st james place beneficiary of financial repression

St James’s Place saw net new business of £700m in the first quarter and retained 95% of existing client funds, fulfilling speculation from industry insiders that the firm has been a beneficiary of financial repression.

st james place beneficiary of financial repression


Total funds under management at the end of March reached a record £31bn, an increase of 9% or £2.5bn since the end of December 2011.

Edward Hocknall senior partner at Baillie Gifford until this week explained why business models like St James’ Place were posed to do well in current markets.

"There are a lot of rich people becoming disenchanted with property and becoming richer. The people servicing them are making huge amounts of money," he said.

Hocknall was justifying the presence of St James’s Place within the Baillie Gifford Managed Fund’s top six holdings.

"There are about 28 wealth managers in Edinburgh, every firm you have ever heard of have a flourishing wealth management business. There’s money being taken out of deposit account and property as financial repression forces people out of these assets and St James’s Place is a beneficiary of that."

He added that generally it "makes no sense at all to get a wealth manager to look after your money" because the fees they charge hardly justify the return.

"They put you in things that are not going to make you enough money. They won’t make you more than 4% and will charge you 3%," Hocknall said.

But he said people stayed with wealth managers because they would have one good year every three or four years, which retains confidence in what they do.

On St James’s Place, he said: "I think it’s more sensible than most [wealth managers]. It is not really a standard wealth management firm, they are the good guys if you like."

Following the positive results, David Bellamy, chief executive of St James’s Place, said: "We are pleased to report another strong performance in what remains a difficult period for the retail investment market.

"While investor confidence remains comparatively low, the breadth of our investment proposition, together with the growing strength and the quality of our distribution has enabled us to attract a further £1.3bn of new funds in the period."

What do you think St James’s Place are doing right or wrong with their business model? Let us know below…



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