What: Shares of Waddell & Reed Financial (NYSE:WDR) are trading lower, falling by 16% as of 11 a.m. ET.

The plunge comes as the company simultaneously reported disappointing earnings and the retirement of company president Michael Avery, who manages its largest fund, Ivy Asset Strategy.

So what: Waddell & Reed reported earnings of $62.9 million, or $0.76 per diluted share, down from $80.9 million and $0.97 per diluted share during the year-ago period.

The asset management firm has been hard hit by weak performance in its largest funds. The company reported that assets under management fell to $104 billion at the end of December, down 16% from the year-ago period. It cited "net outflows and market erosion" for driving the decline in AUM.

Across all of its strategies, it saw $9.3 billion in outflows in the fourth quarter, compared to sales of only $4.3 billion, resulting in about $5 billion of net outflows. If not for a rising market, which added $3.2 billion in AUM, results would have been much worse for the fourth quarter.

Now what: Change is coming. The company highlighted an effort to reduce operating expenses by $40 million in the next 12 to 18 months, with the goal of realizing two-thirds of the savings in 2016. It notes that cost savings amount to $0.20 per share. Wall Street, however, seems to see cost cuts and management shakeups as little more than confirmation that performance will continue to deteriorate as its biggest funds lose fee-earning assets.