Taking on the chief executive position at an asset management company is always a tricky proposition, but for Euan Munro certain “legacy issues” meant his new role came with even more challenges than might be expected.
Mr Munro joined Aviva Investors in January 2014 after almost two decades at Standard Life Investments (SLI), where he started as a fixed income manager before ending as global head of multi-asset investing and fixed income. But the move was not all plain sailing, and he notes that among the challenges facing him at his new firm was “some bad practice that had been going on before I arrived”.
He recalls: “During my gardening leave I learned we were highly likely to be sanctioned by the regulator for inappropriate trading activity, which we compensated clients for, but we had all the negative publicity associated with that.
“[I was] trying to build self-confidence in the organisation and create a sense of momentum and excitement internally, but trying to do that while getting a smack from the regulator is a challenge,” he explains.
“You have to say that’s more to do with our past than the future, but nonetheless it was a challenge and was a big part of the first 12 months.”
However, the past 18 months have not all been a struggle. One of the key highlights for the chief executive is the fact that, six months after he joined, the company launched the Aviva Investors Multi-Strategy (Aims) Target Return fund, a competitor to Mr Munro’s former flagship Global Absolute Return Strategies (Gars) fund at SLI.
“I set [the launch] as an objective when I arrived and didn’t really expect the organisation to rise to the challenge. I wouldn’t say I set them up for failure,” he laughs, “but I wanted it to be aspirational, and it certainly was.”
He explains: “To launch a proposition like that, you simply can’t [do] it unless its high quality. If you launch before you’re ready and have a bad first six or 12 months, people will be very harsh in their assessment of how good you are and how good the organisation is.
“So I wasn’t going to bring it unless I really felt we had everything in place. I said we’d do it in six months and everybody in this business got behind it and made it happen and that was truly satisfying. The fact we did it in six months was good, the fact it was then a market-leading proposition in the next 12 months was fabulous.”
Not bad for someone who originally planned a career in engineering, at least until he discovered the ceiling in an industry where the pinnacle appeared to be chief engineer rather than chief executive.
“That became a bit of an issue for me, as I always wanted to at least have the possibility of leading and being at the top of whatever organisation I went into. The other thing that concerned me was that nothing worked for me in the lab, so I thought I’m probably not going to excel at this,” he smiles.
Mr Munro then turned towards the actuarial profession, partly because a number of insurance companies in Edinburgh at the time were led by actuaries. “I thought, ‘Here’s a technical profession where if you’re good at it, you can rise to the top of your organisation.’”
But after being sponsored by Scottish Provident to do his actuarial qualifications, his first placement in the company was in the investment management division, and a new career was discovered.
“I just loved that world. All of it appealed to me – the intellectual challenge of trying to make sense of a complex world and trying to make money for your clients, while all the time being in this wonderful competition against everybody else and against yourself.”
Therefore, when it came time for him to move into a different division as part of his training, he refused, which “caused quite a lot of consternation”.
“When I look back, I’d got married reasonably young, had a mortgage and wasn’t quite two years into a career, and I was threatening to resign if I didn’t get to stay in fund management. It was probably the biggest career risk I’ve taken but one of the best ones. By standing my ground I got to stay in asset management.”
Almost 20 years later and Mr Munro is clearly relishing his new challenge. While he enjoyed his stint at SLI, he says that he likes being able to “make my own decisions and drive in the direction I think is appropriate”.
He explains: “I genuinely think I’m a team player, but once you’ve achieved certain things and taken your team as far as you can, you start thinking about taking an organisation on a journey. Particularly with the development of Gars, it created an investment proposition that had been quite revolutionary and changed the way people thought about macro investing.
“I thought [at Aviva Investors] I had the opportunity to develop a business that would change the way people looked at asset management, and I think we have the chance to become a renowned business that is focused on a small number of things that really matter to investors.”
He points out the fund industry tends to produce thousands of products when customers only have a handful of goals at most. “All the client really wants is for their Isa to be bigger next year, or they want a decent level of income in retirement, or they want to beat inflation,” he says.
“Our vision is to get close to those fundamental customer needs and desires and develop propositions using all the expertise that we have.”
Having already struck gold with Gars, is there added pressure to make the Aims range equally successful?
He says: “Probably nobody puts more pressure on me than I put on myself. I have a huge amount of ambition for what this organisation can do. It has a lot of very talented investors and we had all of these disparate skill sets, but for whatever reason we weren’t able to bring it together and deliver great propositions for our customers.”
While Mr Munro is confident of the future, there is still pressure on the business to start pulling its weight in terms of group profitability.
“It’s true that the group chief executive Mark Wilson is not a patient man and he quite rightly and regularly points out that Aviva Investors’ contribution is not what he or I would want it to be. We have a target in mind and that’s absolutely doable but it’s in the medium term. Asset managers cannot turn on a sixpence, and we’re investing in new propositions and increased distribution.
“With every business there is a bit of a J-curve, you spend the money and then you get the reward for it. We’re spending a little bit of money and we expect to be rewarded for it in the coming years.”
However, in the shorter term the firm has been given a boost with the group’s acquisition of Friends Life and the additional assets that have fallen under Aviva Investors’ remit.
“All the stuff that I’m building – the Aims track record and the distribution capabilities in different parts of the world – is what will make us successful in three to five years. What will help us in the shorter term is a successful integration with Friends Life, which will put us into an interesting place in terms of assets under management.”
But it’s not just multi-asset that will be leading the charge in terms of product offerings, with Mr Munro describing the Aims range as the “shop window” of the firm’s investment capabilities.
He explains: “What inevitably happens is people start looking in your shop window at some of the capabilities that are behind that. I don’t think Aims will be the only thing we sell. I see it as being the… proposition that will drive sales in our other capabilities.
“We also have a sizable real estate business that’s under new leadership with Ed Casal. He’s leading that and developing the strategy of what he wants to do with that business, but I do have a lot of ambition of what we could be in the real estate business as well. It’s not a question of one cylinder, I think there are quite a number of cylinders we can fire on,” he adds.
CV
Euan Munro
2014 – present
Chief executive, Aviva Investors
1995 – 2013
Various roles ending as global head of multi-asset investing and fixed income, Standard Life Investments
1992
Postgraduate diploma in actuarial sciences, Heriot-Watt University
1991
BEng degree in physics and electronics, University of Edinburgh
