Playing the long game - Aberdeen Asset Management's Martin Gilbert on Scotland's financial sector
Aberdeen Asset Management CEO Martin Gilbert tells Holyrood Scotland's financial sector can adapt in the face of risk
Holyrood: Uncertainty is never something business wants and yet we seem to be in a permanent cycle of elections and referenda. How do you deal with that potential for political flux in terms of business planning?
Martin Gilbert: In 33 years as CEO of Aberdeen, I’ve learned that you can worry as much as you want about these things but it won’t do you any good. I concentrate on the things I can control.
You seemed to respond to the Scottish referendum with more of a que sera, sera attitude than some of the more pragmatic positions of other business leaders. Were you relaxed about it regardless of the outcome?
MG: I was certainly relaxed about letting the people of Scotland having a vote to decide the future of their country! The best business people are pragmatic and I try to follow their example, by keeping a focus on what you actually have a handle on. I couldn’t change how Scotland voted, so concentrated on how Aberdeen would respond to the vote. We have offices in over thirty countries around the world – we know how to adapt to operate effectively in different jurisdictions.
How would you view the prospect of a second independence referendum?
MG: The same way as I viewed the last one – it is entirely a matter for the people of Scotland. I’ll focus on managing my business and leave the debating to the politicians.
Has there been any real change in the way other financial markets deal with you as a Scottish based asset management company as a result of the independence referendum?
MG: No – not at all.
Is being Scottish still an asset in terms of global business relations?
MG: Absolutely. Scotland has a long history of asset management and a good reputation to match. Most people don’t know that Aberdeen’s origins actually trace back to the North of Scotland Canadian Mortgage Company in the late nineteenth century.
The prospect of a European exit seems to have provoked more of a negative view from the financial services. Are you taking a position on it?
MG: No. Our position is similar to the position during the Scottish referendum. Aberdeen is a politically neutral company. If Britain were to leave the EU it would be inconvenient for our business but by no means a disaster. We would be able to adapt to and continue to deliver a high level of service to our clients and customers.
Businesses like your own have to protect themselves from shocks all the time, how do you manage risk?
MG: Markets can be volatile, as we’ve seen recently, but in terms of investing, we do our homework and invest for the long term in well-run companies. For us, risk is in buying a bad company or overpaying for a good one.
If Scotland ends up with a higher rate of tax to the rest of the UK, what effect do you think that could have on your business in particular?
MG: There are a number of different powers and taxes in the process of being devolved to Scotland. It all depends on how a Scottish Government of the day chooses to administer them all before you can truly consider any effects on business. For my part, I’ve always argued for a simple and transparent tax system – one that people and business alike can understand.
Scotland used to be a real centre for financial services, do you think that has diminished over the years and what more could be done to attract financial services to Scotland?
MG: The financial crisis obviously weakened the banking sector in Scotland, but outside of that, the country is home to some globally respected firms, such as Standard Life and Baillie Gifford, that are hugely successful.
One of Scotland’s greatest assets is its young people. We realised long ago that by investing in young people through our graduate and apprenticeship programmes that we could develop very impressive future colleagues and leaders. We are blessed with world renowned and respected universities and by tapping in to this reservoir of human potential and learning from the mistakes of the past, Scotland is well-placed to have a thriving financial services sector for generations to come.
There is a myth that Scots have to leave Scotland to build a career, do you think that’s true and what more could be done to retain talent?
MG: In asset management, like many industries, one can stay in Scotland to progress a career. Cities in Scotland are attracting a lot of talent, especially in the internet and technology sectors, just look at Skyscanner, for example. As more work is done online, commuting at all may come to seem old-fashioned in the not too distant future!
Do you think it is realistic for the Scottish Government to be able to encourage economic growth without widening inequality? Should money makers even have to think about social justice?
MG: I’m a great believer in inclusive capitalism. For me, it’s about recognising our responsibilities beyond pure profit. It means acting in the best interests of our shareholders, clients, employees and wider stakeholders, like local communities and suppliers. A business will only prosper in the long run if it delivers value to the society in which it operates.
Bankers have become something of a social pariah since the crash. Do you feel that personally and how do you respond to it?
MG: Bankers are seen as pariahs for understandable reasons. Asset managers tend to get lumped in with bankers so I think we need to do a better job at explaining what it is we do – looking after peoples’ savings so they can achieve their long-term investment goals, and allocating capital within the economy to generate growth and jobs.
There’s a perception that Scots have more of a social justice core than our near neighbours, do you feel a tangible difference between attitudes in the City compared with those in Scotland?
MG: The City, by its nature, is a global financial services centre and attracts hundred and thousands of people from around the world every year. Partly as a result of that, perhaps there’s less of a sense of attachment to the local community than in Scotland.
As an Aberdeen man, you must have found what has happened to the oil industry very hard. Can you see any recovery and how do you think governments could best respond?
MG: It is troubling but I have no doubt the oil industry will bounce back. The banking sector went through a hugely difficult time during the crash of 2008. The oil industry would do well to look at this and to see if there are synergies in the lessons that can be learned. Factors like the price of oil are out of our control, but we have great reserves of talent and expertise in the North-East that will be useful for the future of the industry globally.
A reported drop in literacy and numeracy skills in Scottish schools must be a concern for you as an employer but also as someone with a particular interest in maths. Do you think enough is being done to address this?
MG: More is being done and even more needs to be done. I am a great supporter of the Scottish Government’s Making Maths Count initiative to make maths more engaging for pupils which is absolutely crucial. I remember fondly my old maths teacher, Mr Payne, who got us all excited about maths in the classroom. Not many pupils can say they looked forward to their maths lessons!
Do you think Scots have an inherent characteristic that makes them good in business?
MG: Scotland is an increasingly diverse country but perhaps our reputation as being diligent and frugal, makes Scots effective businessmen. We certainly know how to drive a good bargain!
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