State Street Corp. and Wellington Management have recently announced job cuts, adding to the increasingly gloomy holiday season in Boston's Financial District.
State Street, the world's largest custodian of assets, said Dec. 3 it would cut between 1,600 and 1,800 positions between now and the first quarter. On that same day, closely held Wellington Management announced plans to cut 10 percent of its 2,100-person staff, according to the Boston Globe.
These cuts come on the heels of 3,000 jobs cut at Fidelity Investments, and reductions at other firms, including MFS Investment Management, which last month announced plans to cut 5 percent of its workforce. More losses may be in store: Observers expect the economy to worsen, especially if the real estate market doesn't stabilize. For Boston-area job seekers, there's the additional competition from people looking to relocate to the area from Wall Street.
For years, Boston has attracted job seekers, lured by its financial firms, universities and high-tech industries. According to the Boston Foundation, one in three Bostonians is between the ages of 20 and 34 and almost one-third of residents are foreign born.
Stock Decline Hits Asset Management Fees
Although workers in the area have been on an economic roller coaster for years, according to the non-profit organization, New England's economy has until recently been stronger than the U.S. as a whole. Unemployment there was 5.9 percent in October, according to the Bureau of Labor Statistics. The rate in Massachusetts was 5.5 percent, below the national average of 6.5 percent.
Money management firms in the Boston area have been hurt by declines in the stock market, which have dried up fees both by depressing portfolio values and prompting investors to withdraw money. During the third quarter, fees generated by State Street's asset management subsidiary, State Street Global Advisors, fell 13 percent from a year earlier to $261 million. Total assets under management were $1.686 trillion as of Sept. 30, down 16 percent from a year ago.
Shares of the venerable Boston-based company are down almost 50 percent this year. The company also is receiving a $2 billion investment from the government's Troubled Asset Relief Program. Ironically, the job cuts come about a month after State Street was named one of the best places to work in Massachusetts.
Like those of every financial services company, State Street's executives said the cuts were necessary. Two-thirds are coming from North America with the remainder coming from Europe and the Asia-Pacific Region.
The company expects to record total pre-tax charges of approximately $325 million to $350 million for the job cuts. The action is expected to generate approximately $375 million to $400 million in annualized savings.