Abrdn confirms 500 jobs to be cut as part of £150m saving plan
Abrdn is set to cut 500 jobs as part of a new £150m profit saving programme, as the firm suffered £12.4bn in outflows in the second half of last year, it revealed in a trading statement today.
In a media call this morning, CEO Stephen Bird said the firm was focused on “getting our investment business to sit alongside our advisory business as earning an acceptable level of profit” through the job cuts, despite making £75m of cuts in it last year.
New CFO Jason Windsor said the cuts were meant to “streamline” the business by reducing largely operational and support staff, and emphasised that the “lion’s share” of the cost-saving measures would be coming from areas other than reduced staffing costs.
Assets under management and administration for the firm dropped from £495.7bn at the midpoint of last year to £494.9bn at the end of it, while outflows more than doubled.
Outflows came from almost every sector of the business, with only the firm’s adviser platform interactive investor and personal finance arms seeing investors put their money in.
Following the announcement, Abrdn’s share price has fallen 3.7%, and is down 20.5% over the last year.
Bird emphasised that Abrdn was focusing on a “diversity of revenue streams” and rebuffed reports that he had been considering ditching the firm’s investment business altogether, instead claiming that the cost-saving measures were “a clear path to restoring the profitability of it”.
The firm said the cost-cutting programme was expected to take place primarily in 2024, with £60m of savings this year, and would be completed by the end of next year.
Bird also said that the job cuts were necessary as a response to “technological progress” as it was “incumbent on us to adjust the business to new forms of investing”.
The CEO added: “Market conditions have remained challenging for our mix of business, and this is reflected in our year-end AUMA, flow numbers, and margins.
“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.”
“Although our business model benefits from the diversification that comes from operating three businesses, we will not rest until all of them are contributing strongly to group profitability, as Adviser and interactive investor have done in 2023,” Bird continued.