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SJP shares nosedive as dividend is halved and complaints stack up

28 February 2024

The firm has been forced to hold back cash to pay out overcharged clients.

By Jonathan Jones,

Editor, Trustnet

St James’s Place has held back £426m in provisions to refund clients who paid its ongoing advice fees but did not receive an “acceptable standard” of service for their money, its latest full-year results reveal.

To do this, the firm announced it would halve its dividend, with the final payment of 8p taking the full-year payout to 23.83p – less than half of the 52.78p shareholders received in 2022. Shares in the UK’s largest wealth manager plummeted this morning, down by more than a third.

The issue relates to ongoing client servicing in the years preceding the firm’s investment into a new Salesforce CRM system in 2021, the report said. The company received an uptick in complaints on the issue last year.

Mark FitzPatrick, chief executive officer of SJP, said: “A combination of the provision we have established and an expected decrease in the level of profit growth in the next few years as we transition to our new charging structure, reduces our ability to invest for long-term growth in our business over the next few years. Accordingly, the board has decided to revise our approach to shareholder distributions.”

Moving forward, the company said total annual distributions to be 50% of full-year underlying cash, while the dividend will be fixed at 18p for the next three years.

Elsewhere in the report, net inflows halved from £9.8bn in 2022 to £5.1bn in 2023, although funds under management rose from £148.4bn to £168.2bn, after the firm took in £15.4bn of money from new clients.

FitzPatrick said: “We have a strong and enviable track record of driving growth through an unbroken history of net inflows in every year over three decades.”

The firm also boasted a strong client retention rate of 95.3%, although this was slightly below the 96.5% in 2022.

St James’s Place has been under scrutiny ever since the Financial Conduct Authority’s introduction of Consumer Duty last year, which forced firms to justify their fees.

It has already removed exit fees on new investment bonds and pensions products and announced towards the end of 2023 that it would review its manager line-up with a focus on more passive options to help lower costs.

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