Difficult markets drag SJP assets below £100bn milestone

Brooks Macdonald sees more dramatic shrinkage of FUM


Challenging markets in the fourth quarter have left St James’s Place’s and Brooks Macdonald’s assets battered, with the former tumbling from its recently achieved £100bn milestone.

SJP finished 2018 with assets just 5% higher, growing from £90.8bn to £95.6bn. The UK’s largest wealth manager had only just surpassed £100bn in assets the previous quarter, delivering rosier flow figures than fellow industry giant Hargreaves Lansdown.

Funds under management at Brooks Macdonald were down more substantially over its last financial quarter, contracting 7.2% from £12.8bn to £11.9bn. Over the six months to 31 December 2018 the AIM-listed manager’s FUM was down 4.5%.

SJP delivers sluggish flows

SJP chief executive Andrew Croft hailed the firm’s “robust performance” for the year despite net inflows falling short of the “exceptional outcome in 2017”.

Croft said that the quarter began strongly but inflows weakened in the final two months as clients and advisers grew jittery due to the volatile market backdrop.

SJP took in £3.9bn of gross inflows over the final quarter which was down from the £4.1bn brought in during the record Q4 the year before.

However, gross inflows for the year were up 8% on 2017 at £15.7bn, with its pensions business continuing to drive money coming in.

Croft cautioned that challenging conditions “will slow the pace of fund inflows from time to time” but said the group continued to see a growing demand for advice. He noted that group retained 96% of client funds last year and had grown its adviser network by 8% to 3,954 members strong.

Brooks Macdonald ‘streamlining’ update

Meanwhile at Brooks Macdonald net fund flows slowed to £83m in the quarter, up 0.6%. On a six-month view net flows are up 1.9% at £241m.

The wealth manager said it had seen short-term pressure on revenue driven by macroeconomic and political uncertainty. But it said that underlying profit for the financial year remains in line with expectations assuming there is no further deterioration in markets or client sentiment.

The group made waves at the start of the year by announcing it would be culling 50 jobs, mainly in administration and IT, as part of a plan to streamline the business. Brooks Macdonald anticipates the restructure will reduce costs by £4m per annum.

Caroline Connellan said in the latest update that the group had already begun putting its cost cutting plans in motion, which she thinks will improve margins over the medium to long-term, and expressed hope for the firm’s future.

“The fundamental opportunity for our business remains strong,” she said. “I am confident that the strength of our client and adviser relationships, coupled with the investment we are making in our offering, position us well to capture future growth. The efficiency measures that we recently announced combined with ongoing cost discipline will help deliver greater value from this opportunity.”

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