BlackRock trims 3% of its worldwide workforce, attributing the reduction to shifts in the industry.
BlackRock, the largest global asset manager, is set to reduce its workforce by approximately 600 employees in response to the rapid technological transformations occurring in the financial industry. CEO Larry Fink and President Rob Kapito conveyed this information in an internal memo, highlighting the industry’s unprecedented pace of change.
In the memo reviewed by CNN, Fink and Kapito pointed out that the financial landscape is evolving significantly, with emerging technologies poised to reshape the sector. They emphasized the growing prevalence of exchange-traded funds (ETFs) as the preferred vehicle for delivering both index and active investment strategies. ETFs, designed to track indices such as the S&P 500, often utilize automation, reducing the need for extensive analyst teams due to their passive approach.
Despite the forthcoming job cuts, BlackRock anticipates a net increase in its workforce by the end of the year. The company is focused on realigning resources to adapt to the evolving industry landscape. The memo expressed the firm’s commitment to expanding capabilities and adding personnel to support key areas of growth.
The asset management giant has faced challenges in recent years, including setbacks caused by a downturn in the stock market and bonds in 2022, coupled with high interest rates in 2023. In October, BlackRock reported a $13 billion withdrawal from long-term investment funds in the third quarter of 2023. This led to a 3.2% decline in total assets under management, falling from $9.4 trillion to $9.1 trillion.
CEO Larry Fink acknowledged the challenging environment, noting that clients were earning a real return in cash for the first time in nearly two decades, allowing them to await more policy and market certainty before taking on additional risks. This marks the second round of layoffs for BlackRock, following a reduction of 500 employees, or 2.5% of its workforce, in January of the previous year.
As the company prepares to release its fourth-quarter earnings, BlackRock’s shares experienced a modest decline of approximately 0.6% in afternoon trading.
