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Why the Abrdn rebrand is a poorly timed distraction

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You have to feel a little sorry for Standard Life Aberdeen (LSE: SLA), which this week announced that it was rebranding by removing all of the vowels from its name to become ‘Abrdn’.  The underlying rationale behind the change was sound: in February the asset manager sold its Standard Life brand and wanted to end any subsequent brand confusion by dropping ‘Standard Life’ from its name. 

Twitter quickly pointed out that when a company has to clarify the pronunciation of its name in its own press releases, it is not a good start.  Why the company could not revert to its prior moniker of ‘Aberdeen Asset Management’ remains to be seen, but Abrdn says that it wants to become a “modern, agile, digitally enabled brand”.  That’s corporate speak for “we drank the Kool Aid offered to us by a branding agency and then spent lots of money.”

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A good or bad rebranding can make or break consumer-facing brands.  Oatly, a Swedish consumer goods company, was a rather sedate unknown before its powerful 2014 rebrand made it one of the coolest brands on supermarket shelves.  Last week the company filed its pre-IPO prospectus in in the USA where it is rumoured that the company will seek a $10 billion valuation.  So not all rebranding is worthy of mockery.  But away from the world of consumer products, a rebrand can also signal that a company has run out of ideas. 

The new name and brand could belie an underlying insecurity that Abrdn does not know how to adapt or to become relevant beyond its traditional markets and customer base; that it does not know how to reignite the connectivity which it once enjoyed with its clients.  SLA shares tumbled in the aftermath of the 2017 mega-merger between Standard Life and Aberdeen Asset Management, and today they trade at just over half of their 2017 level.

Part of Abrdn’s current woes can be tracked back to the loss of a significant asset management contract with Lloyds, as well as a flight of investors from its flagship funds.  One can’t help arriving at the analogy of a lost middle-aged man trying to reinvent himself as hip, young and cool to recapture the popularity and vigour of his younger days.

For what it’s worth I believe that the divestment of the Standard Life insurance business and the general streamlining of seemingly disparate businesses under a single brand have all been the ‘right’ moves.  But I worry that the company might now be focusing on the ‘gloss’ of branding as a distraction from the difficult task of reinvigorating the underlying fundamentals that have driven its performance during better years.

It doesn’t help that over the course of the last five years, SLA stock has consistently underperformed the FTSE All-Share Index.  One of the attractive facets of the company had always been its dividend yield, so it was also unfortunate that the rebrand was announced on the back of Abrdn cutting its dividend by one third after profits fell by 17%. 

I have said before in a previous post for The Motley Fool, that I would never wish to align my investment interests with a company whose future is predicated upon subjective and esoteric ‘organisational change’ rather than upon observable objective factors.  With the Abrdn rebrand, CEO Stephen Bird has cast doubt as to which scenario the company now fits. 

There is at least some conciliation for Abrdn.  An old joke used to be that “Aberdeen” was an appropriate name, because like the (some say) dour Scottish city, the company was slightly dull but had nonetheless made a lot of money during the 1980s.  With this rebrand, the joke no longer holds.  Whether Abrdn will have the last laugh still remains to be seen.

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Tej Kohli owns shares in Twitter. 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.

Tej Kohli is a technologist and investor and is Chairman of Kohli Ventures.  He is best known for his mission to combat poverty driven blindness at the Tej Kohli Foundation.  He regularly shares his thoughts and wisdom online and on Twitter as #TejTalks.

 

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