The remarkable redemption of St James’s Place

There was an inevitability to St James’s Place’s ejection from the FTSE 100 last year. Long-standing controversy around opaque customer fees, and a hefty compensation pot to cover potential mis-selling, had weighed on its share price for months.

But the UK’s largest wealth manager staged a sharp turnaround after its ignominious exit, rejoining the blue-chip index six months later, at the end of 2024. Shares in the Gloucestershire-based business are up more than 50 per cent so far in 2025, putting it in the top 10-performing FTSE 100 stocks.

In the past few months, a review from the watchdog has meant SJP has been able to claw back some £63mn of its £426mn redress pot earmarked for customers who had not received sufficient levels of financial advice, freeing up more cash for the company to buy back its own shares.

Meanwhile, assets under management have hit a record £198.5bn as the wealth manager doubled client inflows in the first half of the year. The group has overhauled customer fees, a major undertaking following years of criticism over its opaque charges and “exit” fees for people selling out of their products early.

As chief executive Mark FitzPatrick prepares to unveil the group’s third-quarter earnings next week, the spotlight will be on its ability to attract financial advisers under its new charging structure, which cuts the maximum initial advice fee they can potentially earn. SJP is also aiming to cut £100mn of costs by 2027 and generate savings of £500mn by 2030 — half of which would be reinvested back in the business.

Proponents laud SJP’s new fee structure and turnaround. “Under Fitzpatrick’s leadership they have brought charges back into the pack of comparable peers whilst retaining market leadership in a sector that can only continue to grow,” said Richard Buxton, a former fund manager who personally holds SJP shares.

“There was a dislocation between the share price and the company’s transformation,” said Rae Maile, an analyst at Panmure Liberum.

“The market has reflected on itself and the share price has now rebounded, but the company is still being underestimated. It’s still undervalued we believe, and materially so.” SJP’s shares are currently trading at £1,303.50.

The new customer charges, which came into effect at the end of August, split costs into their component parts, including fees for advice, the product — such as a pension — and the investment costs. An “exit” penalty — applied to pension and bond products if a customer sold out within six years — was also removed.

But the new model is not without its challenges. The changes followed sweeping Consumer Duty rules introduced by the Financial Conduct Authority in July 2023, aimed at ensuring customers receive a fair deal. The FCA pushed SJP to overhaul its fees after considering that its initial proposal did not go far enough. The implementation of the new charges was also slightly delayed owing to technology issues.

According to David McCann, analyst at Deutsche Numis, the new fee structure results in a typical annual cost of 1.9 per cent of a customer’s investment, which is slightly less than the 2 per cent under its former model, and compares with the 1.6 per cent to 2.1 per cent range charged by its rivals. However, SJP is rolling out lower-cost funds which will bring this average charge down.

For advisers, though, the chance to earn as much as 4.5 per cent through a so-called initial advice charge, which includes giving a client advice at the outset and a financial plan, has dropped to a maximum of 3 per cent.

One person close to the company warned that this could make it harder for SJP to attract financial advisers to join its “partnership” — a fleet of 5,000 advisers across the country.

FitzPatrick told the Financial Times that he did not believe this would be an issue. “We’re not finding that at all. There’s a lot more that we offer our partners . . . than solely a fee, whether it’s the training . . . the technology, the support.”

He pointed to the group’s “academy”, which trains up advisers, noting that a younger generation was being fostered to provide financial advice.

Some analysts have noted that SJP has stopped updating the market on the number of advisers it has. “The level of granularity might not be there going forward because the narrative is more nuanced and the market will decide if we’re successful or not by the quality of our output,” FitzPatrick said.

The effect of the fee changes on the business means that there will be a dent to profits in the second half of this year and next, but growth will resume from 2027, analysts have estimated. “From 2027 onwards, [profits] grow at about a 20 per cent compound annual growth rate,” said FitzPatrick. “So on a 12-month window it’s going to look like it’s going backwards [but] in 24-48 months we enter a very different world.”

Another key part of Fitzpatrick’s turnaround is SJP’s culture; the firm was criticised in the past for its opulent awards to top-selling advisers, ranging from swanky trips overseas to designer bags.

FitzPatrick has ditched the group’s annual gathering at London’s O2 arena as well as its spring sports break at the luxury Gleneagles hotel in Scotland.

But FitzPatrick is aware of the need to ensure advisers continue to meet to preserve the network and a sense of camaraderie. Under the new charging model, this task might become even more of an imperative to entice new advisers.

“Culture is probably the thing that takes the longest to shift and change and evolve,” said FitzPatrick.

“We are announcing to the partnership over the course of the next couple of months a new event programme for next year, that will have a lot of opportunities through the year for the partnership to get together . . . because it is so important.”

SJP will also launch a lower-cost range of investments next month, to help make the group’s investment offering more competitive as its charges are now more accessible. The new Polaris Multi-Index portfolios will be rated according to their risk and will invest in cheaper index trackers based on SJP’s managers setting the asset allocation, bringing the total charge of these investments to 0.2 per cent a year.

“The new range does offer genuinely competitive fund fees, which should improve outcomes, but once you add advice and platform costs, there are still far cheaper, more transparent options available elsewhere,” said Robin Powell, a consumer champion.

“Had these funds launched three decades ago, SJP clients would be significantly better off today,” he added. “Better late than never, perhaps, but it’s a shame that it ultimately took regulatory pressure to force SJP’s hand.”