By Lori Pizzani, Mutual Fund Careers Editor and Columnist
August, 2002
Fund Companies Sharpen Their Axes, Ready for More Cuts
The continuing bear market has mauled the employee ranks of many mutual fund and financial services firms, causing several to admit that they quietly have, will have to make, or are carefully considering staff cuts; in some cases, second or third round cuts.
Selective Slicing
In early August, AMVESCAP, the London-based parent of AIM Management of Houston, and INVESCO Funds of Denver, announced it would slash another 115 or so jobs from its payrolls before the end of this year. "Right now there's no game plan for the cuts," said Bill Hensel, an AMVESCAP spokesperson in Atlanta. It is more than likely that jobs will be cut across AMVESCAP and its subsidiary companies, as opposed to any one company feeling the brunt of the cuts, he added.
Two of AMVESCAP's companies have already trimmed the ranks within the past year. Earlier this summer, INVESCO announced it was pink slipping 111 of its staff, about 15% of its workforce, across all of the firm's departments. And in October of last year, 100 employees of Trimark Funds, the Canadian mutual fund unit which AMVESCAP acquired in 2000, were cut when Trimark's operations was merged into AIM of Canada's operations. The Canadian firm, since renamed AIM Funds Management, now employees about 900 people.
AIM's US fund unit in Texas has so far been spared any significant layoffs. "There have been no massive head count cuts," said David Bachert, an AIM spokesman. Moreover, there's no current directive from parent AMVESCAP to cut any jobs, Bachert added.
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Slicing and Dicing Across Fund Units
FleetBank, whose Columbia Management Group fund complex now includes the collective mutual funds of Stein Roe, Wanger Asset Management, Colonial Asset Management, Newport Management, Crabbe Huson Funds, Liberty Funds, Galaxy Funds and Columbia Management's Portland-based funds, will have axed a total of 430 employees by year-end 2002, or roughly 19% of its original 2,300 employees. The cuts have taken place since FleetBank acquired the fund businesses of Liberty Financial in November of 2001.
"Most of those job eliminations have already taken place," confirmed Charles Salmans, a FleetBank spokesperson in New York. Those jobs were primarily in the back office processing areas. FleetBank cut employees where infrastructure overlap existed between Liberty and Fleet, he added. The objective? Achieving economies of scale, he said.
Fifty jobs, which are part of the total 430 layoffs, were being cut at Columbia's Portland office and are concentrated in the fund accounting and fund marketing departments.
But Columbia's revolving door isn't stuck in only one direction. While cuts have been made within redundant back office operational areas, Liberty Fund Distributors, the group's central sales and marketing unit, has been on a hiring binge at the more senior level. "We are taking advantage of the fact that some good people are available in the current market environment," Salmans enthused. In addition, Columbia has been adding to staff in its retirement plan services area, he noted. All told, nearly 200 higher-level employees have been added.
The bottom line is that cutting jobs and achieving efficiencies allowed the Columbia fund complex to invest in recruiting additional talent with an eye toward expanding market share, Salmans summed up.
Prudential Financial Maintains Status Quo...But More Pink Slips on Horizon?
On August 7, Prudential Financial of Newark, NJ announced a major restructuring of its business units and will pare down to three main operating divisions from four. The reconfigured investments division will consist of the businesses of Prudential Securities as well as its asset management products business, which now include the firm's mutual funds.
"No staff cuts are associated with the reorganization," said Bob DeFillippo, a Prudential spokesman. But he reminded that Prudential had already seen its share of staff cuts across the company in an effort to cut costs. Prudential Financial became a public company in December 2001.
While the firm's mutual fund unit wasn't specifically the target of prior employee cuts, DeFillippo said that the firm "almost certainly will make more cuts."
Charles Schwab Chops More Employees
On August 12, The Charles Schwab Corp. of San Francisco announced another round of layoffs as the axe fell for 375 employees. Citing "continued difficult market conditions" Schwab said it would close its client telephone service center in Austin, Texas, displacing 300 of its employees. Another 75 support and administrative positions were being eliminated across four other Schwab telephone call centers in Denver, Indianapolis, Orlando and Phoenix. Schwab is banking on the additional workforce reductions amounting to an $11 million savings. Moreover, Schwab expects the cuts to save another $25 million in facilities charges, and is hoping to sub-lease the Austin call center.
