Abrdn saw outflows of £15.3bn in its investments business as it committed to losing 500 jobs as part of a cost-cutting exercise.
According to the company's annual results, published today (February 27), the outflows in its investment business were equivalent to more than 4 per cent of its opening assets under management, with net outflows across the whole business having hit £13.9bn.
Profits dropped 5 per cent in 2023, from £263mn to £249mn.
The firm also saw outflows of £2.1bn in its adviser platform in 2023, which it blamed on a technology upgrade.
The annual results said these outflows were offset by positive flows in its direct to consumer platform, Interactive Investor.
Stephen Bird, Abrdn CEO, said: "The investment industry faced further structural and macroeconomic challenges during 2023 with a 'higher for longer' rate environment across developed economies adding sustained pressure on most asset classes."
The results showed that in 2023 Abrdn reduced expenses by £102mn, over the £75mn target it had set.
Abrdn’s transformation programme aims to see an annualised cost reduction of at least £150mn by the end of 2025 and these savings would bring the investments business back to profitability.
This will result in around 500 roles being cut.
Total implementation costs are expected to be around £150mn and the firm expects group operating expenses to be £60mn lower in 2024.
Bird added: "Our balance sheet remains strong which enables us to fund our cost transformation while continuing to strategically invest in growth areas and maintain our dividend.
“There is significant work ahead, but we are confident we will be successful in delivering future growth."
Looking forward, the firm expects cost growth in Interactive Investor and its adviser business of up to 5 per cent over the next two years.
While market conditions are expected to remain challenging for active asset managers, the firm's view is that the wider market will switch from active equity and fixed income strategies to passive quantitative strategies this year.
tara.o'connor@ft.com
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