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St James’s Place shares soar after unveiling £500m of cost cuts

Commuters in the Square Mile
Commuters in the Square Mile

Britain’s largest wealth manager unveiled a £500m cost-cutting plan on Tuesday that lifted its share price up by 25pc, reflecting its biggest jump in 16 years.

St James’s Place (SJP), which has been struggling ever since a regulatory crackdown on its fees earlier this year, announced a strategy shake-up during its latest half-year results.

It plans to cut £100m a year by 2027, as bosses aim to hit a £500m savings target by 2030.

The surge in its share price is the largest increase for the FTSE 100 giant since the financial crisis in September 2008, marking a turning point for the group under Mark FitzPatrick, the chief executive.

St James’s Place, which manages £182bn of savings for 1m people in England, has endured a torrid few months after criticism of its opaque and costly fee structure prompted investors to turn its back on the stock.

Prior to today, the company’s share price was down by 18pc since the start of the year.

Concern among investors peaked in March when the group was forced to book a £426m provision and cut its dividend to pay for refunds to customers over advice failings.

Mr FitzPatrick, who took over in December, said Tuesday’s jump showed that the group has turned a corner, even though shares are still 60pc below their 2022 peak.

He said: “Despite all of the negativity and the dark clouds that we have had over the last 12 months – and the last 12 months have been very difficult for brand reputation – we have seen a phenomenal performance by the business.

“Clients are sticky and they really get on well with their advisors. In uncertain times, that’s when you need advice and that’s what we’re there for.”

Mr Fitzpatrick plans to double the £400m or so of underlying cash that SJP generates every year.

To trim costs, he will reduce spending on consultants and use more automation for its back-office work.

Job losses are also expected but the group refused to provide any detail.

Its latest financials revealed net inflows of £1.9bn in the first half, which was above analysts expectations of £1.3bn. This was alongside profits of £205.2m.

Mr Fitzpatrick said the results were a reset moment and showed “everything is moving in the right direction”. He added: “St James’s Place has come out the other side and actually been there for clients.”

Alongside Mr Fitztpatrick’s appointment, SJP also hired former Credit Suisse banker Caroline Waddington as its new finance chief in June.

Bank of America analysts said the latest SJP results had “smashed expectations”, adding that reports of SJP’s “death have been greatly exaggerated”. Bank of America said the new plan “could help SJP rebuild credibility”.

SJP previously faced scrutiny from the Financial Conduct Authority (FCA) over whether customers had received end-of-year reviews for which they had been charged.

As Britain’s largest wealth manager, the FCA took a particular interest in SJP when examining how customers were being treated across the sector.

Despite this, Mr Fitzpatrick said: “The relationship with the regulator is very open, transparent. It’s a robust relationship.”