Stephen Bird, Standard Life Aberdeen's new CEO, is on the hunt for acquisitions and new technology to lead the money manager into a strategy that's become indispensable to the industry's growth: passive management.
In his first published interview since taking the helm in September, Mr. Bird said he plans to reverse an investor exodus by building a stable of passive products that could eventually account for as much as 30% of its assets. The £512 billion ($677 billion) firm, which relies almost entirely on stock pickers and bond specialists to choose investments, needs to ease its reliance on active managers and embrace the global swing toward index investing if it's to thrive and grow, Mr. Bird said.
Passive business "is an essential component of a full solution provider. We are screening for which technology, which people, which capabilities can help us get there," said the former Citigroup Inc. banker. "An ideal active-passive split would be 70/30."
Mr. Bird wants to turn Standard Life Aberdeen, which traces its roots back nearly 200 years, into a "21st century competitor." He's chasing a chunk of the business that index giants BlackRock Inc. and Vanguard Group have already been enjoying for years as investors fled higher-fee active managers in favor of cheaper funds that simply track markets. That's seen the global universe of passive funds soar to $12 trillion of assets under management, according to Morningstar Inc.
"If you stay as an old traditional asset class asset manager, you will be extinct," he said. "But if you say I'm going to go closer to my clients, I'm going to listen more intently to them, I'm going to connect to them more seriously, then you're high value."
Mr. Bird has his work cut out. He's inherited a firm that's suffered a constant string of investor outflows since it was formed by the merger of U.K. giants Standard Life and Aberdeen Asset Management three years ago. His focus will now be on streamlining its various brands into one that people will remember, and investing in data analysis and cutting-edge technology such as artificial intelligence and cloud computing.