Stephen Bird was brimming with concepts when he grew to become Abrdn chief govt in September 2020.
The Scotsman quickly informed workers about his ambitions for the asset supervisor, in line with two folks on a late 2020 employees name, and referred to himself as a “futurist”: somebody whose data and analysis helps them to see the longer term.
Three-and-a-half years later, Bird is going through tough questions on his personal future, as one of many UK’s largest remaining asset managers races to chop prices and develop new income streams so as to stem the movement of belongings to rivals and to low-cost passive managers.
Bird’s purpose was to chop bills and enhance earnings by increasing wealth administration and promoting extra investments on to shoppers. The concept was to go away Abrdn much less reliant on its £367bn funding business, which managed money for insurers and pension funds, amongst different shoppers.
At first, this plan confirmed promise: Abrdn acquired Interactive Investor, the UK’s second-largest client funding website by belongings, and took the knife to group prices, partially by restructuring or closing greater than 250 of the corporate’s funding funds.
Bird additionally sought to restructure different underperforming elements of the business, promoting off Abrdn’s £7.5bn non-public fairness arm and offloading its 50 per cent stake in a three way partnership with the financial institution Virgin Money — though for lower than half the quantity it paid.
Under Bird’s tenure, the agency has reduce jobs, prices, vowels from its title — as a part of a much-ridiculed rebranding — and even the workplace within the Scottish metropolis after which it’s named.
But analysts argue the turnaround has floundered. Costs stay stubbornly excessive, the share value has fallen by a 3rd and underperformed the FTSE 350 asset managers’ benchmark since Bird’s appointment, and the group has twice been ejected from the blue-chip FTSE 100 index.
Rae Maile, an analyst at Panmure Gordon, stated: “They’ve taken some costs out but there is still much which needs to be done. It’s all well and good saying you’ll take out 10 per cent of the workforce but profit margins are still a million miles away from where they need to be.”
Others query whether or not it’s Abrdn’s administration that’s itself the issue. “It is abundantly clear that a change of leadership is required,” says Samuel Johar, chair of board advisory group Buchanan Harvey. “The only discussion is whether it should begin with the chair or the CEO.”
Some shareholders have already given up on the group. David Herro, deputy chair of US funding agency Harris Associates, stated the agency offered its stake in Abrdn final yr as a result of it “lacked confidence that management could repair the business.”
Abrdn informed the Financial Times that the administration crew was “brought in to deliver a new strategy of creating a long-term, sustainable business model that could thrive against a backdrop of huge change in the sector”. The firm says it has “made substantial progress in delivering that. No change was not an option.”
The firm’s efficiency in 2023 could have given Bird some headroom, because the £6mn pre-tax loss reported was decrease than the £612mn suffered a yr earlier than, and adjusted working income got here in above analysts’ forecasts.
A Scottish banker whose appointment was overseen by chair Sir Douglas Flint, Bird was raised in Motherwell, a metal city south of Glasgow, and rose to carry the highest client banking position at Citigroup. It was after he missed out on the chief govt position there — to fellow Scot, Jane Fraser — that Flint urged to Bird in an Edinburgh pub that he think about working the asset supervisor.
Bird arrived at what was then Standard Life Aberdeen with a mandate from the board to broaden wealth administration and slash prices to show the business round inside 5 years, in line with a person aware of the method.
He sought to do the job sooner. He stated within the firm’s annual report in early 2021 that he would reduce the cost-income ratio to 70 per cent by the top of 2023 — a goal that has been missed.
The investments a part of the business, which nonetheless accounts for the lion’s share of belongings beneath administration, is weighing on bills with a cost-income ratio of 94 per cent.
“Our core business is just not efficient enough . . . that is why we have done so much work to modernise it,” Bird informed the FT final week, highlighting the £102mn in cost-cutting in 2023, above the £75mn goal, in addition to the additional £150mn in financial savings introduced earlier this yr.
Bird reportedly urged to the board in a technique assembly two years in the past a spread of doable eventualities that included promoting off the asset administration business — an concept that has been dismissed.
The concept of a sale of elements resurfaced following the appointment of former banker and Aviva govt Jason Windsor as Abrdn’s chief monetary officer. “Jason Windsor is a former M&A banker — he could have gone in to break the business up,” stated an govt recruitment skilled, who wished to stay unnamed.
Abrdn stated: “As Jason has made clear on a number of occasions, he is supportive of the shape of the group and, along with the rest of the board, is fully committed to the strategy that we have set out.”
The efficiency of the group’s funding funds has worsened. The share of the agency’s belongings beneath administration beating benchmarks over a three-year interval dropped from 65 per cent in 2022 to 42 per cent final yr — dragged down by rising markets.
Meanwhile, scores of fund managers have left the agency or been axed previously few years, together with a big a part of the corporate’s multi-asset crew. Benefits have been additionally slashed forward of the redundancies introduced in January, which hit round 500 workers and can deal with assist features together with HR, finance, tech, and advertising and marketing and communications.
Bird himself has drawn ire for telling employees earlier this yr that bonuses could be paid for “performing colleagues”, whereas his whole pay elevated to £2.1mn from £1.7mn the earlier yr.
Abrdn stated: “Linking pay to performance is an important part of our approach to compensation across the company.”
Bird inherited a challenged business in 2020, in an business squeezed by fund outflows and excessive prices. But even this futurist may not have forecast the present stress he faces. He shall be hoping his latest spherical of cuts and his huge wager on Interactive Investor repay, or else he may be picturing a future exterior of the corporate.
