Jim Armitage: Bloated board will cause bad feeling in funds merger

There’s much sense in bashing Aberdeen Asset Management and Standard Life together.

The public are shunning active fund managers like them and piling their savings into ever bigger passive management behemoths.

Firms who remain in the active management world must merge to make themselves bigger and more efficient.

In the case of Aberdeen and Standard Life, that will mean 800 job cuts, around one in 10, to save £200 million.

Even if some of those go with “natural wastage”, it’s a fair bet morale will take a clobbering as employees and managers battle with their oppos to keep their jobs.

Last night’s merger prospectus admits as much, highlighting in the “risks” section that good staff might quit if the integration is not handled well.

At uncertain times like this, employees and their managers look to their leaders to see how they’re bearing the pain and executing those tough decisions on who’s in and who’s out.

The answer? Er… they’re not. In this merger, nearly everybody in both companies’ boardrooms is keeping their job.

Both chairmen, both chief executives, even most of the non-executive directors, are staying.

Several of those who are leaving the plc board, such as Standard Life non-executive Noel Harwerth and Aberdeen’s Hugh Young and Andrew Laing, retain jobs elsewhere in the group.

In fairness, three Standard Life executive directors, Colin Clark, Barry O’Dwyer and chief financial officer Luke Savage, are out, with their futures “under review”. Code, no doubt, to alert the headhunters.

But overall, like the unwieldy new name Standard Life Aberdeen, this looks like a bloated board that has ducked the cuts it is about to ask the managers below it to make.

Henderson Janus, the other fund management merger going through this year, has a proposed board of 12, Schroders has 11. Vanguard, the US giant with $4 trillion assets under management (compared with SLA’s £660 billion) has just 10.