The new reality facing asset managers: perform or move on

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Asset managers haven’t been spared from redundancies recently, of course, but firms have been more reluctant than banks to pare back headcount. However, with an embarrassment of riches currently on the job market, the prospect of being ‘upgraded’ has never been higher.

A recent example is at BlackRock. After an (admittedly dismal) 89% drop in equity advisory fees, its chief executive Larry Fink said that new portfolio managers had been hired, and would be hired, to turn it around. The implication being that those responsible for underperformance would be out on their ear.

Obviously, fund performance has always been a factor in assessing a portfolio manager’s employability, but (even amid slumping markets) asset managers have become more likely to show the door to those not making the grade.

“There’s so much talent available currently and asset managers are looking to extract maximum value from their employees,” says Martin Lorigan, head of the asset management practice at Principal Search. “If portfolio managers are not performing, they’re being encouraged to move on, but this is also the case in distribution roles.”

One of the selling points of a career in asset management has been the longevity and relative stability it offers; high turnover of portfolio managers generally produces inconsistent returns. At the extreme end, the average tenure of heads of investment desks at Baillie Gifford is nearly 22 years.

However, a number of firms are going through more fundamental restructuring, which is adding to the lack of job security. Scottish Widows Investment Partnership, for instance, cut 23 investment roles (from a team of 38) as it moved away from active investment strategies. Peter Cockburn, head of UK equities, left the firm after nine years.

“A lot of fund managers are moving away from active management in equities and instead moving to a passive strategy,” adds Chris Sevenoaks, who runs the asset management division at recruiters the Emerald Group. “This means often it’s not just poor performers being asked to leave companies, but those who fell victim to a change of approach.”

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