St. James's Place (SJP) is overhauling its partner compensation structure, moving to more frequent payments in a bid to retain advisers as the wealth manager faces a mounting exodus. The firm announced that partners will now receive commission payments monthly rather than quarterly, a change aimed at improving cash flow and loyalty among its 4,800-strong adviser force.
Exodus Accelerates
The shift comes as SJP grapples with a wave of departures. According to the company, around 400 advisers left in 2024, representing roughly 8% of its partner base. This follows a turbulent period marked by regulatory scrutiny and a pivot away from its controversial exit fees, which were scrapped in 2023 after pressure from the Financial Conduct Authority (FCA).
"We are listening to our partners and making changes that support their businesses," said SJP chief executive Mark FitzPatrick in a statement. "The move to monthly payments is a direct response to feedback and part of our broader efforts to enhance the partner experience."
Fee Restructuring Underway
The more frequent payment schedule is just one element of SJP's wider strategic overhaul. The firm is also simplifying its fee structure, moving to a single annual charge from a complex mix of initial and ongoing fees. This follows a review prompted by the FCA's Consumer Duty rules, which require firms to demonstrate fair value.
SJP reported that the new charging structure will reduce total costs for clients by an average of 20%. However, the transition has been costly, with the firm setting aside £426 million in 2023 to cover the impact of fee changes and compensation for clients who were charged exit penalties.
Financial Impact and Outlook
The adviser departures have weighed on SJP's financial performance. The company reported net inflows of £1.1 billion in the first half of 2024, down from £1.6 billion a year earlier. Funds under management stood at £157 billion as of June 30, 2024, compared to £158 billion at the end of 2023.
Analysts at RBC Capital Markets noted that the monthly payment change could help stabilize the partner base but warned that retention remains a key risk. "SJP is taking steps in the right direction, but the competitive environment for advisers is intense," they wrote in a note.
SJP shares have fallen 12% over the past year, underperforming the FTSE 100. The company is scheduled to report full-year results in February 2025.
