St James's Place, the UK's largest wealth manager, reported a decline in gross inflows for the third quarter of 2024 as the company presses ahead with a strategic overhaul following regulatory pressure. Gross inflows fell 9% year-on-year to £4.3bn, down from £4.7bn in the same period last year, the company said in a trading update on Thursday.
Continued pressure on net inflows
Net inflows also dropped sharply, falling 56% to £0.5bn from £1.1bn a year earlier. The company attributed the decline to ongoing changes in its charging structure and a shift in client investment behavior. Funds under management stood at £158bn at the end of September, down from £162bn at the end of June, reflecting market volatility and net outflows.
St James's Place has been overhauling its business model after facing criticism over high fees and a lack of transparency. In February, the company agreed to overhaul its charging structure following a review by the Financial Conduct Authority (FCA). The changes include capping exit fees and introducing a simpler fee structure.
Strategic overhaul and regulatory impact
Chief Executive Mark FitzPatrick said: "We are making good progress with our strategic overhaul, but the impact on inflows is expected to continue in the near term. We are focused on delivering better outcomes for clients and ensuring our business is sustainable for the long term." The company has also been reducing its cost base and simplifying its product range.
Analysts have expressed caution about the pace of the turnaround. "The decline in inflows is a concern, but it is largely expected given the scale of the changes underway," said a note from RBC Capital Markets. "The key will be whether the new strategy can attract clients back once the overhaul is complete."
Outlook and market reaction
St James's Place reiterated its full-year guidance, expecting net inflows to be in the range of £2bn to £3bn, down from £5.3bn in 2023. The company also said it remains on track to deliver cost savings of £100m by 2025. Shares in the company fell 2.5% in early trading on Thursday, reflecting investor caution over the near-term outlook.
The wealth management sector as a whole is facing headwinds from regulatory changes and market uncertainty. However, St James's Place's overhaul is seen as a necessary step to align with evolving client expectations and regulatory standards.
