More on Fidelity's Job Cuts
Fidelity Investments' recent announcement of 4,000 job cuts between now and early 2009 puts an exclamation point on the Boston job market's vulnerability to ongoing turmoil in financial markets.
Boston-based Fidelity employs more than 11,000 people in Massachusetts and more than 7,000 in New Hampshire and Rhode Island.
The retrenchment wasn't a surprise. Fidelity has struggled with poor returns on its funds plus declining assets under management, which has depressed fee income. As of Sept. 30, assets under management exceeded $3 trillion but were down 13 percent from the start of the year, according to Bloomberg News. Several of Fidelity's biggest funds, including Magellan Fund and Fidelity Contrafund, are down more than 30 percent.
Other asset management companies face similar headwinds. Legg Mason and Janus, two rivals of Fidelity, recently announced job cuts, and more are expected.
"There's no surprise to hear about cuts from any organization because every single organization is considering them," says Henry "Hank" Hidgon, managing partner of HidgonPartnersLLC, a New York-based recruiting firm that specializes in the asset management industry. "Assets are down, revenues are down. Margins are down."
Putnam is Hiring to Upgrade Investment Team
Even companies that are hiring - such as Boston-based Putnam Investments - are keeping a close eye on the bottom line. Robert Reynolds, the recently named Putnam CEO, plans to hire 10 to 15 more analysts and three to five fund managers. Hidgon cautions against reading too much into Putnam's hiring plans, which are designed to improve fund performance.
"Bob Reynolds is cleaning house," Hidgon says. "He has got to get the best people interested in Putnam.... They are cutting costs overall."
Late last week, Fidelity spokesman Vincent Loporchio told eFinancialCareers News the company had not yet notified employees who would be laid off. "While this wasn't an across-the-board directive, most (but not all) of our division leaders have made a decision to implement some layoffs," he said.
For job seekers in Boston, this is more bad news. More people want to work for buy-side firms like Fidelity because they are seen as more stable employers than large investment banks. People who either grew up or went to school in the area also are increasingly applying for jobs there.
One recruiter who's had assignments from Fidelity says he hasn't received many resumes from staffers there lately, although he is "pretty much inundated" with resumes from candidates who work elsewhere.