When a company has had three chief executives within 12 months it is a pretty clear signal of a business under intense pressure. It didn’t take the unexpected departure of Chris Ryan from Perpetual today to signal that the group is feeling that stress.
Ryan, appointed chief executive just short of a year ago to succeed David Deverall, 'stepped down' as Perpetual’s chief after a weekend meeting with the board made it apparent that there were significant differences between the chief executive and his directors over "emphasis and execution of strategy for the immediate and longer term".
It would appear that, while there was a broad consensus on strategy, the issue for the board was the proposed pace of change at a time when funds management businesses generally, and Perpetual in particular, are under intense pressure from the difficult investment environment.
Simply, it would appear that the board wasn’t satisfied that Ryan was moving with the urgency it wanted.
The areas identified in today’s announcement – that Perpetual’s head of private wealth and retail distribution, Geoff Lloyd, had been appointed chief executive officer – were the need to work harder and faster to refine the group’s growth strategy, to deliver further meaningful cost reductions and to reinvigorate sales and distribution across the business.
The weak sharemarket environment has affected fund managers across the system but Perpetual has also been particularly been affected by the loss of former high-profile fund manager John Sevior, and an associated exodus of funds under management.
That has accentuated the need to carve into what had become a relatively high-cost structure and an over-emphasis on the funds management business, individual star managers and platforms.
Perpetual has a slightly tarnished/neglected jewel in its private wealth business, although it has been devoting more attention to that business as the environment for funds managers has become more difficult.
Lloyd appears to have a mandate to attack costs and to focus the group’s resources on leveraging its brand and strengthening the areas where it has some competitive advantage. There was also a very clear inference in today’s statement that Perpetual’s sales performance hasn’t been up to the board’s expectations over the past year.
The pressure to improve its performance has been intensified by the flatlining of the group’s share price over the past year, the focus of the loss of Sevior and the constant references to the group’s dismissal of an approach from private equity giant KKR just over a year ago.