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Barclays tips SJP to double AUM and grow partner numbers

In a 19-page report, analysts predict St James’s Place can more than double its assets under management over the next five years to £93bn.

Barclays equity research team today (27 May) stated St James’s Place is the best-placed UK life company to benefit from both the transformation of the retirement income market post-Budget and the Retail Distribution Review.

The report states: “SJP is the best placed UK life insurer to deal with the changes announced in the UK budget, as it loses virtually nothing in lost annuity sales and should benefit from faster asset gathering and retention.

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“Indeed, the company can actually benefit from the effective abolishment of the need to buy an annuity as it can now retain the assets in a drawdown product as the client goes into their decumulation phase.

“Currently, SJP only offers drawdown for clients with over £250,000 in their pension, but we would expect this threshold to decline post the budget.”

The Barclays analysts state St James’s Place should do well as it “has a relatively simple business model” with aims is to grow investment sales by 15 to 20 per cent a year, driven half from increased partner numbers and half from increased productivity.

The report stated: “The UK budget and the relatively healthy equity market sentiment will help boost productivity, while the company is starting the year with 10 per cent more partners than 2013, most of whom will not hit full productivity until 2015.

“Furthermore, banks continue to leave “orphaned” clients as they pull back from the advice market post the retail distribution review.

“We believe more partners, going after more potential customers; alongside a more attractive investment landscape provides the perfect backdrop for continued outperformance for SJP.

“The record level of new partners added in 2013 will start to generate revenues and sales in 2014, and reach full productivity in 2015. With only 6 per cent of the advice market, we believe SJP can continue to grow its partner base (and hence sales) for many years to come.”

Barclays forecast for SJP comes after David Bellamy, chief executive of St James’s Place, said last month the business has “nothing to fear” about a forthcoming FCA thematic review into conflicts of interest at firms that recommend in-house funds.

He said the firm had no such conflicts as all client money was managed by independent fund managers with the company’s restricted label referring to its pension, unit trust and other wrappers.

Mr Bellamy said: “We are not concerned about the FCA probe as we don’t have in-house funds. We appoint blue-chip managers from all over the world to manage our money so there are no conflicts of interest.”