SJP bucks trend of anaemic growth among DFMs despite scandals

A series of scandals have failed to unsteady St James’s Place which delivered a “solid” set of results in 2019, making it a “clear standout” in the wealth industry, which has been haemorrhaging money.

Total funds under management climbed 22% to hit a new high of £117bn ($151bn, €137bn) in 2019, a year where the wealth manager was blasted for its adviser rewards scheme and pulled £3.5bn in segregated mandates from stricken manager Neil Woodford in the aftermath of his fund suspension.

The FTSE 100 wealth manager took in £9bn of net inflows last year, which represented 9% of opening funds under management. But the level of money coming in was down 12% from the £10.3bn that flooded into the business in 2018.

Profits at the wealth manager slid from £1bn in 2018 to £952m in 2019 which chief executive Andrew Croft said was due to higher costs of £38.8m, relating to the migration of £69.1bn of its customer accounts onto the Bluedoor platform in September. The replatforming is expected to cost SJP a further £10m in 2020.

“Last year was challenging for the UK wealth management sector with investor sentiment being impacted by the uncertain macro-economic indicators, the US/China trade dispute, and the domestic political environment,” Croft said.

“Therefore, I am pleased to report a solid set of results, once again demonstrating the resilience of the St James’s Place business.”

The ‘clear standout’ in wealth industry

SJP’s growth provides a striking contrast with other rivals in the sector, many of which struggled to hold onto assets toward the end of 2019.

Peel Hunt analyst Stuart Duncan described SJP as “the clear standout” in Q4 19. “Although the absolute quantum of flows was lower than the prior year, the business still generated over £2.4bn of net new business and has delivered growth of close to 10% for the full year,” Duncan said in an analyst note issued earlier in the year.

This contrasts with Brooks Macdonald and Charles Stanley which haemorrhaged £500m and £300m and Rathbones which delivered flat net flows.

Brewin Dolphin “fared better” thanks to its MPS offering, Duncan said, though its boost in assets was driven mostly by investment performance and M&A activity.

Listed wealth managers Q4 performance

Source: Peel Hunt

Culture

SJP Chair Iain Cornish addressed the media firestorm over its cufflinks and cruises perks system in the firm’s annual results.

“It was clearly disappointing when some aspects of our culture were subject to criticism last year, particularly in relation to way in which the partnership is rewarded,” Cornish said.

“Recognising achievement and bringing advisers together to provide development and networking opportunities remains an important part of how we operate, and indeed it is an essential way of strengthening culture in what is a geographically widely dispersed partnership.

“Whilst we do not believe that the criticism we received is reflective of our community as a whole, we continue to review all aspects of partnership recognition and remuneration to ensure they remain appropriate in today’s world and we will continue to further develop our approach in this area in 2020.”

Cornish went on to say that the board would continue thinking about “the wider societal purpose and the culture of the business and how best to refine the way in which it assesses them”.

SJP announced it would be overhauling its rewards system earlier this month including axing its annual cruises for top performing advisers.

It has also sought to add more women to its senior ranks, including adding ex-Legal & General Investment Management personal investing boss Helena Morrissey to its board, following allegations of a macho culture at the top.

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