AllianceBernstein Plans To Shift New York Staff -- WSJ
October 12 2017 - 3:02AM
Dow Jones News
By Sarah Krouse
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 12, 2017).
AllianceBernstein Holding LP is in talks to shift some staff out
of New York in the latest example of money managers trying to cut
expenses as investors plow money into index-tracking funds with
lower fees.
The plans, unlikely to be completed until late 2018, are part of
a broad cost-cutting effort at the money manager as its parent
insurer AXA SA prepares an initial public offering of a combined
U.S. life insurance and asset management firm, according to people
familiar with the matter. AllianceBernstein is considering moving
staff to locations including Charlotte, N.C., where AXA is
expanding its footprint, and San Antonio, where AllianceBernstein
already has an office.
No final decisions have been made and the firm may ultimately
decide to keep its staff in New York, the people said. The firm's
chief executive told staff in a town hall meeting last week that it
was considering a number of options for its real estate footprint,
including moving some staff out of state, one of the people
said.
AllianceBernstein has 3,438 employees globally, according to its
annual report, with most based in New York, London and Hong Kong.
It has been working to downsize its global office footprint since
2010.
At the end of last year, it occupied about 40% of the 992,043
square feet of space at its New York headquarters under a lease
that runs through 2024, and sublet the balance. It also rented
space in two other New York City locations and in White Plains,
N.Y., according to the annual report.
Money managers are trying to trim costs amid unprecedented
changes in the economics of their industry as investors shift money
out of active funds managed by stock pickers and into passive index
and exchange-traded funds. Many investors have lost faith in
so-called active managers' ability to pick winners and have opted
to instead pay less to match the performance of an index.
Those funds have gained even more momentum in recent months as
stock markets have reached new highs.
Meanwhile, wealth advisers are increasingly offering fee-based
portfolios to clients that are filled with lower-cost funds, a
trend accelerated by new retirement industry regulations. Those
rules have also caused big brokerage firms to cull the number of
funds on offer.
As a result, many traditional asset managers have struggled to
retain assets and have been forced to reconsider their fee
structures, to pursue mergers and acquisitions or to diversify
their businesses and revamp their strategies.
AllianceBernstein has to date experimented with most of those
moves.
Formed in 2000 when a mutual-fund firm and research outfit
merged, the firm is home to stock and bond pickers as well as a
private wealth management business and a research arm. It suffered
during the 2008 financial crisis, when bad bets on financial firms
battered its investment performance and led to the ouster of Chief
Executive Lewis Sanders.
Earlier this year AXA removed another AllianceBernstein leader,
Peter Kraus, who became the firm's chief executive in late 2008 and
had worked to reposition it.
During his tenure AllianceBernstein became less dependent on its
stock pickers, cut some fees, launched new funds with
performance-linked fees, and pushed into more complex, higher-fee
strategies such as hedge funds.
This spring, however, AXA ousted Mr. Kraus and removed nine of
AllianceBernstein's 11 directors. It appointed Seth Bernstein, a
former J.P. Morgan Chase & Co. executive as its new CEO.
Days later it unveiled plans to take its large U.S.
life-insurance operations public and sell shares in a combined life
insurance and asset management firm that would also be home to
AllianceBernstein.
AXA is growing its footprint in Charlotte. It said in May that
it would almost double its head count there over the next five
years and invest $18 million in an expansion of its presence. In
return, it is eligible for up to $11.8 million through a state
economic development grant program.
Charlotte, home to big banks including Wells Fargo & Co. and
Bank of America Corp., has emerged as a finance hub in part due to
its office space costing less than in such cities as New York and
San Francisco.
Write to Sarah Krouse at sarah.krouse@wsj.com
(END) Dow Jones Newswires
October 12, 2017 02:47 ET (06:47 GMT)
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