SJP assets hit record despite ‘unwanted press attention’

But net flows slow by £360m from a year ago

SJP

A flurry of bad press around St James’s Place’s “cufflinks and cruise” rewards system has failed to dent the wealth manager’s total assets which reached a record high in Q3.

SJP’s funds under management swelled to £112.8bn from £109.32bn in the three months to 30 September. Year-to-date FUM is 18% higher.

Its record asset growth comes despite the fact the wealth manager has found itself at the centre of a media storm over its sales perks.

SJP has been accused of making a “mockery of regulations” for showering advisers with lavish gifts, from Montblanc pens to Mulberry bags and diamond encrusted cufflinks and broaches, for meeting sales targets.

Repeated negative press has taken a toll on morale at the firm, with reports emerging last week that some SJP advisers have threatened to stop selling investments for the rest of the year in protest of their annual luxury cruise, disguised as the company’s week-long overseas conference, being scrapped.

Net inflows slow

SJP chief executive Andrew Croft (pictured) called it “another good quarter” for the business, praising partners’ “excellent work” in building and maintaining close relationships with clients”.

SJP’s annualised FUM retention rate was 96% which is broadly in line with a year ago.

However money coming into the business was weaker when compared with a year ago.

Net flows fell 14.7% to £2.1bn over the three months from £2.5bn in Q3 2018, while new and existing clients poured £3.7bn of gross funds into the business, down from £3.8bn the year before.

Brexit will be biggest driver of SJP share price

Citi continued to hail the wealth manager’s resilient business model despite the “unwanted press attention”, noting gross and net flows came in at 3% and 1% above consensus. But it said Brexit uncertainty would continue to weigh on the share price moving forward.

“We see this as a solid set of results as the business continues to show its resilience through this period of uncertainty,” it said in an analyst note.

“Ultimately, we see the outcome of the ever-changing UK political situation as a bigger driver of the share price in the coming months. SJP will be hoping for some clarity so that money that is currently sat on the sidelines comes back into play.”

SJP’s share price has fallen 8% over the last three months which Citi noted is roughly in line with other asset gatherers like Hargreaves Lansdown.

In the firm’s Q3 results Croft downplayed the impact of the UK’s divorce from the European Union on the discretionary industry and said it would not affect SJP’s prospects in the medium to long-term.

“While political and macro-economic uncertainty may affect the pace of some discretionary investment flows from time to time, it has no bearing on the continuing need for holistic, long-term financial planning,” he said. “Indeed, we see demand for sound, personal and trusted financial advice growing while at the same time the ‘advice gap’ remains.”

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