SJP’s gloom lifts as clients pour in more funds than expected

A turnaround of St James’s Place has received a boost after clients poured in more money than expected, helping the troubled wealth manager to shrug off uncertainty over the looming budget.
The Cirencester-based company said on Thursday that it had attracted gross inflows of £4.4 billion in the three months to the end of September, surpassing the £4.15 billion forecast by City analysts and taking its overall assets under management to £184.4 billion. Net inflows of £890 million also topped expectations. Shares in the group rose by 32p, or 3.9 per cent, to 850½p in late-afternoon trading.
It is a fillip for Mark FitzPatrick, who took charge of SJP last December and is trying to revive its fortunes following a torrid period and a series of self-inflicted blows. He is revamping the company, partly by cutting costs, as the wider wealth management industry wrestles with nervousness caused by the Labour government’s first budget on October 30.
There is mounting speculation that the chancellor will target pensions and inheritance tax as part of efforts to bolster the public finances. This is giving clients of wealth managers the jitters: analysts at Jefferies said the budget “will potentially cause some turbulence” for St James’s Place.
FitzPatrick said: “The macroeconomic environment has improved since the beginning of the year but there continues to be uncertainty in the outlook for consumers, savers and investors.
“While speculation around the forthcoming autumn budget compounds this, we know that our advisers are providing invaluable advice to our clients, helping them to navigate the uncertainty and safeguard their financial futures.”
St James’s Place is Britain’s biggest wealth manager and oversees the nest-eggs of clients who have at least £50,000 of non-property assets to invest, making it a favourite of Britain’s middle classes. Its business is built upon a network of about 4,800 self-employed financial advisers and has about 2,300 employees.
SJP was thrown into turmoil last year after it was twice forced to set out plans to overhaul the lucrative fees charged to clients in response to new consumer duty rules imposed by the Financial Conduct Authority. The aim of the consumer duty is to ensure financial services firms put the interests of their customers first and the fee changes SJP is implementing will hit its profitability.
In another blow, it also revealed in February that it had set aside £426 million to cover the cost of refunding clients who had been charged for services they had not received in previous years. The problem stems from patchy records about clients, which are now being combed through as part of the refunds process.
These setbacks sent the wealth manager’s share price tumbling and FitzPatrick, who was previously a top executive at Prudential, in July set out an overhaul plan that includes cutting about £500 million of costs by 2030.
He said on Thursday: “We continue to make progress on our cost and efficiency programme, our review of historic client servicing records and the implementation of our new simple and comparable charging structure.”
Rathbones, a rival wealth manager, also reported quarterly net outflows of £561 million, taking its overall assets to £108.8 billion. Paul Stockton, its chief executive, said: “The potential for taxation changes in the forthcoming autumn budget has created a heightened opportunity for us to engage positively with our clients.”