Abrdn confirms 500 jobs to go in cost-cutting ‘transformation’

24/01/2024

EMBATTLED fund management giant abrdn has announced plans to cut 500 jobs.

The firm – which was created out of the mega-merger of Aberdeen Asset Management and Standard Life in 2017 – has this morning confirmed plans to save £150million a year.

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Around 10% of its workforce will go as it seeks to save money by removing layers of management to “increase spans of control” for employees. 

The company employs 5,000 people around the globe, including at its office in Aberdeen. 

The programme also includes further efficiency in outsourcing and technology areas, as well as reducing overheads in group functions and support services. 

It is expected that most of the jobs that will go are in London and Edinburgh, although it is understood that some group functions and support services are hosted in Aberdeen.

Stephen Bird, CEO abrdn plc, said: “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.

“The new transformation programme announced today, when completed, will deliver a step change in our cost to income ratio. We exceeded our £75million 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 £150million of costs – mostly from group functions and support services. The programme will largely be implemented in 2024, completing in 2025. These changes will allow us to continue our focus on building a growth business.”

The redundancies follow outflows of £12.5billion for the Investments arm of the business during H2 last year, with assets under management and advice standing at £366.7billion. 

The firm also suffered £6.5billion of outflows from the same business sector in H1. Elsewhere, the institutional and retail wealth part of abrdn suffered outflows of £11.2billion in H2, and £6.7billion in H1, with assets now standing at £211.2billion.

Abrdn has been hampered by lacklustre performance for some time, having been relegated from the FTSE 100 to the FTSE 250 index twice in 2023. In its H1 2023 results published in August last year, profits for abrdn’s investment arm fell by 66% and fund flows plummeted 83% year-on-year.

Credit ratings issuer Moody’s downgraded Abrdn’s long-term issuer rating from Baa1 to A3 due to “idiosyncratic weaknesses in its profile” as well as “industry-wide headwinds.

Aberdeen roots

The business was founded in 1983 as Aberdeen Asset Management in the Granite City by Martin Gilbert, George Scott and Ronnie Scott Brown.

The trio formed the company to take over the investment business of a local Aberdeen law firm Brander & Cruickshank where they all worked. The aim was to provide fund management and secretarial services to an investment trust and to a small number of institutions and private clients.

At launch in 1983, Aberdeen AM consisted of the partners and some administrative support. It had assets under management (AUM) of £70million and in its first year reported a profit of £87million.

In 2016, the year before its merger with Standard Life, Aberdeen’s AUM was £312billion and its profit was £353million.

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