Franklin Resources Inc. BEN recorded a negative earnings surprise of 1.6% in second-quarter fiscal 2016 (ended Mar 31), impacted by lower revenues. The company reported earnings of 61 cents per share, missing the Zacks Consensus Estimate by a penny. Moreover, results compared unfavorably with the prior-year quarter earnings of 98 cents per share.The lower-than-expected results resulted from reduced revenues and lower assets under management (AUM). However, lower expenses were a major positive factor.Net income totaled $360.4 million in the quarter compared with $606.5 million in the prior-year quarter. Performance in DetailTotal operating revenue fell 20% year over year to $1.61 billion in the quarter, mainly due to lower investment management, sales and distribution and shareholder servicing fees. Moreover, revenues missed the Zacks Consensus Estimate of $1.62 billion.Investment management fees decreased 19% year over year to $2.0 billion, while sales and distribution fees declined 25% year over year to $437 million. Moreover, shareholder servicing fees contracted 7% on a year-over-year basis to $61.8 million, while other net revenues climbed 24% year over year to $19.9 million.Total operating expenses decreased 14% year over year to $1.08 billion. The fall resulted mainly from a decline in sales, distribution and marketing expenses.As of Mar 31, 2016, total AUM was $742.6 billion, down from $880.6 billion as of Mar 31, 2015. Notably, the quarter recorded net new outflows of $24.6 billion, partially offset by market appreciation and other of $4.2 billion, net of $4.6 billion increase from foreign exchange revaluation. Simple monthly average AUM of $737.1 billion decreased 16% year over year.Capital PositionAs of Mar 31, 2016, cash and cash equivalents along with investments were $10.6 billion, in line with the level as of Sep 30, 2015. Moreover, total stockholders' equity was $12.4 billion, compared with $12.5 billion as of Sep 30, 2015.During the reported quarter, Franklin repurchased 9.6 million shares of its common stock at a total cost of $337.3 million.Our ViewpointFranklin posted disappointing results in the quarter under review. Though the company’s global footprint is an exceptionally favorable strategic point as its AUM is well diversified, regulatory restrictions and sluggish economic recovery could mar AUM growth further and increase costs. Moreover, lower revenues is a concern.Currently, Franklin carries a Zacks Rank #3 (Hold).Competitive LandscapeAmong other investment managers, T. Rowe Price Group, Inc. TROW reported impressive first-quarter 2016 results with reported net income of $1.15 per share outpacing the Zacks Consensus Estimate of $1.02. Moreover, the reported figure increased from the year-ago earnings of $1.13.Notably, results included higher non-operating income which resulted from realized gains on investments and implementation of a new accounting guidance associated with the consolidation of certain sponsored investment portfolios.Among others, Invesco Ltd. IVZ and Legg Mason Inc. LM are scheduled to release March quarter-end results on Apr 28 and Apr 29, respectively.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report T ROWE PRICE (TROW): Free Stock Analysis Report INVESCO LTD (IVZ): Free Stock Analysis Report LEGG MASON INC (LM): Free Stock Analysis Report FRANKLIN RESOUR (BEN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research