Standard Life Aberdeen (SLA) and M&G both suffered a drop in fee-based revenue in their full-year results released on Tuesday.
SLA’s fee-based revenue fell to £1.4bn from £1.6bn the year before as it was hit by £29bn worth of net redemptions.
The outflows were largely due to £25.9bn of withdrawals from Lloyds after the banking group terminated its contract with Aberdeen Asset Management in 2017. Excluding this net outflows were £3.1bn in 2020, less severe than the £17.4bn that exited the company in 2019.
SLA chief executive Stephen Bird (pictured) said: “We have seen growing momentum in the second half of 2020 with improved investment performance and flows which represent an inflection point as we pull out of the post-merger era.
“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.”
SLA recently announced the sale of the Standard Life brand to Phoenix Group as it looks to streamline its brands.
Commenting on this move, Bird said: “We will be rebranding to use one consistent brand name for our publicly listed company and for all our client facing businesses. Our brand will make a promise that we will fulfil and having a single brand will allow us to get a better return on the investments we make in marketing and sales.”
SLA’s pre-tax profits were down by nearly 17% from 2019, at £487m, “reflecting lower revenue”.
M&G fee revenue drops but wealth arm sees inflows
M&G also reported a drop in fee-based revenue for its asset management business, from £1bn in 2019 to £988m in 2020.
It blamed weaker revenues on its decision to slash charges across 45 of its mutual funds and lower fees being brought in from its frozen £2bn Property Portfolio. Since the fund suspended in December 2019 M&G has not charged fees on cash held in excess of 20% and has waived 30% of the fund’s annual charge.
However, M&G saw inflows into its recently-launched wealth arm through the acquisition of Ascentric, a Royal London adviser business. Ascentric brought in £15.5bn assets, as well as 95,000 new customers and a relationship with 4,000 advisers. Combining Ascentric with Prudential Financial Planning and The Advice Partnership, M&G Wealth has £28bn of assets under management.
“In our first year as an independent company, we have delivered a strong and resilient performance in one of the most challenging operational environments ever,” said M&G chief executive John Foley.
“This demonstrates the value of our diversified and integrated business model, both to customers and clients, and to shareholders. We laid the foundations for M&G’s return to growth including actions to fix retail asset management and the creation of M&G Wealth following the acquisition of Ascentric,” he added.
M&G’s overall assets under management and administration amount to £367.2bn, and its adjusted operating profit before tax was £788m, down from £1.15bn in 2019.