"Losing colleagues who served clients so well is truly disappointing to me personally, and to our entire management team," said Chairman and Co-CEO Charles R. Schwab in a statement. "These are talented individuals who stood by our clients during the historic sea of changes in the market over the past two years."
But that's not the last chapter for Schwab layoffs. The company has noted that over the next 30 to 60 days it will look to slash another $200 million in operating expenses, and expects to axe more employees as part of its cost-cutting initiative.
Despite Staff Cuts, Some Firms Still Selectively HiringFund Accountants are a Hot Commodity
Despite additional layoffs at fund firms, fund accountant spots seem to be multiplying as several fund companies have posted openings for fund bean counters at the major online employment sites.
Delaware Investments of Philadelphia, State Street Corp. of Boston, Legg Mason of Baltimore, and Security Benefit Group of Topeka, Kansas, and ABM AMRO are among the fund firms searching for accountants to crunch numbers for fund portfolios. Dreyfus Corp. of New York City is searching for several fund accountants to join its Uniondale, Long Island fund operations hub.
Fraud Prevention is Front and Center
Federated Investors of Pittsburgh has an interesting opening for a "Fraud Prevention Specialist" in its Rockland, MA. office. The employee will work with internal business units to validate "suspicious activity" and assure that legal requirements were followed to prevent and address fraud, money laundering and foreign control of assets.
While the company did not return a phone call seeking comment, the position appears at least in part to be in response to the soon-to-become mandated "Customer Identification Program" (CIP) which the SEC has proposed and it toying with how to best regulate. In July, the SEC proposed regulations for the CIP, which stems from Congress' passage of the USA PATRIOT Act. The CIP will require investment companies including mutual fund advisers to verify the identity of any person seeking to open a mutual fund account and determine whether the person appears on lists of known or suspected terrorists.
"Customer Care" is in Vogue
What's new in mutual fund customer service jobs? Well, not very much, except the title of the job. At least two companies have banished the "service" nomenclature in favor of a more nurturing title.
Both Federated Investors and Boston Financial, which provides services to mutual fund companies, are looking for individuals to fill "Customer Care" spots. The title change reflects the industry's move away from having call center representatives just answer investors' questions and resolve problems. The new focus is to guide and coddle fund investors.
Boston Financial is seeking a "customer care representative" whose job description is remarkably just like that of a call center service representative in its North Quincy, Mass. office. The firm had not returned a call seeking comment.
And Federated Investors is hunting for a "Director, Customer Care" for its investor services department. The position, a mix between a customer service spot and a marketing job, entails creating and executing customer care strategies, including the development of asset retention and asset gathering programs.
But fund groups have not unilaterally adopted the new holistic job moniker. Both OppenheimerFunds of New York and fund transfer agent PFPC of Wilmington, Del. among others, still have limited openings for the standard customer service reps.
Putnam's Work@Home Picks Up Steam
Putnam Investments of Boston plans to create another 200 off-site jobs in Vermont by the end of 2002 as part of its two-year-old Work@Home Program. The program will allow employees to work from home using state-of-the-art telecommunications technology. Putnam has been running the program in Maine and Vermont (it originally began in Putnam's home state of Massachusetts eleven years ago) through partnership arrangements with selected universities where hired telecommuters can attend local training classes sponsored by Putnam.
As long as long-distance employees have physical access to an ISDN or DSL phone line, Putnam will set them up with a computer workstation, and fax.
Right now, Putnam is hiring for a Work@Home Portfolio Accounting Analyst to handle the daily maintenance of fund portfolios and related client reporting, as well as a Work@Home Client Services Representative. The CSR will respond to phone inquiries that are routed to them, answer account inquiry and marketing questions, and process all types of transactions for Putnam investors.
Job Hunters Should Hone Networking Skills
According to career management firm Bernard Haldane Associates of New York, job hunters shouldn't just rely on traditional job search tactics, and shouldn't wait around for the phone to ring. The best thing to do is to get the connections network humming, said Haldane chairman Jerry Weinger. He suggests job seekers:
--List absolutely everyone they know; from family, friends and neighbors to business colleagues, social acquaintances, and members of organizations they belong to.
