Schroders announces major cost cutting plan to save £150 million per year

Schroders, the London-based asset management company, has unveiled a significant cost-cutting initiative aimed at saving £150 million annually as part of a three-year transformation plan. The newly appointed chief executive, Richard Oldfield, stated that the measures were necessary to streamline operations and improve efficiency.

The company has already reduced its workforce by approximately 200 employees over the past two months and anticipates further reductions by the year’s end. While it was suggested that up to 500 roles could be affected, Oldfield refrained from providing specific numbers, instead emphasising that the adjustments were focused on eliminating duplication, simplifying processes, and investing in labour-saving technology.

A key aspect of the plan has been restructuring leadership within the organisation. The group management committee was downsized, from 23 members to just nine. Senior figures who left have been replaced by an extended leadership group of 50, which the company believes will boost efficiency. These initial changes have already delivered annualised savings of £20 million, with aims to double that by the conclusion of this year.

While streamlining operations, Oldfield affirmed the strategic commitment to growth, specifically targeting a £20 billion increase in assets for its Schroders Capital private markets business over the next three years. Currently managing £70.1 billion, this division enjoys strong momentum, having secured £6.3 billion in client commitments last year.

The announcement of the restructuring was well-received by the market. Following the news, Schroders’ share price jumped by 12.6 per cent, closing at 428¼p. However, the company remains under pressure, as it attempts to combat wider struggles faced by active fund managers. Over the past three years, shares have declined by a third amidst a growing trend towards passive investment strategies.

Despite these challenges, Oldfield expressed confidence in the future of active fund management, noting the flexibility it offers over passive approaches. By trimming exposure to heavily concentrated market leaders, such as the dominant US technology firms, Schroders seeks to diversify client investments and enhance returns.

In the broader financial landscape, Oldfield voiced support for decreasing the annual cash ISA limit from £20,000, a move potentially under consideration by the Treasury. He argued that such a change could encourage more investors to redirect their savings towards UK shares, delivering better long-term returns while fuelling growth within the domestic market.

Schroders also reported mixed financial results for the year. While assets under management rose to £779 billion, operating profit declined from £661 million to £640.5 million, and the company experienced net outflows of £10.8 billion. Despite this, recent gross client wins totalling £17.5 billion, including a sustainable equities mandate worth £5.2 billion, contributed to a cautiously optimistic outlook for the year ahead.