The troubles facing St James’s Place have presented an “opportunity” for rivals this year as investors scope out alternative firms in the market, a rival chief has said.
Hugo Bedford, boss of JM Finn, said that a cost shake-up at Britain’s biggest wealth manager and heightened scrutiny of its controversial fee structure could allow other players to scoop up more customers.
“We’ve talked to everyone in the industry and [they have] felt that there’s too much friction and costs in some of the incentivization schemes behind the way they operate their business,” Bedford told City A.M.
“At the end of the day, you’re reliant on contacts, you’re reliant on people referring you and saying ‘if you’re disappointed with [SJP], come and see JM Finn’, so yes, it’s an opportunity,” he added.
SJP is a “phenomenal” business however and JM Finn was not expecting a “wave” of clients to pour across from SJP, Bedford said,
The comments after a troubling period for St James’s Place after it came under pressure from the Financial Conduct Authority over its complex fee structure and costs.
The FTSE 100 wealth manager confirmed in October it would scrap an early exit charge on all new investment bond and pension clients from the second half of 2025, as well as breaking down its fees into advice charges, fund charges and product charges.
The firm has also faced a slew of negative headlines over lacklustre performance in some of its funds, with SJP vehicles dominating the industry ‘Dog Funds’ list which ranks the industry’s worst performing funds.
St James’s Place is the biggest player in the UK market with around £157.5bn assets under management in June this year. JM Finn had around £10.4bn of funds under management on behalf of some 18,500 clients, according to its most recent numbers.
Bedford’s comments come amid a difficult year for Britain’s money managers as rising interest rates squeeze investors and trigger a rise in outflows.
JM Finn notched near record inflows at £756m last year but Bedford added it had been a more “difficult” period this year.
“There’s just been a bigger outflow because people have, understandably, sat on their hands for a couple of years with COVID and then the Ukraine situation, [when] people have just not wanted to make decisions on their investments,” he added. “And now that’s all coming out.”
Bedford said that the firm’s “hands on” and “relationship-driven” model was allowing it to retain clients amid jitters around the economy, however.
JM Finn’s listed rivals have revealed a troubling picture for flows in recent results. Net inflows to St James’s Place slowed to £3.4bn in the first half of the year, down from £5.5bn in the same time last year.
Quilter similarly saw a 56 per cent slump in flows from the first half of the year to £700m.
A spokesperson for St. James’s Place, told City A.M.: “SJP’s focus is on establishing and maintaining long-lasting, trusted relationships with clients.
“The strength of our offering and the Partnership’s expertise in delivering holistic financial advice is demonstrated by our strong client retention levels of 95 per cent and the consistent delivery of net inflows in every quarter for more than 30 years.”