St James’s Place advisers exit network as shares fall on client asset concerns

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St James’s Place advisers exit

Highlights

St James’s Place shares fell over 7 percent after Prospera Wealth Management and Wellesley Investment Management, overseeing just over £2bn in assets, exited the network.
Sovereign Wealth, with about £3bn in assets, is reportedly considering leaving St James’s Place as the company faces both competitive and legal challenges.
Jefferies notes the three departing firms comprise only 2 to 3 percent of St James’s Place’s £217bn assets under management, with potential outflows likely spread over two to three years.

Adviser departures hit network confidence

As first reported by the Financial Times, Prospera Wealth Management in Sheffield and Wellesley Investment Management in West Sussex have left St James’s Place, according to entries on the Financial Conduct Authority register. News of the exits emerges on Thursday and sends shares in the Gloucestershire-based group down more than 7 per cent.

The two firms together oversee just over £2bn of client assets. Their departure follows reports a week earlier that Sovereign Wealth, another large St James’s Place advisory firm with about £3bn of assets under administration, is also considering leaving the network, while St James’s Place declines to comment.

St James’s Place operates through a partnership model with about 5,000 individual financial advisers working across advisory firms nationwide. Under that structure, appointed representative firms can sell only the company’s products and services.

Competitive and legal pressure grows

St James’s Place is cutting costs and trying to rebuild its reputation under chief executive Mark FitzPatrick, who is appointed in 2023. After facing scrutiny over a complex and opaque fee structure, the company restructures its charges last August, resulting in lower upfront fees for financial advisers.

The latest moves come as competitors expand by recruiting or acquiring advisers. Wellesley says on its website that it is now in partnership with Sweden-based Söderberg, which declines to comment; the group has more than £100bn in assets under advice, is backed by KKR and TA Associates, and is also moving to expand in the UK after agreeing a deal reported earlier to buy Schroders’ financial planning arm Benchmark Capital for about £200mn.

St James’s Place is also dealing with legal action from some former advisers who allege the company took their clients and did not pay fair compensation. Jefferies analyst Julian Roberts says FCA data does not indicate a large-scale exodus, noting the three firms represent about 2 to 3 per cent of St James’s Place’s £217bn in assets under management, while client outflows would likely take two to three years and some clients may remain with the group.

Our earlier article examined the surge in overseas takeovers of London-listed companies alongside a weak pipeline of new UK stock market listings. We noted that subdued valuations, policy uncertainty and fragile business confidence were creating a self-reinforcing drag on UK equity sentiment, with policymakers urged to provide clearer, steadier conditions to restore confidence.

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