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Change of strategy

New Standard Life Aberdeen chief in acquisition hunt

Stephen Bird: ‘I’m driven by power metrics’

Stephen Bird, Standard Life Aberdeen’s new CEO, is on the hunt for acquisitions and new technology to halt an exodus of investors and ensure it can compete with the industry’s heavyweights.

He says the firm will be investing in data analysis and cutting-edge technology such as artificial intelligence and cloud computing as it shifts its investment strategy.

Mr Bird, who succeeded Keith Skeoch, has initiated an overhaul of the Edinburgh-based institution which involves investment in key areas, such as developing inexpensive exchange-traded funds (ETF) – computer-run funds that track the rise or fall in the prices of specific groups of shares, bonds or commodities.

The £512 billion firm will hire more staff to build up its ETF business, while also seeking to boost investments in assets such as private companies, infrastructure and real estate.

The move to a passive management model is likely to be accompanied by acquisitions of smaller companies, particularly in technology.

He has identified its branding as a “weakness”. It has six brand names and six websites. “So we’re going to fix that,” he says.

When the Standard Life Aberdeen merger completed in August 2017, the newly created firm had £670bn in assets. Since then it has suffered withdrawals each year, with about £25bn pulled in the first half of this year. The company also lost its title as the UK’s largest stand-alone asset manager to Schroders.

Everything you see us do will look very 21st century

– Stephen Bird

“We can either buy proprietary ETF technology, buy an ETF business or build it. The other gap was in private markets,” he told New York-based website Pensions & Investments.

“We are thinking of acquisitions but it won’t be traditional asset managers. We don’t want to buy an old asset manager. Everything you see us do will look very 21st century.”

The merger that created Standard Life Aberdeen in 2017 was meant to produce a firm capable of competing with the industry’s heavyweights. Martin Gilbert, one of its co-CEOs following the merger, said at the time that the goal was to amass enough assets to join the “$1 trillion club.” Mr Bird said that bar has been raised.

“Minimum efficient scale is larger than that now,” Mr Bird said. “We’re focused on growing our business. The revenue line goes up and the expense line goes down.

“Once that starts to happen, you’re on the journey toward efficient scale. For me, I’m not into sort of vanity statistics. I’m absolutely driven by power metrics.”

Mr Bird’s most recent role was head of global consumer banking at Citigroup. He stepped down from the lender last year after Jane Fraser rose to the bank’s number two, putting her in position to succeed Michael Corbat as CEO.

Home working ‘lacks courage’

Mr Bird last week argued against full-time home working, saying that office life is vital for generating new ideas and training the next generation of workers.

With most of its almost 4,500 employees currently working remotely, he has signalled that they should expect a return to office working at some stage.

An element of flexibility is likely to be part of the company’s future, but he is not convinced that it results in better productivity.

He said in a series of interviews: “Collaboration, innovation, transformation of business models requires your best brains in real time, in a common space.

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“I think there’s a lot of mythology (around working from home). Yes, there are things that you can do from home.

“You cannot change the world from home. It’s an absolute falsehood. It’s lazy thinking, it lacks courage and it’s delinquent on the next generation.”

His comments contrast with the decision by big financial firms such as PwC and Schroders which have accepted the need for more permanent flexible working.

Former Standard Life Aberdeen CEO Keith Skeoch said earlier this year that he did not expect more than 40% of Standard Life Aberdeen’s office capacity to be occupied at any one time from next year.

See also

Aberdeen Standard Investments selling shopping mall at a loss as retail softens

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