By Amy-Jo Crowley, Iain Withers and Stefania Spezzati
LONDON (Reuters) – When Schroders CEO Richard Oldfield presents his revamp of the 221-year-old British fund manager next week, one group of investors will be watching more closely than usual: the founding family.
Oldfield, at the helm since November, is expected to outline cost cuts and prioritise areas where Schroders is growing, such as wealth and private markets, according to three people close to the firm.
Some representatives of the influential Schroder family have challenged executives to improve the company’s performance faster after a poor run of earnings, the sources said. Schroders’ stock fell 25% last year, a third straight annual decline that returned share prices to 2020 levels.
Oldfield, who joined Schroders as finance director in 2023, has the board’s backing and will be given time to pursue his strategy, according to two of the sources.
Schroders’ shares have risen 15% this year ahead of the review.
Schroders declined to comment.
The family holds significant sway at the company, with a 44% stake and two representatives on the board, including Leonie Schroder, the daughter of late City grandee Bruno Schroder who held the seat for 56 years before her.
The board is having to contend with a rapidly changing industry and is challenging executives about the trajectory of the firm, the people said.
The likes of BlackRock, Vanguard and Amundi have hoovered up assets through low-cost passive funds, leaving mid-sized fund firms including Schroders losing clients and raising doubts about their long-term independence.
Schroders’ core business remains actively managed stocks and bonds, but it has tried to bulk up in areas that generate higher fees, including in wealth and private markets, aided by acquisitions including wealth manager Cazenove in 2013, and infrastructure investor Greencoat in 2021.
Its wealth assets under management have grown more than two-thirds since 2020 to 121.3 billion pounds.
Founded in 1804 when Johann Heinrich Schroder, a member of Hamburg’s elite, joined forces in London with his brother Johann Friedrich, Schroders financed transatlantic trade before moving into corporate finance and managing investments for the well-heeled.
In more recent times, Bruno Schroder represented one wing of the family for decades, while the late George Mallinckrodt, who married Bruno’s sister Charmaine and later became executive chairman, represented the other. Mallinckrodt’s son Philip took over his seat, before his sister, Claire Fitzalan Howard, succeeded him in 2020.
The large family ownership has historically been seen as a steadying force – Bruno was close to long-time CEO Michael Dobson – that shielded management from the demands for rapid action seen at many listed companies.
FAST-CHANGING LANDSCAPE
With a market value of 6 billion pounds and 777 billion pounds in total assets under management, Schroders could prove too big for many potential European buyers or partners.
Asset management combinations have proven difficult, even as European consolidation picks up with France’s BNP Paribas snapping up AXA’s investment arm, Natixis agreeing to combine with Italy’s Generali, and Germany’s Allianz looking to sell its investment unit.
The people close to Schroders caution not to expect a big strategic shift soon even though Oldfield, who has already cut around 200 staff and more than halved the executive committee, recently said standing still is “not an option” for the company.
Ultimately, pressures on asset management’s “squeezed middle” should prompt a more “radical approach” at Schroders, such as selling its asset management business to focus on wealth, said David McCann, an analyst at Deutsche Numis.
Schroders is also likely to face questions about French money manager Tikehau Capital, which in February leapt into its top five shareholders after amassing a 5% stake, regulatory filings show.
Tikehau has said it sees potential for “commercial collaboration” with the FTSE 100 firm, without elaborating further, and called Schroders “one of the best remaining global brands” in an industry it expects to change “very fast”.
A person close to Tikehau said its main interest was in Schroders’ private markets business while a spokesperson declined to comment further.
Schroders’ third quarter report underlined its problems, as it warned four departing clients would withdraw around 10 billion pounds. It more recently picked up a 5.2 billion pound sustainable investment mandate from St James’s Place in January, but investors will still need convincing, analysts say.
“It’s been a double whammy”, said Mandeep Japgal, analyst at RBC, referring to declining investor confidence and earnings expectations. “The strategy is likely to maintain a focus on private assets, solutions and wealth. It’s just about reigniting the growth within those areas.”
($1 = 0.7915 pounds)
(Editing by Tommy Reggiori Wilkes, Kirsten Donovan)
