Analysts and advisers have questioned whether Standard Life and Aberdeen’s co-chief executive roles could pose a problem later down the line if it triggers a battle of egos between the two bosses.
Earlier this month, Standard Life and Aberdeen Asset Management struck a £3.8bn deal to merge the two providers, with the heads of the two groups sharing responsibility for the combined business.
Yesterday (20 March), the two fund groups outlined how the roles would be split, with Standard Life’s Keith Skeoch taking on the day-to-day running of the combined business, and Aberdeen’s Martin Gilbert looking after the “external matters”.
A number of figures in the financial industry have said it makes sense to separate the responsibilities, but questioned how well it will work in reality, particular as neither boss will have overarching control of the company.
Matthew Harris, IFA and owner of Dalbeath Financial Planning, said: “This sounds a bit like two mountain gorillas agreeing to share a particularly attractive female.
“It sounds sensible in theory, but you have a suspicion that sooner or later there is going to be some chest-thumping followed by extreme violence.”
Graham Bentley, managing director of investment marketing consultancy GBI2, said it might be the natural progression for the combined firm to eventually end up with one boss.
“Normally the whole point of running a business is these chief executives want to leave a legacy.
“Sooner or later human nature dictates that one person will want to run the business, and the business will want one person to run it.”
The GBI2 director pointed out that Mr Gilbert has built the business up from acquisition, and therefore suggested he could be continuing this pattern by acquiring Standard Life as an investment leader.
But he said it is not about winners and losers, and was instead about how well these co-chief executives work with each other.
“The role split makes entire sense if you assume that neither one of these CEOs have ego,” he added.
Mr Bentley also pointed out the role split failed to mention the insurance side of Standard Life’s business, and said this could indicate that the group is looking to shelve its life assurance arm, echoing concerns from a number of industry players.
Mark Dampier, head of research at Hargreaves Lansdown, said it was a good idea to scope out the roles in order to avoid conflict, but suspected there will still be problems when it comes to overlapping responsibilities.
“Whether this works in practice will depend on Keith and Martin sticking to it,” he said.
Ben Yearsley, investment director at the Wealth Club, described the split as sensible, saying otherwise it would be a “recipe for disaster” to have two bosses.
“Without defining the roles, there is a danger they end up stepping on each other’s toes, which wouldn’t look good to the outside world and would indicate to the market a lack of clear vision.”
Yet he said the biggest challenge would be that both are used to running the business on their own and being the final arbiter, and therefore questioned what would happen if they have a disagreement.
Peter Lenardos, analyst at RBC Capital Markets, said the announcement by the companies could be an attempt to alleviate market concerns.
While he said the disclosure was helpful, he said investors' fears largely relate to ongoing net outflows at each business, and the potential for further disruption as the businesses integrate.
But both leaders said they had a strong working relationship during the deal process, which they said will continue going forward.
Mr Gilbert said: “Importantly we are both team players and see the benefit of delegating decision-making, as well as seeking guidance from others to form clear strategic objectives.”
In yesterday’s (20 March) statement, the two firms said further announcements about the executive management structure would be made in “due course”.
Mr Skeoch said: “As we bring our businesses together we will provide clear leadership and stability as co-CEOs within the combined organisation.”
katherine.denham@ft.com