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“Wake me up when the result changes to one in which we voted to remain in the EU,” said one chief executive of a large fund management company, who stayed up the whole of Thursday night and watched the outcome of the UK referendum on EU membership through his fingers.

“We never really thought people would vote to leave and now I have to figure out how I am going to get us [his company] out of this bloody mess,” he said, before hanging up his phone to take an “urgent call” with a “very, very large and anxious investor”.

He was not the only one taking urgent calls on Friday morning. By the time markets had opened in the UK at 8am, hotlines had been set up between asset managers and their advisers to pick through the wreckage of the vote to leave the EU and David Cameron’s quick and subsequent announcement that he would stand down as prime minister.

The damage to fund managers was immediate. Within minutes of the start of trading on Friday, the share price of Aberdeen Asset Management had tumbled 32 per cent while Schroders — the UK’s largest listed fund house — had fallen 17 per cent. Legal and General, which runs one of Europe’s largest fund businesses, was down 21 per cent.

At least one fund manager had also scrambled to draw up legal notices to stop redemptions from its investment products. It is understood the UK regulator contacted asset managers last week to check how well equipped they were to deal with redemptions in the wake of an exit.

The fear now is that there will need to be wholesale changes to the way asset managers run their operations. Listed investment companies are being hit twice: once by the fall in the price of their own shares and again by money flowing out their funds. Jobs may have to go as a result.

One head of UK business at a midsized investment house said his company had already begun work on trimming its staff numbers as a result of the UK regulator’s impending and unprecedented review into the workings of the investment management industry.

“We might have to speed up those cuts now,” he said.

“The business model of UK asset managers will now need a big makeover,” says Amin Rajan, chief executive of Create Research, the consultancy, and an expert on the fund management industry.

Brexit will be a messy divorce, he suggests. “For asset managers, it was bad enough coping with the existential challenges caused by ultra-loose monetary policies. This may be the final straw for many who are not in the premier league. Consolidation is inevitable.”

The bad news is that fund companies are already grappling with sinking profit margins and concerns about performance. Assets in the UK fund industry have fallen by a fifth over the past 12 months and just a few weeks ago, McKinsey, the consultancy, forecast that profits at asset managers would fall by a third over the next two years.

Daniel Godfrey, former head of the IA, the trade body representing UK fund managers, who is currently working with the UK regulator, said the Out vote would deliver more pain.

“There is an immediate downside for asset managers. Plunging valuations means plunging assets, and that will dent revenues. All industries could see job cuts if GDP slows and asset management will be no different,” he said.

Sadly it isn’t a dream — or perhaps more accurately a nightmare — for fund managers. There will be more sleepless nights to come, but the market will have to be very awake to the fact that it needs to be front and centre of talks when the UK government begins to negotiate exit terms with the EU.

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