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SJP profits down as FSCS levy hits distribution arm

St James’s Place has reported an 8.5 per cent drop in pre-tax profits, from £90.1m in the first half of 2013 to £82.4m this year, with the firm’s distribution arm recording an £8.8m loss during the period.

SJP’s half year results, published this morning, reveal a 20 per cent surge in year-on-year sales at the company, from £373.9m in the first six months last year to £447.9m in 2014.

Profits within SJP’s life business were down 4 per cent, from £81.1m to £77.6m, while its unit trust arm increased profits from £25.3m to £29.4m during the period.

However, the company’s distribution business made an £8.8m loss, driven by a change in accounting rules which means it is required to recognise its FSCS levy immediately rather than phase it evenly throughout the year.

The result for the first half of 2014 therefore reflects an expected full-year FSCS levy of £6.9m, whereas the corresponding 2013 loss of £2.1m reflected a six-month FSCS charge of £2.4m.

Total adviser numbers at SJP are up 9 per cent in the past 12 months, from 2,466 last year to 2,688 in 2014, while funds under management have risen from £39.9bn to £47.6bn.

SJP chief executive David Bellamy says: “We believe that there is a growing market for trustworthy, personal advice in the UK marketplace and these results once again demonstrate that fact. They also demonstrate that the scale and quality of the company’s relationship based approach to wealth management, twinned with our distinct investment management proposition, which has been positioned to serve this market, is doing so.”

He adds: “We are encouraged by the pension and savings initiatives announced in the Budget earlier this year and indeed we fully support steps that seek to simplify the current regime and encourage savings for the future.

“We expect our advisers to play an increasingly important role in helping their clients to understand the options available to them leading up to, at and post retirement, in order that they can make the right decisions and plan accordingly.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Soren Lorenson 29th July 2014 at 9:17 am

    This unfair system depends upon the consent of all those involved. If a little firm such as mine refused to pay the FCA would simply stamp on us. If a big firm like SJP refused what would the FCA do? Would they de-authorise them? That’s hardly going to meet their criteria of bringing stability to financial markets. And SJP could justifiably argue that it wasn’t them that was selling the daft products that cause the claims. Their portfolio is really quite vanilla like most IFA’s who end up coughing for this FSCS nonsense. How would that look on the news, the FCA closes wealth manager with the loss of 1,000’s of jobs because it refused to pay into a compensation scheme that covers products that it doesn’t sell.

    Come on big firms – the whole industry, as well as your own investors, need you to stand up to this nonsense.

  2. E L Wisty (an only twin) 29th July 2014 at 9:24 am

    SJP run a very successful model; albeit one that is dripping with sophistry, and style over substance. It is telling that the unit trust business is profitable, while the source of the AUM (SJP’s itinerant ‘partners’) is starting to show cash flow fatigue.

    Does anyone think that SJP’s slick salespeople could go the same way as the ‘man from the Pru’?

  3. ONe might wonder if this is not unusual. HOw many firms are seeing their margoins squeezed as a result of the more trasparent disclosure regimes.

    I have a distinct feeling that this is a story of two halves. The big outfits are probably being hit harder as they have a bigger overhead tail, they have historically been high chargers and are now feeling some resistance.

    Whereas the smaller firm has usually been more cost effective, charged lower fees and may well actually be seeing improved trading conditions.

    Just a theory.

  4. This is more about how profits are distributed within a vertically integrated business. COBS 6.1A.9R require these firms to ensure that its adviser charges are at least representative of the services provided. It would be difficult to show that this was the case if there was a perpetual loss – regardless of the cause.

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