David Nish took the reins as CEO of Standard Life PLC in January 2010. We spoke to him recently about what he has focused on in his first two years in the role.
Q: What has been your primary focus since assuming the role of CEO?
A: I set out that I was going to take three years to effectively transform the business. [We’ve been] developing a greater understanding of what advisors and customers really need with regard to types of products and propositions. We are a core pension delivery company; it’s really at our heart. If you look at changes taking place, both in the U.K. and Canada—such things as auto-enrollment, PRPPs—the scale of opportunity is really quite large, but it’s going to be satisfied by those companies that invest in a quality proposition. And that is not just about the design of products. It’s also the servicing.
I’ve only been with Standard Life for five years [after starting as chief financial officer in 2006], so I’ve probably got quite a different perception of where the organization sits, particularly as a newly listed entity [than those employees who’ve been with the company for a much longer period]. So I’ve been looking a lot at how we operate, how we structure ourselves, and really trying to get the group working with much more energy looking forward, and trying to drive up the speed with which we do things.
A third element is making sure we have a capital base that is really strong for our business. From a group point of view, and within Canada, we’ve got really strong balance sheets, very strong capital positions, and we’ve removed a lot risk from the business. We’re on track for record earnings in 2011, and that’s because we write business we believe we can manage.
Q: How has being part of Standard Life for a short amount of time relative to some of your colleagues helped or challenged you in this role?
A: I believe businesses are all quite simple. They’re all about two or three things. They’re made up of people, so you need to have a really strong focus on the people within the business. Secondly, there’s got to be a strong focus on the customer. And the third thing is, you have to understand where the cash is. I think the first question I asked after joining the company was, I wanted to know where the cash was: literally, I wanted to know where it sits, how we get money from our customers, and what do we spend it on.
Financial companies operate in complex markets, with complex products. One of our biggest skills has to be the capability to make ourselves easy for customers to deal with, and to actually deliver on the promises we’re making. One of the things I’ve really tried to do is to unpick all the “knots” in the organization. That’s meant it’s probably been uncomfortable for certain people, with the changes. But we’ve also given a lot of opportunity to talent within the business. One of the things that I’ve always believed, prior to taking over as CEO, is we’ve got really great people. What I’m trying to do is make life better for these great people.
Q: How are you increasing the organization’s ability to bring new products to market?
A: People think of us as a life company or an investment company, but we’ve actually got a huge amount of IT capability that we need to deploy. Our websites in the U.K. operate on what we call “guided architecture”—how do I actually persuade you to make an investment decision? So there’s a lot we’re doing around technology, which both drives efficiency and engagement with the consumer and advisor in a much more direct way. People want immediacy.
One of the other things we’re trying to do is to use technology to make savings much more exciting for the consumer. We’ve been in such a consuming environment for the past 20 years that people have essentially lost the focus on saving for the longer term. In the future, we’re all going to be personally responsible for our long-term income and our healthcare costs, so we have to get back to being a much more prudent society. In India, people save one-third of their income, irrespective of how much wealth they have. The poorest people still save, because they don’t have a social network—they have to look after themselves.
Q: How will the financial situation in Europe affect how Standard Life does business over the next year or so?
Because we’re a business that connects through to end consumers, it’s how they’re thinking about the decisions they’ll need to make. If you’re faced with news items that are all about crisis, what happens is individuals tend to curl up and say ‘I’m not going to do anything. Undoubtedly, the flow of business will probably be lower for a period of time. But we’re on a three-year journey to change our business, and we’re only at the end of year two. So we’re still driving on with our agenda. I’ve been asked, if things begin to slow down, are we going to stop doing things? No, I’ll just drive the business twice as hard, because we’re doing the right things. When the upturn comes, I want us to be ready to grow out of this. That’s why we’ve been investing at record levels over the past 18 months. I’ve been challenged by my shareholders about that level of investment, but I’ve said to them that this is the time to invest.
Q: How important is Standard Life Canada to the company as a whole?
It’s very important. If you look at it from a financial point of view, Canada represents probably about 25% of our group. It’s our biggest overseas business. We were in Canada before Canada was even formed [the Canadian branch opened in 1833].
If you look between the U.K. and Canada, the markets are very similar. So we’ve got two mature markets that can share with each other. Certain things we’ve launched in the U.K. over the past 12 to 18 months were actually original concepts rolled out in Canada.
Q: What plans do you have to grow your pension, benefits and retail markets in Canada?
If you look at retail, we’ve taken time to develop it. We’ve expanded our product range this year with GMWBs being launched. We’ve really pushed our seg funds and we’ve seen really good growth.
What you’re seeing across all the lines is continued development of the propositions, and more focus on bringing those propositions together. So, if we’re looking at an opportunity in pensions, do we also have an opportunity in group insurance.
Pensions are going to be really exciting, with the development of PRPPs. We’ve done some research in the U.K. about the behavioural aspects of the employee-employer relationship. We see it as being probably the most trusting relationship that exists. So if an employer sets up a pension scheme, or a group health or disability scheme, the employee looks upon that as being a very important thing. The research looked at that relationship, and also how to ensure things like auto-enrollment become a success. A lot of that comes down to communication, and getting people engaged in savings.
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