Jargon-prone chief claims he’ll turn around Abrdn

He oversaw the much-mocked rebranding to Abrdn and the decision in March to cut the dividend by a third — a move that made him unpopular not only with the army of retail investors who own 47 per cent of the company as a result of the demutualisation of Standard Life in 2006, but big institutional investors who relied on the stock for their income funds.

To Bird’s mind, the dividend cut was needed as he tries to inject growth into Abrdn, which has suffered a collapse in funds under management in the four years since its creation from £660 billion to about £530 billion. The emerging market investments for which Aberdeen was famed have fallen out of favour, while Standard Life’s flagship GARS fund — once the envy of the industry with £50 billion in the “absolute return” fund intended to cushion investors from market volatility — has collapsed to just £2.5 billion. Abrdn has been punished on the stock market, where its value has more than halved to £5.2 billion.

David McCann, an analyst at broker Numis, said that with the shareholder base so skewed to retail investors, Bird might be protected from demands for more radical action. “They [Abrdn] don’t have quite the pressures ... as a company with a more conventional [institutional] shareholder base ... Individuals don’t have collective power.”

As a result, McCann reckoned, an activist investor might need to appear on the shareholder register to put a rocket under the share price, which traded above 300p at the start of the year.

Australia’s Min-Woo Lee, after winning the abrdn Scottish Open this year

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But Bird dismissed that idea as he spoke from a sofa in his small corner office in Abrdn’s head office in London. “I’m the biggest activist you’re going to find,” he said, outlining his prowess as a “business builder” and describing strategy making as a “ very big part of my skillset”.

His strategy has three “vectors”. He wants to focus, first, on the traditional base, and the dominant one, of fund management (£1.1 billion of revenue at the half-year); second, on its IT business connecting investment advisers to retail customers (£137 million); and third, and where II comes in, on reaching consumers directly (£80 million).

When he unveiled the II deal, Bird told analysts it would be one of the simplest integrations they would ever see. They were not entirely convinced. Tom Mills at Jefferies said investors would be scrutinising whether it was the best use of its £2.8 billion of surplus capital. Some wondered whether a tie-up with another fund management group could have been considered, or a payout to shareholders.

Bird is adamant that II, with 400,000 customers paying a £9.99 monthly subscription fee, is the best use of the cash, and he dismissed any idea that he could have bought an asset manager. “Why?” he asked. “That is a complicated integration.”

He should know, as the first outsider to run a merged business that started out with a problematic co-chief executive structure: Martin Gilbert from Aberdeen and Keith Skeoch from Standard Life. He was recruited by Sir Douglas Flint, the former HSBC chairman, who arrived in 2018 and knew Bird from his 21 years at Citi, where he spent much of his time as an arch-rival to HSBC running the US bank’s Asian operations.

Bird had his eye on the top job at Citi but left after being told by chief executive Mike Corbat last year that Jane Fraser had been selected to take the helm. “Mike actually said to me, ‘Stephen, you are ready to be a CEO now. I’m choosing a successor who will be ready when I’m ready.’ I said, ‘Well, I’m going to make it easy — and I’ll leave,’ ” said Bird.

While much of his tenure at Citi had been spent in Asia, his last five years were in New York while his American wife and two children were living in Edinburgh.

Perhaps it seemed an easy fit installing a Scot — his accent still intact despite years overseas — with a detailed knowledge of Asia where the business has traditionally had a strong reputation through the Aberdeen side of the business.

But Bird ruffled feathers. He refused a colleague’s early advice to keep a tally of decisions that affected the two fiefdoms of Aberdeen and Standard Life. “I didn’t come from a legacy background. That was very important because of the opportunity to have fresh eyes.”

It explains the rebranding to Abrdn (pronounced Aberdeen) — as a result of which, it has shot up the brand-recognition tables for fund managers from 48th to 2nd, behind only BlackRock.

As a banker, he faced questions about his knowledge of the fund management industry and why his “rebasing” of the dividend also led to a “rebasing” of bonuses. “I explained to our colleagues [that] the shareholders have taken a 30 per cent cut in their dividends. We have to be consistent and we need to rebase the incentive compensation.”

Yet Bird took a bonus in March after just six months in the role, which, rumour has it, annoyed some insiders. “Myth and fact,” he said. “The CEO got a bonus ... we paid substantial bonuses. Every fund manager who performed well got paid.”

Some rivals complain that they find it hard to understand his messages and find his language unwieldy. He did not help his cause by drumming up the word “futurist” to emblazon the front page of the annual report. What does this mean?

“If you’re a futurist, you know that you’ve got a responsibility to take decisions that help the business thrive tomorrow — not rest on its laurels of yesterday. We’re futurists — we’re not historians,” he said. “Investing is about the future.

What is clear is that Bird is trying to reach a new generation of customers who are taking saving into their own hands. Abrdn bought Exo Investing, a wealth-management platform powered by artificial intelligence, in August.

And just before announcing the II deal, Bird oversaw the acquisition of Finimize, which has one million subscribers to a newsletter that — for an undisclosed sum — is intended to give retail investors clear information about making investment decisions.

Finimize founder Max Rofagha, 34, joined Bird’s management team last month with a mandate to look at “how we access the brains of this institution”. He started out by advising the fiftysomethings to create a WhatsApp group.

This was not exactly rocket science but at least shows the management team is communicating. Bird proudly brandishes a video on his iPhone from the WhatsApp group. It features a Tedx talk given about the Taj hotel chain in India. The talk describes how staff in the hotel bravely stayed with their guests when gunmen rampaged through Mumbai in 2008.

The moral is that the staff are “ambassadors for the customer” and it feeds Bird’s mantra of “customer-led growth”.

In his reply on the WhatsApp group Bird put up a convoluted post about “leadership shown at every level ... great lessons ... inculcate culture”.

He will need more than a WhatsApp group to convince investors that the turnaround has started. At the half-year results in August, there were signs of improvement: fund outflows slowed to £2 billion and revenues rose for the first time since the merger, by 7 per cent.

Bird also has an eye on costs, aiming to get the cost-income ratio down from 85 per cent to 70 per cent by 2023.

After an initially subdued reception to the II deal, Abrdn’s share price increased by 2 per cent last week. Analysts at HSBC described II as a “game changer” for Abrdn — one that still leaves Bird with surplus cash to make some additional acquisitions.

Abrdn’s private investment arm has already bought a stake in specialist property manager Tritax, which owns Amazon’s warehouses and is regarded by Bird as evidence of his growth strategy.

He now owns 700,000 shares in Abrdn, having bought his first tranche when he arrived last year at 216p.

He watched them rally to 300p — until he cut the dividend. “The stock will go back to 300p if we put the dividend back,” he said.

But investors will have to wait. At the time of the full-year results, he aims to show that fortunes are improving. “This [the Standard Life side] is a 200-year-old company,” said Bird. “This is a total turnaround of this company. It takes time.”