The financial cost savings caused by a round of job cuts should be ultimately passed to clients of the merged entity, analysts said.

Analysts hope the merger of Standard Life and Aberdeen Asset Management, which will see some 800 jobs axed while creating the UK's largest asset manager, will result in lower management fees for the end-client.

Shares in Edinburgh-headquartered Standard Life were up 1.2 per cent yesterday, outperforming blue-chip and broader indices of equities.

Aberdeen Asset Management and Standard Life said the merger will lead to “cost synergies where duplication exists”, which will involve the “reduction of approximately 800 roles” from the group that has a combined total of 9,000 jobs, the firms announced earlier this week in a prospectus to investors.

But Christopher Traulsen, a certified financial analyst at Morningstar, told this publication that mergers resulting in job cuts often fail to benefit the end-client and shareholders.

He said: “We strongly believe that the resulting cost savings should be passed through to investors in the form of lower management fees and the market should watch closely to see if this occurs because it rarely does - asset managers tend to keep the benefits for their own stakeholders instead.”

He continued: “The size of the new board also seems to incur needless extra costs. Although possibly not large, such costs send an odd message in the context of large staffing cuts.”

Traulsen, director of ratings at Morningstar, added: “We are seeking fuller information to understand how the investment management teams in the new combined entity will be structured going forward. We will be keeping a close eye to see how the new entity will realise cost savings."

The “cost synergies” will come from “departures arising from natural turnover”, but the firms will take steps to minimise the number of compulsory redundancies, Standard Life and Aberdeen Asset Management have said. The companies also state that they are set to “maximise operational efficiencies” by reducing the number of premises where they operate within close proximity.

The prospectus stated that the merger is expected to be completed by the third financial quarter of 2017. The document also said that the companies will name the new group Standard Life Aberdeen, with Standard Life, dealing with pensions, savings and the investment management sector, to be overseen by Aberdeen Standard Life Investments.

The merger was announced on WealthBriefing on 6 March 2017, when a statement issued by the firms said that they were considering an £11 billion ($12.5 billion) all-share deal, creating a business with £660 billion of assets under administration.

There remains continued debate about whether M&A activity ultimately builds or destroys long-term shareholder value. According to the National Bureau of Economic Research in the US, over the past 20 years, US takeovers, for example, have led to losses of more than $200 billion for shareholders. However, this result is dominated by the big losses experienced by shareholders in big companies. Small companies that make acquisitions create value for their shareholders. (To see a book review about a racy study of M&A and some of the characters involved, see here.)

The UK asset management industry has seen a number of corporate marriages. Geneva-headquartered SYZ Group, the private bank, recently said that standalone, and “sub-scale” asset managers are pressured by the rise of low-cost, index-tracking exchange-traded funds, a desire to keep fees down, struggling fund performance and higher capital and compliance costs.

The firms also announced in the prospectus the future governance structure of the merged entity's board. This is listed below.

Sir Gerry Grimstone – Chairman
Simon Troughton - Deputy Chairman
Kevin Parry - Senior Independent Director
Keith Skeoch - Co-Chief Executive
Martin Gilbert Co-Chief Executive
Bill Rattray - Chief Financial Officer
Rod Paris - Chief Investment Officer
Akira Suzuki - Non-Executive Director
Gerhard Fusenig - Non-Executive Director
John Devine - Non-Executive Director
Julie Chakraverty - Non-Executive Director
Jutta af Rosenborg - Non-Executive Director
Lynne Peacock - Non-Executive Director
Martin Pike - Non-Executive Director
Melanie Gee - Non-Executive Director
Richard Mully Non-Executive Director