abrdn has announced that it expects to cut around 500 jobs as part of a savings programme, which aims to save at least £150m by the end of 2025.

The investment firm, which is based in Edinburgh, saw its revenue fall by 4% year-on-year, reaching £1.39bn in 2023.

Operating profit also fell by 5% in the same period, from £263m in 2022 to £249m.

As part of the group’s action to build and grow profitability, it expects to reduce the employee size by 500, with implementation expected to take place primarily in 2024, and completed by the end of 2025.

The scheme is designed to restore its core investment business to an "acceptable level of profitability".

Chief executive officer at abrdn, Stephen Bird, said: "Over the past three years we have reshaped the business to fit the modern investment landscape. We now have content and distribution aligned to the products and services clients need, and we are better positioned for future growth.

"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 diversity of our group supported financial results in 2023. ii and Adviser are delivering, and we are scaling up these market-leading platforms to benefit from the long-term structural growth in UK savings and wealth. We are taking action to rebuild and grow profit in our investments business. We have sharpened our focus on improving investment performance, streamlined our fund range, reduced costs by £102m in 2023, exceeding our £75m target, and we announced a new cost saving programme of at least £150m on the 24th January."

Despite the price of shares increasing following the announcement of the cost cutting exercise, analysts have reported that there may be some scepticism around the savings programme, after Bird was handed an £800,000 bonus in 2023.

City A.M. reported that his total pay reached £1.1m in 2023, with the board approving 36% of the maximum for his bonus, with 26.5% of which was due to “non-financial metrics”, including stakeholder engagement and ESG.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, added: "High inflation and worries about economic growth have been challenging for the asset management sector, and abrdn has embarked on a deep cost-cutting plan to revive its performance. It sold off its US and European private equity arms but has been trying to keep revenue moving in the right direction through the acquisition of Interactive Investor.

"This should provide a relatively stable source of assets for the group, given its one of the UK's biggest direct-to-consumer investment platforms, albeit in a highly competitive market. There is likely to be significant disgruntlement emanating from reports that the deteriorating performance hasn’t stopped the board awarding chief executive Stephen Bird an £800,000 bonus, particularly given the scale of the job cuts announced."

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