Profits at St. James's Place took a £34m hit despite the advice company gaining 26,000 clients in the first six months of the year.
The firm saw its funds under management reach a new high of £109.3bn in the half year to June, but underlying profit, before shareholder tax, dropped from £115.4m in 2018 to £81.5m.
In its interim results published this morning (July 31) SJP reported it now has more than 700,000 clients and 4,096 advisers, an increase of 3.6 per cent.
Chief executive Andrew Croft said despite increasing cash being generated by the company's growing funds under management, SJP's profit had been hit by "more modest" gross flows and the cost of investment in its academy, expanding its partnership and operations in Asia.
Net inflows dropped from £5.2bn in 2018 to £4.4bn this year as gross inflow of funds also took a hit, falling from £7.9bn to £7.4bn.
Mr Croft said the company had remained resilient despite the current "uncertain macro-economic and political environment".
He said: "Whilst our new business continues to perform well compared to others in the wealth management sector, we are not immune to the challenging external factors that prevailed during the first half of the year."
SJP saw revenue from its advice charges take a slight dip in the first half of the year, coming in at £355.2m compared with £359.4m in the first six months of 2018.
Wealth management fees also dropped down from £333m in 2018 to £331.5m this year and investment management fees likewise decreased from £44.7m last year to £27.8m in the first half of this year.
Despite this, SJP saw its total income from fees and commission significantly increase, growing to £1.3bn this year and up from £876m in the first half of 2018.
Mr Croft added: "Experience tells us that whilst inflows may be impacted from time to time by external factors that are beyond our control, our clients' financial planning requirements remain unchanged and if anything, the need for advice is more pronounced in times of uncertainty.
"Therefore, in the short term as the current external environment remains uncertain, confidence towards investing may remain tempered. However, it is at times like this that relationships between client and adviser are strengthened."
rachel.addison@ft.com
