Here’s what I’d do about the Standard Life share price right now
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The Standard Life (LSE: SLA) share price has been a bit of a mixed bag over the past five years.
Including dividends, the stock has returned -0.5% per annum over the past five years, substantially underperforming the FTSE All-Share Index, which has returned 6.2% per annum over the period.
It seems clear to me why the company has performed so poorly since 2016. The group has been navigating a transition during this period. Standard Life has been selling off and exiting its core life insurance business. Management is focusing on building its asset management division.
So far, performance at the latter business has been mixed. The loss of a significant assets management contract with Lloyds, coupled with the underperformance of the group’s flagship GARS fund, has hurt its reputation.
These factors have weighed on the Standard Life share price. Granted, the company has also been investing more in its wealth management brands and expanding partnerships, but these are yet to show results.
Standard Life share price outlook
It seems the company has outlined the next stage of its journey today, announcing its intention to change its name to Abrdn plc.
According to the group’s press release, the new Abrdn name will be part of a “modern, agile, digitally-enabled brand that will also be used for all the company’s client-facing businesses globally.“
The rebranding also “marks the next stage in the reshaping of the business and future-focused growth strategy.“
This change is expected to take place over the next few months with the listed company renamed before its half-year results in August. I think this is the right decision. The new brand will bring five different brands under one umbrella. Hopefully, it should help improve customer awareness of the brand and business.
Rebranding could ultimately help resolve one of the biggest problems that has dogged the group since its merger with asset manager Aberdeen Asset Management in 2017. A lack of focus.
Under the guidance of the new chief executive, Stephen Bird, a former senior executive at US bank Citigroup, the company is doubling down on what it does best. The rebranding should help streamline the enterprise and draw a line under what has been a rather messy period for the organisation.
Not an instant cure
That said, I don’t believe the rebranding alone will be enough to rekindle growth. Last month, the dividend on the Standard Life share price was slashed by a third after group full-year profit fell almost a fifth. The continued flight of investors from the company’s funds was responsible for this decline.
Getting investors to come back to the group’s offering isn’t going to be easy. What’s more, the rebrand could lead to further confusion. The Standard Life brand has been around for over 200 years. People know it and the business. Drawing a line under that awareness may not be the best decision.
Still, despite these risks and challenges, I’m encouraged by the company’s desire to change for the better. I think this should have a positive impact on the Standard Life share price in the long run.
That’s why I’d buy the stock for my portfolio today.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.