Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
BlackRock plans to lay off 600 people, or 3 per cent of its staff, to reallocate resources to faster-growing areas within the $9.1tn money manager including technology, exchange traded funds and private markets.
Chief executive Larry Fink and president Rob Kapito told employees in an all-staff memo on Tuesday that the company was adapting to a “rapidly changing environment” but that its total headcount would continue to grow from the current level of about 20,000.
“By the end of 2024, we expect to have a larger workforce as we continue adding people and building capabilities to support key areas of growth,” they wrote. “We need to be agile and efficient in how we serve our clients and how we manage our resources. We must leverage technology, and we must redeploy people and resources where the client needs are greatest and the opportunities for growth the most promising.”
The entire asset management industry faces pressure to maintain profit margins but needs to invest in technology and new offerings. Much new investor money is flowing into low-cost passive funds or alternative investments, which carry higher fees but also require firms to build new expertise.
Charles Schwab, Invesco and Manulife are among the money managers that have announced job cuts and restructurings in recent months.
“The industry continues to have a revenue problem and the cost structures are not aligned with the current growth outlook,” Jefferies analyst Daniel Fannon wrote this week in a note about the sector.
BlackRock, the world’s largest money manager, cut a similar number of jobs this time last year after volatile markets drove down assets under management in 2022. This year’s cuts are not focused in any particular business segment or team, people familiar with the plans said.
The firm’s assets have begun rising again, but it has come under sustained political fire from both the left and right over its use of environmental, social and governance factors in investing. Republicans decry what they call “woke capitalism”, while Democrats say BlackRock should do more to address climate change and social issues.
Fink has said he is hunting for “transformational deals” that could expand BlackRock’s geographic footprint, help grow its Aladdin technology platform or boost its offerings in alternative investments.
BlackRock is due to announce fourth-quarter earnings on Friday.
