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St James’s Place has set out new growth targets and plans to slash costs, sending shares in the UK’s largest wealth manager up 16 per cent on Tuesday.
Chief executive Mark FitzPatrick said the business would aim to cut £100mn a year by 2027 to generate cumulative savings of about £500mn until 2030, half of which would be reinvested in SJP.
FitzPatrick said the plan, which includes increasing its use of low-cost index trackers, would help grow the amount of money SJP manages each year by “mid-to-high single digits”.
Shares rose by more than 16 per cent in early trading on Tuesday but are down more than 31 per cent in the past 12 months.
The new cost targets came as the business reported net inflows of £1.9bn in the first half, down from £3.4bn the same time last year but above analyst expectations of £1.3bn. SJP’s total assets under management rose to a record £181.9bn, up from £157.5bn a year ago.
FitzPatrick said the review was aimed at “taking a step back to assess the development of our marketplace, hold a mirror up to our business and ensure we are setting out on a clear path forward”.
SJP has endured a challenging year in which its shares have plunged, leading to its ejection from the FTSE 100.
New regulations aimed at giving customers a fair deal prompted the wealth manager to reduce its fees last July. The company made more drastic changes to its charging structure just months later, which will come into effect next year.
SJP also set aside £426mn for potential client refunds this year following a spike in complaints from customers claiming they had not received a sufficient level of advice.
FitzPatrick said plans to implement the new charges were “on track” for next year and noted that management was “comfortable” with the provision it had set aside.
Analysts at Bank of America also noted that SJP would buy back £32.9mn of shares over the coming weeks, which was “earlier than expected”.
