Franklin Templeton plans to cut around 8% of its combined workforce after its acquisition of Legg Mason closes at the end of the month.
The cuts will not affect investment managers. In it’s earning statement for the three months to June 30, the firm wrote:
‘It is important to note that these synergies are limited to holding company functions and centralized distribution and do not involve any Franklin Templeton investment teams or the specialist investment managers that were part of Legg Mason (including distribution).‘We are specifically removing overlapping, duplicative areas rapidly while protecting core business activities and thoroughly analyzing areas where more detailed knowledge transfer and longer transitions are prudent.’
At the end of September 2019, Franklin Resources had 9,597 employees worldwide of which around 600 were investment professionals, according to its annual report. At the end of March this year, Legg Mason had 3,059 employees, according to its annual report. Of these around 1,000 were corporate employees, as of May 2019. Using the latter figure for Legg Mason and the 9,000 non-investment management employees at Franklin, an 8% reduction of the combined corporate workforce would result in around 800 jobs being cut.
The two firms announced the deal to merge in February, under the terms of which Franklin will purchase Legg Mason, which owns nine investment firms in its multi-affiliate model, for $4.5bn.
By the numbers
Both Legg Mason and Franklin have grappled with outflows amid market volatility that struck in the months after the two firms announced the deal.
Franklin had assets under management for the most recent quarter of $623bn, with total net outflows of $11.3bn.
In the previous quarter, Franklin Templeton had assets under management of $580bn and outflows of $25.4bn.
The firm attributed improved flows in the three months to June 30 to money going into US equity and fixed income strategies, with eight of Franklin’s 20 largest funds generating positive net flows year-to-date.
The earnings report said:
‘While several large strategies produced strong flows this year through June, many funds that have strong performance are not yet significant flow drivers for our firm. Nevertheless, net outflows improved for the fourth consecutive month, excluding March, and flows also improved fiscal year-to-date in 13 different sales regions globally compared to the prior fiscal year-to-date period.’
Legg Mason ended its second quarter of 2020 with assets under management of $783.4bn and net outflows of $4.6bn.
Its assets were up from the previous quarter, which the firm ended with $730.8bn in assets.
Joseph A. Sullivan, chairman and chief executive of Legg Mason, said in a statement:
‘Legg Mason’s quarterly results were negatively impacted by the significant market volatility and related redemption activity primarily related to the Covid-19 pandemic.‘As the merger with Franklin Templeton is set to close in four days, this will be Legg Mason’s final quarterly earnings announcement as a public company. I am extremely proud of all current and legacy Legg Mason and affiliate employees and their contributions to the benefit of our clients, shareholders, employees and our communities over the course of our history and I wish the combined Franklin Templeton team much success in the future.’