(Alliance News) - St James's Place PLC on Tuesday said it will overhaul its free structure amid pressure from UK regulators, removing penalties for early withdrawals.
The Cirencester, England-based wealth manager said the changes to its charging structures are planned to come into effect in the second half of 2025.
The changes create a revised charging structure "for the vast majority of new investment bond and pensions," St James's said. They will operate with an initial charge and ongoing charges that apply from the outset, but will be without any early withdrawal charges or gestation period.
On Friday, St James's had said it was reviewing its fee structure, on the same day the Financial Times reported that critics cited "opaque and expensive charges" for financial advice and "stiff penalties" for early withdrawals.
https://www.ft.com/content/1280b319-578e-44d7-b240-1e306c2d1389
The company said the changes will strengthen its business and underpin its growth ambitions into the future. It expects incurring investment costs of GBP140 million to GBP160 million before tax, with GBP10 million over the rest of 2023 and GBP95 million in 2024 and the balance in 2025.
Further, it expects a decline in net income from annual management charges in the short term, reflecting reduced and tiered ongoing product charges across its wrappers. It anticipates net income from mature funds under management to contract by around 11 basis points to a range between 43 and 45 basis points from the point of implementation onwards.
Finally, the removal of initial product charges across all product wrappers will mean no more contribution to the cash result from a margin arising on new business.
St James's said the changes will rebalance its advice and product charges towards the value of the advice. "Making these changes will position SJP and the partnership for long-term, sustainable success. Simplifying our charges will support our brand and reputation and challenge the common misconceptions around our proposition, broadening our appeal over time; and they will enable us to better present the value we and our advisers are able to deliver for clients across all elements of our proposition," it said.
St James's on Tuesday said: "In addition to benefiting from improved simplicity and therefore comparability, clients will see enhanced value from the changes we are making, with reduced overall ongoing charges for existing client investments across our core product wrappers."
"We are ensuring we continue to have a sustainable and competitive charging platform for the long-term, offering simplicity, comparability, and a continued focus on value for clients," the company said.
Meanwhile, the company released an update for the third quarter to September 30. Closing funds under management as at September 30 rose 11% to GBP158.57 billion from GBP143.14 billion a year prior. Net inflows in the quarter fell to GBP910 million from GBP2.19 billion a year ago.
Chief Executive Officer Andrew Croft said: "Looking forward, we are beginning to see signs that inflation is moderating and that the current cycle of interest rate increases may be reaching a peak, bringing some optimism that this will ease the pressure on clients and will, in due course, provide for a more favorable operating environment over time."
St James's shares were 1.9% higher at 684.80 pence each on Tuesday morning in London.
By Tom Budszus, Alliance News reporter
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St James's Place (STJ)