/p>\n<p>Schwab, which oversees about $7.8tn in client assets and manages nearly $1tn through its asset management arm, confirmed it was laying off 5 to 6 per cent, or roughly 2,000 people, of its 35,900-strong workforce, \u201clargely in non-client facing areas.<\/p>\n<p>\u201cThese were hard but necessary steps to ensure Schwab remains highly competitive, with industry-leading levels of efficiency, well into the future,\u201d the company said in a statement. <\/p>\n<p>Prudential officials predicted, on a call with analysts last week, a $200mn \u201crestructuring charge\u201d in the fourth quarter while they continue to try to increase the assets under management of PGIM, the insurance company\u2019s $1.3tn asset management business. Bloomberg earlier reported that Prudential would cut about 243 employees, including senior leadership roles.<\/p>\n<p>Invesco, which manages about $1.5tn in assets, previously estimated spending on severance and reorganising costs would be $20mn in the third quarter, only to report $39mn in such costs with another $15mn to $20mn expected in the fourth quarter. It forecast that this would translate into savings earlier than previously expected. <\/p>\n<p>\u201cPart of the increase in the severance and reorganisational expenses in the third quarter is because we did pull forward some of those savings, so we would start to realise the benefits of them in the fourth quarter,\u201d chief financial officer Allison Dukes said on an earnings call last month. <\/p>\n<p>Firms are also looking beyond staffing to control costs. Franklin Templeton, which has embarked on a spate of acquisitions in recent years including a $1bn-plus deal for Putnam Investments, is trying to build a single third-party platform for portfolio management, trading, compliance, cash management and risk management to be used by the entire $1.4tn Franklin group, including its new specialist managers.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/ad93c178-cf15-4f30-a1ec-84ff4f12a9fa\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stay informed with free updates Simply sign up to the Financial services myFT Digest &#8212; delivered directly to your inbox. US asset managers are launching their second wave of job cuts this year, with Charles Schwab, Prudential and Invesco each announcing cost controls amid a flight of customers into safer investments with lower fees. Schwab [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-42431","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>US asset managers launch new round of job cuts as investors seek safety | Innodebt<\/title>\n<meta name=\"description\" content=\"Stay informed with free updatesSimply sign up to the Financial services myFT Digest -- delivered directly to your inbox.US asset managers are launching\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/innodebt.com\/?p=42431\" \/>\n<meta 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