Thread regarding T. Rowe Price Group Inc. layoffs

@1e1 leaving or “leaving”?

@1y8 not like anyone is launching any innovative product. When was the last time they actually had an original idea? Probably 20 years ago

Based on what I’ve heard from people inside, the latest global Head of Product was number ten in ten years. At some point, that’s not bad luck—it’s institutional dysfunction. They keep dreaming up products that are nearly impossible to implement, fail to generate any meaningful sales, and then wonder why the product heads keep leaving. They either realize they’re out of their depth or decide the place is a lost cause.

@1e1 I wonder how much was her fault and how much was down to the local product teams scattered through the world?

@1h1 are you in IT? Try googling. Hint they’re not talking about a head of IT product. The business is an investment business. This is what this whole thread is about.

Who dat?

And now our head of Global Product is leaving after being in the role for only two years. People reading the writing on the wall in all parts of the firm.

@10d lol. The irony eh? Arguably not a leader any more.

@jx a leader in Growth Equities is now a deep Value stock. Sad

There are AI products now they can use to improve their decisions, but instead they wait for whatever they hope to cook up in their "AI Lab". While they futz around and dream of building a humanoid, other firms are actively using AI to innovate. I am sure whoever is cooking up these products that do not sell are making a lot of money and will get a nice bonus well into five figures, The original mission of this company was never to be an "AI company". If Accenture is working on it with them it is bound to be trash.

@hx yes and a place that has benefited hugely from style tailwinds while passing it off as investing talent until it doesn’t

The firm has had one great idea in last 50 years. That was Target Date Funds. Other wise it is just a second-third tier place.

@ee you raise some very valid points. Big issue as I see it though is that execution is lacking. Division heads will all say there’s a strategy. Debatable if there is a strong strategy. However it’s the execution that has had C- written on many a paper at this company.

@ee they tried acquisition with OHA. Hasn’t worked out the way they wanted. There’s no buyer for the firm even at 10x forward earnings. Even Schoders or Henderson was a better target- that should say something.

Honestly, y'all, read a chapter in a book called 7 Powers that describes this.
T. Rowe is in a tough position where it's not "worth it" to invest into entering passive, but it's not optimal to just stay in active or doing what the firm is doing either. Fidelity and others (see Legg Mason) faced essentially an identical problem to the one T. Rowe is facing now. Legg owned a bunch of boutiques but wasn't able to compete independently. T. Rowe could sell but can't (yet) convince someone to buy the company outright.

Ultimately, they have to find some way to diversify, and have entered an array of areas with no clear direction since they don't know precisely what will stick. It's a tough spot with a lack of clear strategy to follow since they are not sure that entering an area they know will succeed will be "worth it" (i.e., passive and random ETFs) and since they don't know if other areas will lead to problems that other managers faced (i.e., Legg with alternatives).

They could diversify, but not get the return that justifies investing.
They could buy smaller companies, but be weighed down by their own purchases.
They could sell the firm, but nobody wants to pay the premium they would have gotten in yesteryear.
It's a secularly challenged company actively looking for a good path forward. It hasn't found that yet.

Active management all looks the same — no real differentiation. Everyone keeps stressing the same things, "bottom-up," "fundamentals," year after year. It's the age of AI. Change is intelligence. I get that some see the essence in tradition and not changing, but can we really afford that mindset now? Performance is on the edge of a cliff. I want firms that keep questioning whether they've fallen into mindless complacency, and that aren't afraid to change, take risks, and differentiate.

What about the PMs that can’t outperform? Why even bother giving them a portfolio to manage?