BlackRock, the world’s largest asset manager, will lay off about 600 employees as it seeks to reshuffle its resources in response to technological changes in the financial industry.
“We see our industry changing faster than at any time since the founding of BlackRock,” wrote CEO Larry Fink and President Rob Kapito in an internal memo reviewed by CNN. “As we prepare for 2024 and this very exciting but distinctly different landscape, businesses across the firm have developed plans to reallocate resources.”
New technologies “are poised to transform our industry,” the executives added.
Fink and Kapito also said in their memo that exchange-traded funds, or ETFs, “are becoming ubiquitous as the preferred vehicle for delivering both index and active investment strategies.”
ETFs are often designed to track an index, like the S&P 500, which can be done through automation. That passive approach requires less active decision-making and reduces the need for large teams of analysts.
The New York-based firm says that even with these job cuts, it expects to end the year with more employees. “We expect to have a larger workforce as we continue adding people and building capabilities to support key areas of growth,” according to the memo.
It’s been a tough few years for asset management companies, which were injured by a stock market and bond downturn in 2022 and high interest rates in 2023. BlackRock reported in October that clients had pulled $13 billion from long-term investment funds in the third quarter of 2023. The company’s total assets under management dropped by 3.2% to $9.1 trillion, down from $9.4 trillion the quarter before.
“For the first time in nearly two decades, clients are earning a real return in cash and can wait for more policy and market certainty before re-risking,” said Fink in a statement at the time.
BlackRock also laid off about 2.5% of its workforce, or 500 people, last January.
Shares of the company, which reports fourth-quarter earnings on Friday, were down by about 0.6% in afternoon trading.
