Abrdn’s chief executive is in bullish mood after reshaping an Edinburgh institution, writes TERRY MURDEN
Stephen Bird has shown little hesitancy since he agreed to swap a career in banking for the task of remodelling one of Scotland’s financial power players. From the moment he succeeded Keith Skeoch at Standard Life Aberdeen in September 2020, he set about creating a new company with a new name and is said to be confident that the benefits will be evident when he reveals the results of his first full-year as chief executive next month.
After leaving Citigroup to head up the Edinburgh institution he wasted no time pivoting what would become newly-titled Abrdn into a technology-led wealth management business, with a greater focus on customer freedom and advice that suits the changing nature of the sector.
Bird moved quickly to acquire the investing tips website Finimize, the AI-driven wealth management platform Exo Investing, and took a 60% stake in specialist logistics real estate fund manager Tritax.
The big market eye-catcher was December’s £1.5bn purchase of Interactive Investor – a move that positions Abrdn in direct competition with UK platform leaders Hargreaves Lansdown and AJ Bell.
Bird denies he is a deal junkie, stating in a recent interview with Financial News that he prefers to be known as a “business builder” and that Standard Life Aberdeen – the result of a merger between Standard Life and Aberdeen in 2017 – had a long list of problems that needed to be addressed. Foremost among them were the heavy outflows that had weakened the share price and the company’s standing in the league table of European players.
“I knew the story had been that the merger had not fulfilled its potential and it was really struggling,” he told his interviewer, adding his criticism of the dual leadership model, with Skeoch and Aberdeen Asset Management boss Martin Gilbert sharing CEO duties. The arrangement would not have resulted in fast change, he argues.
“What I inherited was a mostly insurance-based asset manager, but with deep competence and good people. What we are shaping is a business that can grow in the 21st century.”
The 54-year-old arrived in Edinburgh after overseeing Citigroup’s business in Asia Pacific before heading the global consumer banking division from New York.
Standard Life Aberdeen chairman Sir Douglas Flint, who knew Bird while he was a rival running Citi’s Asia operation, invited him to meet in an Edinburgh pub and offered him the opportunity to turn round the ailing asset manager.
Soon after the merger, the company was hit with the loss of its biggest client – Lloyds Banking Group – which announced it was withdrawing a £109bn mandate for its Scottish Widows subsidiary. Despite winning a subsequent legal battle and a degree of compensation, SLA had to observe Lloyds sign up with Blackrock and big rival Schroders, leaving a sour taste.
“I was worried about the fact they had lost Lloyds. I wondered how that could happen,” Bird said.
It was partly that experience that led eventually to him offloading the Standard Life brand to Phoenix Group. SLA had already sold its insurance business to Phoenix for £3.2bn.
With the brand sold, Bird had to virtually reinvent the business and give it a new name. To say the Abrdn brand was controversial is an understatement, with the critics accusing the board of bringing ridicule on a company with a proud history. A survey by website Investing Reviews labelled the rebrand an “act of corporate insanity”.
Bird says he would do it again and in media calls and interviews he has defended the final choice. He points to brand research that shows Abrdn has jumped 46 places and is now the second most recognised asset management name behind BlackRock.
Fundamentally, by ditching an assortment of legacy brands it has helped eliminate the “two tribes” problem that accompanied the merger and united the company.
Among his most difficult decisions has been cutting the dividend by a third which only added to the fall in the share price which is down 21% over the last 12 months.
He argues that in order to be seen as a careful investor it has to pay a sustainable dividend. Likewise, some staff have seen their bonuses cut, although he says they will be rewarded with a growth in revenue and earnings.