Abrdn is to make £120mn of cuts to the asset management division of the company, as part of a cost reduction programme which will result in job losses.
In a trading update, published on the stock exchange this morning (January 24), Abrdn announced plans to cut costs by £150mn overall, with 80 per cent, or £120mn, of those cuts designed to "benefit" the investments division, which includes the asset management arm.
The personal division, which includes the advice business formerly known as 1825 and now branded as Abrdn Financial Planning, was described in the statement as “contributing strongly” to group profitability in the final half of 2023.
The division had total assets under administration of £66bn, and net inflows in the six month period to 31 December 2023 of £1.1bn.
However, the statement said the bulk of the growth is from the Interactive Investor business, a direct to consumer platform.
The £150mn of cost cuts will involve cutting 500 jobs, including what the company called removing layers of management and outsourcing more technology, while also “reducing overheads in group functions and support services", and because Investments is the biggest department, it will incur the biggest savings, with the expectagtion that margins rise.
The £150mn of cost cuts are in addition to the £75mn of cost cuts in 2023, which chief executive Stephen Bird said had been achieved.
On the asset management side, Abrdn has closed or merged more than 100 funds in recent times, including the once flagship GARS strategy and a number of investment trusts.
The adviser business segment, which is comprised of the Wrap and Elevate platforms, as well as any funds that advisers can buy for their clients, saw an increase in assets under management of 2 per cent, reaching a total of £73bn.
The investment business has total assets under management of £366.7bn, which is broadly the same as in the previous quarter.
The issue is that while the amount of money being managed is broadly the same, profits are falling, with the company highlighting that some of the more profitable asset management products it runs had outflows, while the less profitable products did not.
This meant overall profit margin within the asset management business fell from 24.6 basis points to 22.4 basis points.
david.thorpe@ft.com
