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.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.