Find out how BCG transformed a major asset manager while rapidly reducing operating expenses by 20 percent.
Asset Manager is a global firm providing asset-management and ancillary services to retail and institutional investors in all major markets—United States, Canada, United Kingdom, Continental Europe, Japan, and Australia. Its clients are independent financial advisors, corporations, pension plans, retail banks, and insurance companies.
In the current economic crisis, the client's assets under management are down 30-40 percent. Additionally, investors are withdrawing money from traditional funds and moving into less risky, lower-priced funds, further depressing top-line revenue. Asset Manager has a decentralized, geographically oriented operating model and organizational structure built up from years of undisciplined growth.
The overall project goal was to reduce operating expenses by 20 percent and head count by 25 percent. To achieve a cost reduction of this magnitude, BCG needed to transform the operating model to build scale—centralizing operations, technology, and support staff functions globally. Additionally, the project would explore exiting underperforming markets and businesses.
The project team assessed cost-reduction opportunities across the client's entire value chain: sales and client service, investment management, operations and technology, and support staff functions.
Major areas of assessment included
sales force effectiveness and productivity (coverage models, win rates, return on marketing investment)
client-service account loading and support-staff levels
client and product profitability, including assessing unprofitable products
investment management productivity relative to external benchmarks
operations and technology processes, comparing them with best practices
corporate-function staffing levels relative to benchmarks
management layers and spans of control across the organization
external vendor spend across key categories
The team worked in conjunction with a client team to identify and size potential opportunities. We used a highly interactive and collaborative process to drive decision making and gain buy-in to cost-reduction opportunities.
This project redefined the roles of business units and the corporate center. Businesses changed from fully integrated operating units to units focused just on sales and client service. We established a global operations and technology function to house all operations and technology activities. This function was organized globally, while maintaining regional hubs to respond to local needs. BCG also helped establish shared-service functions across support functions such as finance, human resources (HR), legal, compliance, and procurement.
Within the newly established global operations/technology and staff functions, we introduced streamlined processes to improve consistency, eliminated duplicate activities, and consolidated certain functions into global centers of excellence.
Throughout the organization, we identified additional cost-reduction opportunities by optimizing client-service account loading, eliminating low-margin or unprofitable products, reducing administrative support, rationalizing and zero-baselining IT projects, optimizing marketing spend, and delayering the management structure.
We achieved the target of 25 percent full-time equivalent (FTE) staff reduction and 20 percent cost reduction. The BCG team also developed and helped implement a plan to achieve 75 percent of the targeted FTE reductions on Day One—including developing HR and communication processes to coordinate reductions globally and develop business-continuity plans for the new organization.
Additionally, we developed a plan to reduce the product portfolio by 33 percent, with a 6- to 12-month implementation plan to close out funds and migrate customers to surviving fund products.
We also established a new organization structure, reporting relationships, and roles, including a supporting process to populate the structure.