--Seek additional contacts in their field of work by searching news articles, archives, web sites.
--Write to every contact. But don't ask for a job. Rather, ask their advice about the industry or the resume they've attached, and ask if they know of anyone seeking qualified individuals.
--Make follow-up calls to set up meetings.
Gotten an Offer? CONGRATULATIONS! Here's What to Do Next...
"Job seekers should research a corporation's reputation before accepting an offer," said Tony Lee, editor in chief of CareerJournal.com. "Working for a company with a damaged reputation can impede future job prospects." It can also imperil your expected tenure, retirement savings and self-esteem.
(Okay, so maybe that job at Enron wasn't such a good idea after all.)
Despite the tough job environment, job seekers should take the time to research the ethics program of potential employers long before accepting an offer, said Lee.
Here's what to ask a prospective employer:
1) Does the company have a formal code of ethics?
2) Do employees have formal channels to confidentially express concerns?
3) Is integrity emphasized, and ethical decision making taught?
4) Is misconduct disciplined swiftly and appropriately?
Job Security Among Employees Slumps
Job security has slipped further among employees polled, according to the Employee Outlook Index, a monthly index that measures employee confidence and is a key indicator as to the future direction and well being of the U.S. economy.
In July the index slipped five points to 61(from a baseline of 71 when the index was launched in April 2002) reflecting a drop in job security and indicating that employees are uncertain about the future. Moreover, overall confidence in senior management declined in July, with less than half of employees saying that the people who run the company they work for are honest and ethical.
The Employee Outlook Index randomly surveyed 660 individuals by phone, and is a joint venture between The Gallup Organization and global financial services company UBS (parent to UBS Paine Webber.)
Fraud at Work: NIMBY
A new poll has found that one in five American workers are personally aware of fraud in their workplace, and 80% would be willing to turn in a coworker committing a fraudulent act. It also found that 43% actually have! (Women were more likely than men to report fraud.)
The survey, conducted by Ipsos Reid on behalf of professional services organization Ernst & Young, found that employers lose 20 cents of every dollar earned to some type of company fraud. Top fraudulent acts witnessed include:
1) Theft of office items.
2) Claiming extra hours worked.
3) Inflating expense accounts.
4) Taking kickbacks from suppliers.
Merit Promotions? Think Again
A nationwide survey of 1,100 employees found that fewer than half believe that merit is the number one factor in job advancement. The poll, conducted by consulting firm J. Howard & Associates of Boston, found that while employees over age 65 are the most likely to still believe in merit promotions, younger employees have lost faith in workplace meritocracy. Other factors in promotions cited include seniority, personal connections and luck.
"For years it was a matter of faith that merit will be rewarded," said Mike Hyter, President and CEO of J. Howard. "But trust in the meritocracy is losing ground. More people now regard merit promotion as a myth, or at least secondary to who-you-know or how long you've been around."
Buck Survey Shows Good News...and Bad
A new study of corporate retention and severance practices conducted by Buck Consultants of New York, a subsidiary of Mellon Financial Corp., shows that the rate downsizing is slowly declining. That's the good news. The bad news? Companies are getting stingier.
The number of companies offering employment agreements that guarantee severance pay to executives has not only dropped sharply from last year, but those offered severance terms are finding them much less generous.
In addition, up front severance agreements are becoming scarce. According to the survey, last year 62% of companies said that they offered executives employment agreements that spelled out separation benefits. This year, that number is down -- sharply -- to only 46%.
Fidelity and Monster.com Say Employees are Job Confident,and Dollar Cautious
A survey jointly sponsored by Fidelity Investments of Boston and online career site Monster.com of Maynard, Mass. found that four out of five imminent job changers believed they would find a job opportunity within six months. Moreover, 80% of these ready-to-switch individuals haven't made a withdrawal from their retirement savings within the past year, and don't have plans to tap into retirement savings.
"With today's economic pressures, it's tempting for job changers to take an early distribution from their retirement savings during a transition, but those who cash out risk losing nearly half of their hard-earned dollars to taxes and penalties," said Tracy Esherick, executive vice president at Fidelity.
