UK’s largest wealth manager SJP warns of slowing growth

The UK’s largest wealth manager said it is expecting growth to slow from record inflows last year, as the boost from the pandemic recovery wanes and turbulence hits financial markets.

St James’s Place said that customers investing money they saved in the first year of the pandemic helped boost gross inflows of new client funds to £18bn last year, up 27 per cent from the year before. It is expecting slower growth of just 7 per cent in the year ahead.

“There was some pent up savings from people not having spent during the pandemic. We undoubtedly benefited from that,” said Andy Croft, SJP’s chief executive.

Wealth managers that profited from a pandemic recovery and buoyant financial markets in 2021 now see those factors fading, with a more difficult road ahead. Markets have opened 2022 in a stormy mood, unsettled by rising central bank interest rates and Russian aggression.

“I’m not going to try to predict what happens on the day that Russia invades Ukraine,” Croft said on Thursday. “This is clearly a disturbing situation which we obviously need to watch closely.”

Andy Croft says there will always be times when investors want to step back © St. James’s Place Wealth Management Group

Croft said the company’s ability to generate new business had withstood market crises before. “There will always be moments in time when people might want to step back,” he said.

The threat of inflation eroding cash savings is likely to provide a counterbalance to negative sentiment, Croft said, because it will prompt more people to seek financial advice and invest.

SJP said the recovery in “consumer confidence” last year had also been favourable to the business. It reported a 52 per cent rise in underlying cash profit, compared to the year before, to £401mn, with its dividend per share rising 35 per cent to 52p. Net inflows rose 34 per cent to £11bn, increasing total funds under management to £154bn. 

Its shares fell around 8 per cent by midday, as the FTSE 100 index also tumbled in reaction to the Russian invasion of Ukraine.

London wealth manager Rathbones also reported strong 2021 results on Thursday, with profit before tax up 30 per cent from the year before to £121mn. 

“Our revenues are linked very closely to asset prices, which held up through most of 2021,” said Paul Stockton, chief executive. “In that sort of climate, it encourages investment. There is less uncertainty around.”

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