SCOTTISH financial services heavyweight abrdn again underlined the difficulties facing its core investment business when it reported its latest results yesterday.

The Edinburgh-based company has been plagued by withdrawals from its investment funds since 2017, when its current incarnation came into being following the £11 billion merger of Standard Life and Aberdeen Asset Management.

It revealed a further net outflow of £13.9bn from its funds yesterday, with shares tumbling by 3.3%, or 5.3p, to close the day at 156.2p.

The decision to merge two companies with two very different cultures was brought into question by City watchers at the time and events in the years since have done little to dispel those concerns.

The company has found it difficult to staunch net outflows and has streamlined operations, which has included the closure of its flagship Gars (global absolute return strategies) fund, as it has faced challenging conditions in global equities markets. In January it announced a major shake-up of its investment business to improve its profitability. But while the restructure is expected to save the company £150 million a year it will also lead to the loss of around 500 jobs.

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Chief executive Stephen Bird, who replaced Keith Skeoch in 2020, declared yesterday that the company was “taking action to rebuild and grow profit in our investment business”, as abrdn’s results for 2023 revealed further net outflows from the division.

He remains upbeat about the future prospects for a company he has remodelled around three key businesses. Alongside the investment division, the abrdn group includes interactive investor (ii), a subscription-based direct investment platform for retail investors, and Adviser, which provides products and solutions to independent financial advisers.

However, abrdn warned that conditions in equities markets would continue to be challenging in the year ahead.


What is abrdn?

abrdn is a major Scottish financial services company, formed through the merger of Edinburgh-based Standard Life and Aberdeen Asset Management in 2017.

What does it do?

The company has three main divisions. Its asset management business actively invests money on behalf of institutional and other investors through a range of equities and fund styles. Adviser provides platforms and solutions for independent financial advisers, and interactive investor (ii) is a direct investment platform for retail investors.

The group had previously sold its life and pensions business to Phoenix for £3.2bn in 2018, before Phoenix then acquired the Standard Life brand in February 2021.

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Who heads the business?

Motherwell-born Stephen Bird was appointed chief executive in July 2020 after more than two decades with Citigroup. He replaced Keith Skeoch, who had led the company as joint chief executive with Martin Gilbert immediately after the merger of Standard Life and Aberdeen Asset Management. Mr Bird oversaw a controversial rebranding of the company, from Standard Life Aberdeen to abrdn, in 2021, and has gradually reshaped the business around three key divisions.

What’s the story?

The company has struggled to stem net outflows from its investment funds for several years. Full-year results published yesterday showed the company suffered net outflows of £13.9bn in 2023 against the backdrop of “structural and macroeconomic challenges”. Mr Bird also cited the impact of “higher for longer” interest rates in developed economies, which he said was “adding sustained pressure on most asset classes”.

However he emphasised his confidence in the performance of the company’s ii and Adviser businesses, which he said are both “delivering”.

What’s happening with jobs?

abrdn reaffirmed plans yesterday to remove around 500 jobs as part of plans to revitalise its investment business. The cuts, which would amount to a 10% reduction in the company’s workforce, are expected to result in savings of around £150m a year, while costing £150m to implement. When the plans were first announced in January, the company said they would involve the removal of management layers, increasing spans of control, and further efficiency in outsourcing and technology areas. The company did not break down where the job reductions will fall, though it is understood the cuts will focus on group functions and support services rather than frontline investment roles. A significant proportion of the company's function and support roles are believed to be based in Edinburgh.

What else is controversial?

The company confirmed the cuts as abrdn’s latest annual report revealed Mr Bird will receive a bonus of nearly £800,000 for 2023. The report shows the chief executive will receive a total bonus of £786,000, equating to 89.8% of his £875,000 salary. His total remuneration, including pension allowance, bonuses, and salary, totalled £2.14 million for the year, the report shows.

What are the analysts saying about Mr Bird in relation to abrdn’s performance?

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There is likely to be significant disgruntlement emanating from reports that the deteriorating performance hasn’t stopped the board awarding chief executive Stephen Bird an £800,000 bonus, particularly given the scale of the job cuts announced.’’