The chief executive of Standard Life Aberdeen plc (SLA) Stephen Bird unveiled plans to return the business to “revenue and earnings growth” after reporting lower profits and assets under management.
A greater focus on UK financial advisers, more business in Asia, and the proposed purchase of a real estate investment manager to boost private markets investments were among the plans.
SLA, which reported its full-year 2020 financials this week, saw an adjusted profit before tax of £487 million (€567 million) in 2020, compared to £584 million in 2019, predominantly due to lower revenues.
Fee-based revenue in 2020 of £1.425 billion was down from £1.634 billion, largely reflecting the impact of 2019 outflows, the firm said.
Net outflows were £3.1 billion, albeit this was dramatically down from the £17.4 billion in 2019 and driven by improvements in institutional and wholesale net flows.
Assets under management and administration (AUMA) were £534.6 billion at the end of 2020, down from £544.6 billion the year before. This reflected £25.9 billion of Lloyds Banking Group withdrawals, partially offset by improvements in markets.
However, adjusted operating expenses reduced by 10% to £1.206 billion due to cost control initiatives and efficiencies, said the firm including around £20 million of “Covid-related savings in discretionary costs”.
The firm also saw improved investment performance with 66% of AUMA above benchmark of three years, compared with 60% in 2019.
The company said it would focus on three growth areas – investments, adviser, and personal – to increase revenue and earnings, and that strategic priorities will be growth in Asia, the UK adviser and consumer markets, “solutions” and responsible investing.
Some action already taken include the exit from Nordics real estate and Indonesia, and the proposed sale of Parmenion. The firm has also proposed to acquire Tritax, a specialist logistics real estate business, to augment its private market business.
SLA also announced it had reached an agreement on a “simplified and enhanced strategic partnership” with its largest client, Phoenix.
Bird said the firm had seen “growing momentum” in the second half of 2020 with improved investment performance and flows. He said this was an inflection point as the company moves away from the Aberdeen Asset Management and Standard Life merger that formed it.
“We remain on track to deliver targeted synergies and have identified more that we can deliver. We have exited some non-core businesses and made an acquisition that has extended our capabilities in private markets. We have simplified and clarified leadership structures across the business and placed a refreshed focus on Asia,” said Bird.
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