St James’s Place has attracted over £9bn worth of new investment in the first half of the year, trumping its pre-pandemic performance as it eyes £200bn in assets by the end of 2025.
The FTSE 100 wealth manager closed out H1 2021 with a record £143.8bn in funds under management (FUM), up 11% from £129.3bn in December 2020.
Improving client sentiment during the Covid economic recovery and a sharp increase in household savings rates helped SJP deliver gross flows of £9.2bn over the period. On a net basis it landed £5.5bn of client cash, representing 8.6% of FUM.
Gross flows were 27% higher than the same period last year when it brought in £7.3bn amid the onset of the coronavirus pandemic, while net flows were up 22% compared to last year’s £4.5bn.
However, SJP said a better measure of its progress was comparing the figures against pre-pandemic growth in H1 2019 where gross flows and net flows totalled £7.4bn and £4.4bn respectively.
“On this basis, our gross and net inflows for the first half of 2021 represent compound growth of some 12% per annum over the two-year period,” it said.
SJP targets net inflow growth of 10% a year
SJP has set itself a number of targets to grow the business in the coming years to “maintain its market leading position”.
The wealth manager remains the largest in the UK by some distance but consolidation has been ramping up with Rathbones the latest rival to boost assets through M&A.
SJP intends to grow new business by 10% per annum by continuing to grow the army of advisers that make up its Partnership. It had 4,477 qualified advisers at the end of 30 June 2021, up 139 year-to-date.
Alongside this it has set a target to grow net inflows by 10% per annum. Coupled with “modest growth” in investment markets, it expects FUM to exceed £200bn by the end of 2025.
“The impact of the pandemic on the timing and value of flows in 2020 and 2021 will naturally result in a variable pattern of year-on-year growth and normal phasing of business,” said chief executive Andrew Croft (pictured).
“Taking this into account together with a strong start to July, we anticipate a rate of gross inflow growth for the second half of around 20% despite strengthening comparatives in the latter part of the year.”
SJP boosts cash levels
Reducing its “controllable expenses” is also top of the wealth manager’s agenda.
Last year activist shareholder Primestone Capital excoriated SJP in a letter to shareholders, calling on the wealth manager to get a handle on its “high cost culture”.
At the start of the year SJP revealed it would be axing 200 roles from its workforce, representing 10% of UK headcount, in a bid to simplify operations.
Costs over the first half of 2021 were “modestly lower” than last year due to cost cutting efforts phased in over the second half of 2020. As a result, underlying cash was £189.3m, some 65% higher than last year.
However, profit after tax was lower at £120.9m, compared with £178.1m last year, which SJP said was down to the “the volatile experience of policyholder tax asymmetry” year-on-year.
See also: SJP finds defenders as it stands accused of letting shareholders down
