- SLA needed a rebrand
- But cosmetic changes only go so far
- Lots of idea-generating content
A little over a year ago, the fund giant Standard Life Aberdeen took the next step in its faltering strategy. At the advice of brand consultancy Wolff Olins, it dispensed with the vowels and boldly announced a new corporate identity: Abrdn (ABDN).
The move was widely mocked, but it had its logic. The 2017 merger of Standard Life and Aberdeen Asset Management had left a cacophony of product identities, further complicated by the licensing of the Standard Life brand to life insurer Phoenix (PHNX). Simplifying the name to ‘Aberdeen’ wasn’t an option, as this would mean competing with the Scottish city for search engine relevance.
A refresh was deemed imperative. When presented with the plan, board members who only saw ‘a burden’ in the new name concluded a few days of social media ridicule would be worth it. For a company struggling to remain relevant, there are worse ideas than falling back on the old adage about bad publicity.
But if management hoped the revamp might spark a renaissance in the share price, they have been left disappointed. Since SLA turned Abrdn on 26 April 2021, the stock has lagged the FTSE 350 by 32 per cent on a total return basis.
That’s not a huge surprise. Amid the rout in global bond and equity markets, all asset managers have had a rough year. But for Abrdn, net withdrawals of £6.2bn in 2021 showed the group is yet to reverse years of outflows and come up with a proper plan to pull in investor mandates.
The latter point gets to the nub of why new corporate identities can only get you so far.
In a 2015 study of marketing in the hospitality industry, a team of US academics found that hotel rebranding resulted in a marked increase in occupancy rates and revenues per room. Part of this, the researchers concluded, was down to an intangible uplift from the brand identity. But a more intrinsic effect that came “from better management, more motivated employees or a better match of the brand with the location” was cited as almost equally important.
For several years, asset managers like Abrdn have lacked each of these qualities. Squeezed between boutique or specialist fund managers on the one hand, and large passive-focused asset gatherers exploiting distribution effects on the other, they have struggled to stop the drift in performance toward the mean, while trying to punt an undifferentiated and expensive product.
The same logjam can be seen at Jupiter (JUP), which was this month accused of failing “to deliver on the key metrics of net sales, shareholder returns and return on equity” by a former board member.
A “synergy-extracting” tie-up between the two has doubtless been mooted at some point, even after the SLA-Aberdeen merger and Jupiter’s 2020 purchase of Merian resulted in painful impairments. It was Karl Marx who said, “history repeats itself first as tragedy, then as farce”, not an M&A banker.
But this doesn’t mean we should write off these stodgy fund manager stocks just yet. With benchmark equity and bond indices seemingly in freefall, market-hugging strategies have been dealt a sharp blow. After a decade of unassailable growth, the passive giants suddenly look more vulnerable to active managers with a convincing story to pitch.
Whether either bloc can get ahead of the slow turn to index customisation, at the same time as digesting a possible dip in retail investor savings rates, remains to be seen. But if active investing is about to have a moment – and can back it up with decent aggregate performance in 2022 – it would be of greater value to the likes of Abrdn than any corporate rebrand.
Further reading:
What's in a Brand Name? (Tsai, Dev & Chintagunta)
