Mutual-fund providers concede it will take a lot of cost-cutting to offset recent steep income drops.

T. Rowe Price Group Inc., which reported dropped earnings of 68 percent Wednesday, reduced staff by 5.5 percent, according to the Wall Street Journal.

T. Rowe is in line with a string of fund firms which, according to the Journal, have seen falling profits:

“Franklin’s stock assets in the U.S. have shrunk by 54%, or $97 billion, since the beginning of last year. It was the same story for other big players. American Funds, Fidelity Investments and Vanguard Group saw their stock fund assets shrink, 47%, 51% and 44%, respectively, according to data from Morningstar Inc. All of these companies have seen increases in their bond funds and money-market funds, but those generate lower fees than stock funds.

“ING Investment Management in the U.S., which manages $196 billion in mutual funds and insurance products, let go of 10%, or 110, of its employees earlier this year, including analysts and portfolio managers. … Stock mutual funds also are facing rising competition from exchange-traded funds, offered by only a few providers like State Street Corp.’s State Street Global Advisors.”

Fund managers are having to make adjustments in their business to survive what is a downdraft in the market, says Paul Schott Stevens, president of the Investment Company Institute, who provided comment for WSJ Thursday.

The Journal cites data from The Investment Company Institute, stating nearly $3.4 trillion, or 50 percent, of stock-fund assets have either disappeared in market declines or left through investor exoduses since January 2008. In 2008, fund companies collected fees of $51 billion from all of their funds, down from $68 billion the year earlier. This is the sharpest drop in fees in two decades.