SJP cashes in on RDR as pre-tax profits double

St James’s Place has reported strong results for the first six months after the implementation of the Retail Distribution Review, confirming the view of a number of market analysts that the vertically integrated wealth manager was set to benefit from the regulatory overhaul.

In its half-year results today (31 July), the firm announced that operating profits increased 39 per cent to £233.6m in the first six months of this year, while pre-tax profits in this period doubled year on year from £220.5m in the first six months to 2012 to £444.6m

The firm said this was a result of new business growth - up 21 per cent on an annual premium basis to £426.5m, while single investments rose 28 per cent to £3.5bn - as well as strong investment performance.

SJP also reported a net inflow of funds under management of close to £2bn, up 32 per cent, and funds under management of £39.9bn, up 29 per cent on the same period in 2012.

The firm reported a steady increase in the number of adviser partners, which were up 6.5 per cent to 1,905. SJP said the additional recrutiment resulted in its distribution arm making a “negative contribution” of £2.1m for the period, compared to a £2m positive contribution last year.

Regulatory fees for the first half of the year stayed stable at £4.1m compared to £4.2m in the first half of 2012.

Earlier this year, FTAdviser revealed that advisers and industry figures were questioning whether SJP’s charging structure complies with Retail Distribution Review remuneration rules, which came into force in January.

According to two former adviser ‘partners’ at the firm, St James’ Place’s charging structure does not appear to have significantly changed since the new rules came into force.

SJP blamed this questioning on the fact it is a vertically integrated business, meaning it offer clients a fully integrated service.

The firm said at the time: “As a vertically integrated business, we facilitate the payment of the advice from the charges we take from our clients’ investments. The cost of our advice along with the other costs of doing business, such as the costs of our services and those of our fund managers, are included in the charges clients pay and is not an additional amount.”

Commenting on the results, David Bellamy, chief executive, said: “I am very pleased to be able to report another strong performance from St. James’s Place.

“At the heart of our business are the long term relationships that our partners build with clients, working with them over time to understand their financial needs and goals and helping them to achieve them.

“These results demonstrate that the focus we place on those long term relationships with both our partners and clients over time, delivers extremely good value to all our stakeholders.”