Standard Life Aberdeen’s decision to scrap its co-CEO structure has been hailed as a long-overdue, inevitable decision for the firm but also the end of an era for Aberdeen boss Martin Gilbert who defied industry type.
The FTSE 100 firm confirmed on Wednesday that Keith Skeoch will retain the CEO title, while Martin Gilbert (pictured) becomes the group’s vice chair and chair of Aberdeen Standard Investments. Gilbert will continue to be an executive director on the board.
SLA said the change would allow Gilbert to “focus solely on our strategic relationships with key clients, winning new business and realising the potential from our global network and product capabilities”.
Scrapping the dual structure was inevitable
Scrapping the dual CEO-structure was inevitable, said Chelsea Financial managing director Darius McDermott, who noted rival Janus Henderson took the same decision last year. “Co-CEOs don’t happen forever. Sooner or later once those mergers are more mature somebody has to run the business,” McDermott said.
Shiv Taneja founder of UK fund boards was surprised it took SLA this long to scrap the joint-CEO structure which he said was “a dumb idea from the off”.
“I just wish they hadn’t done it to begin with,” said Taneja. “You’d think these guys would learn from looking around and say, ‘Look this doesn’t work and we’re going to end up getting a lot of grief not just from the press but from our investors and the corporate governance guys are going to be crawling all over us because this is not such a clever thing.”
Skeoch a safer choice
Of the joint-CEOs, commentators agreed that keeping Skeoch at the head of the firm was a logical choice.
“Keith Skeoch is well regarded in the city and I’m sure shareholders, staff and clients will be very comfortable about this news,” Tilney managing director Jason Hollands said.
Adrian Lowcock, head of personal investing at Willis Owen, agreed that Skeoch is a “natural” fit given his 20 years of experience running various businesses at Standard Life and more recently his focus on transitioning the business away from its life assurance roots to become a true asset manager.
“Right from the start of the merger it was fairly clear that Gilbert would be the one to step back sooner or later, once the merger had completed and the two businesses had successfully integrated. Ultimately this was a takeover of Aberdeen by Standard Life.”
Rumours about Gilbert’s retirement have also continued to grow.
“I would imagine that Martin Gilbert’s retirement is on the horizon and moving into chairmanship is part of that process and part of their long-term succession planning,” said CEO Fundscape Bella Caridade-Ferreira.
“Keith Skeoch knows how to run an investment business and that is essentially what it is now that the life & pension business has gone to Phoenix. As chair, and with deep knowledge of the business, Martin Gilbert is well placed to challenge and hold Skeoch to account.”
End of an era for Aberdeen
But Taneja lamented Gilbert stepping down as CEO, a position which in the asset management industry is typically occupied by technocrat and bureaucratic-types.
“He [Gilbert] has been a giant for that organisation [Aberdeen], taking it from the small Scottish firm that it was 20-odd years ago to a dominant player across Europe and indeed elsewhere. When you think about the asset management industry it’s largely run by technocrats and bureaucratic sorts of people. You don’t often get people who have a certain personality who are able to stand out beyond just being good at what they do in terms of running people’s money. And I would absolutely put him in a very small group of people who has transcended that.”
The fact that Gilbert’s role reshuffle coincides with news that CFO Bill Rattray, also an Aberdeen man, will be stepping down this summer is also not insignificant, said Hollands.
“This marks a significant changing of the guard, as Martin and Bill were the two most senior executives at Aberdeen Asset Management, working together for 28 years over which the business grew significantly, in large part through acquisitions.”
SLA sees €47bn outflows
In terms of the merged business’ performance neither Skeoch nor Gilbert has delivered, said Taneja.
SLA’s share price has nearly halved in the last year, plummeting from 421p to its current 253p. Merging the businesses together has not stymied heavy levels of redemptions, which in 2018 grew to £40.9bn (€47.8bn), up 24% from £32.9bn the year before, according to the firm’s latest set of results released on Wednesday.
The continued woes at the asset manager have called into question the rationale for combining the two businesses in the first place.
McDermott said: “Everybody thinks big is beautiful because it has cost savings and compliance in this ever-trickier world of regulation. These were good businesses independently but they both had a flagship franchise – Aberdeen emerging markets and Standard Life Gars – that was already in redemptions.”
Taneja is also “a slight cynic” about the SLA merger. While he understands the “positives” underpinning the merger, mainly acquiring bigger scale, he said the end result has been disappointing, considering the “heartache” that went into making it happen, including staff members getting culled.
“After all is said and done, yes, they are now this big organisation but they don’t have a footprint in America, the world’s largest marketplace, and they still don’t have a deep penetration into Europe.”
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