St James’s sees funds soar to record £27bn

A COMBINATION of low interest rates, the increasing tax burden and a strong performance from the FTSE 100 helped wealth manager St James’s Place to expand its funds under management to an all-time high of £27bn in 2010.

Pre-tax profits rose almost 70 per cent to £84.2m in the year to December 31, beating expectations and it added £3bn of new business during 2010.

David Bellamy, St James’s chief executive, said: “The step up is largely about confidence returning to the markets, sustained low interest rates driving people into a different space, the increasing tax burden getting people to come and talk to advisers plus more partners working to bring in new business.”

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He added that people are more cautious in the current economic climate.

“After 2008 and 2009, risk appetites have changed,” said Mr Bellamy. “People are also more concerned about preserving their wealth. They hope they’re going to live longer and are paying more attention to how they will pay for it.”

The group said that a six per cent increase in the number of partners the firm employs and a 23 per cent rise in their productivity also drove new business.

It said that the extra employees will help grow the business in 2011.

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The group plans to grow its partner base by a further five to seven per cent in 2011.

St James’s Place, which is 60 per cent-owned by Lloyds Banking Group, contracts out the management of its funds and does not employ in-house fund managers.

St James’s Place said it will focus on the seven model portfolios it recently launched, which select funds from the offered range based on a client’s investment needs.

St James’s Place will pay a full-year dividend of six pence, up 33 per cent on 2009, with a similar rise expected for the 2011 dividend.

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The group has 1,500 partners or wealth advisers affiliated to 18 regional offices throughout the UK. One of the principal regional offices is in Leeds, which supports over 100 partners.

“Whilst the road to recovery for the UK economy is likely to remain challenging, the need for trusted financial advice is greater than ever,” said Mr Bellamy.

“Given the market opportunity available to us, together with the continuing growth and development of the partnership, we remain confident of our ability to achieve the 15 to 20 per cent per annum new business growth target over the longer term.”

Analysts at Numis said St James’s Place’s medium and long-term prospects remained attractive after the results.

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“We regard the current price as an attractive entry point for longer-term investors and remain our top pick in the asset/wealth sub-sectors,” they said in a note to clients.

Analyst Eamonn Flanagan at Shore Capital said: “To us, these are stunning results and confirms the growing maturity of the book, with £27bn of funds under management.”

Shares in St James’s Place closed down 0.7 per cent last night, a fall of 2.1p to 308p after investors took profits.

The group’s chairman Mike Wilson said that 2010 was an “excellent year” for the group as it built on the robust performance in 2009 by delivering record new business, record profits and our highest ever level of funds under management.

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“We continue to establish ourselves as a market leading UK wealth manager by ensuring that our partnership remains best placed to offer trusted advice to our clients, and provides them with market leading investment products that can cater to their ever changing needs,” he said.

Mr Bellamy said that the group has established a strong reputation in the wealth management market and it remains committed to building long-term relationships with clients who can trust St James’s Place to provide sound financial advice and manage their investments well.

“Our reputation and track record have enabled us to attract good quality advisers into our partnership and we remain confident that we will be able to continue this growth over the next few years,” he said.