A Baillie Gifford manager whose fund holds St James’s Place shares has predicted the company will have to cut its fees in the near future.
Milena Mileva, the manager of the Baillie Gifford UK Growth Fund, said the fees charged by the wealth manager and advice company were “very very high” across the entire chain, adding they “had to change” and “will come down”.
This was because she thought the company was more vulnerable to fee pressures because of its position in the value chain.
Mr Mileva said she had discussed the company's fee structure with its managers. She said: "Hands on the table, we’ve had debates on that. We do have slightly different views and we do debate it quite a lot.”
The £272m Baillie Gifford UK Growth Fund has SJP as its third biggest holding at 3.6 per cent of the portfolio and therefore has £10m invested in the company. The fund also holds Hargreaves Lansdown, which Ms Mileva recently said needed to 'grow up' in the aftermath of the Woodford saga.
Baillie Gifford as a whole is the fourth largest holder of SJP's stock according to Refinitiv data, with a 4.2 per cent holding worth £234m.
Ms Mileva's comments come after the FTSE 100 company hit the headlines in September with reports of large incentives for its advisers and sales people alongside hefty advice and exit fees.
But she said she was “not worried” about the impact of the negative media surrounding SJP.
Ms Mileva said: “I read all the articles with great interest and we will follow up on points. But we’ve reviewed the case and SJP is taking proactive steps to make efforts [on the issues raised]."
James Budden, director of marketing and distribution at Baillie Gifford, said: “I think their customers like them very much and enjoy the service they provide.
“The fundamental service is actually very attractive and works very well for the customer and that’s regardless of price. The proof is in the pudding, they have been successful in getting customers and assets because there is something there.”
Ms Mileva also brushed off any suggestion Schroders and Lloyds’ joint advice venture — Schroders Personal Wealth — would hurt SJP as a new rival in the market.
She said: “We’re also following that closely. But don’t underestimate the barriers of scaling that model.”
The Baillie Gifford UK Growth Fund has slightly underperformed its sector, the AIC UK All Companies, over the past three years, returning 25.7 per cent while its sector returned 27.4 per cent.
Ricky Chan, director at IFS Pensions and Wealth, thought any business would be impacted by media attention as it would cause clients to ask about costs, but said whether SJP responded to this was a “different issue”.
He added: “A lot of their clients buy into the premium brand that SJP has built so it’s hard to tell. I think probably in a down-turn we would see clients being more cost conscious.”
A spokesperson from St James’s Place said: “Independent research by Grant Thornton shows that St James’s Place has competitive fees compared to other fully advised wealth management services in the UK.
“Our focus is on providing quality face-to-face advice and, at an investment level, selecting the best managers from the global investment market to provide clients with well diversified portfolios to meet their investment risk.”
The spokesperson said SJP continually monitored its fund managers and were able to change at short notice without inconvenience or cost to clients.
imogen.tew@ft.com
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