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(Sharecast News) - Asset manager Abrdn announced it is cutting 500 roles across the group as part of a new cost-cutting initiative to save £150m by the end of 2025, as it reported net outflows of over £12m in the second half.
The new transformation programme is "designed to restore our core Investments business to an acceptable level of profitability and allow for incremental reinvestment into growth areas".
The Investments division continues to struggle amid high inflation and geopolitical uncertainty, which has "continued the trend to cash and de-risking of client portfolios", Abrdn explained. Revenue margins in Investments have also fallen due to outflows in higher margin asset classes.
Some 80% of the savings will benefit the Investments business, and includes the removal of management layers, increasing spans of control, further efficiency in outsourcing and technology areas, and reducing overheads in group functions and support services. The company said the bulk of the savings will be in "non-staff costs" but said it would cut headcount by "approximately 500".
Assets under management and administration (AUMA) totalled £494.9bn at the end of 2023, more or less in line with the level reported at the half-year stage. However, net outflows totalled £12.4bn, representing 3% of opening AUMA, on the back of outflows in the Investments and Adviser divisions.
"Market conditions have remained challenging for our mix of business, and this is reflected in our year-end AUMA, flow numbers, and margins," said chief executive Stephen Bird.
"The new transformation programme announced today, when completed, will deliver a step change in our cost to income ratio. We exceeded our £75m cost reduction target for 2023 for Investments, but we recognise more needs to be done. After a root and branch review, we are now re-engineering and simplifying our business model to remove at least £150m of costs - mostly from group functions and support services."
