FTSE 100-listed wealth manager St James’s Place entered 2024 in a precarious position amid thousands of overcharging claims that threatened the bottom line, causing shares to plummet to their lowest point in over a decade.
However, less-terrible-than-expected interim results posted in July, which outlined half a billion pounds in cost savings and a £33 million buyback for good measure, were applauded by City analysts, kicking off the beginnings of a share price recovery.
Shareholders will be hoping to see more of this when SJP publishes its third-quarter results on 17 October.
But as Labour chancellor Rachel Reeve’s debut October Budget approaches, are potential changes to the pensions system emerging as a fresh headwind?
Maybe not straight away, according to UBS analysts.
“A flat tax relief percentage of 30% could be introduced, benefiting lower-income individuals but having a detrimental impact on higher-rate taxpayers,” noted analysts. “Inheritance Tax exemption on pensions might also be abolished, along with a potential increase in national insurance contributions on pensions.
“Around 60% of SJP's new business is pensions, but we do not think there will be an immediate negative impact from these changes.
“However, if individuals contribute less to their pensions as a result of the changes, this could be a longer-term headwind."
Funds under management upgrades
As the results approach, investment bank Jefferies has bumped up its funds under management (FUM) prediction by a few percentage points.
The bank anticipates £183.4 billion in FUM for the third quarter and £186.2 billion for the full year.
“Although (SJP) appears to remain out of favour, we expect flows to improve gradually and sentiment to follow, especially as the prospect of rising earnings growth from 2027 onwards gets nearer,” said Jefferies.
Giving a long-term view on SJP’s investment thesis, Jefferies analysts called it “a large and highly profitable business with a significant demographic tailwind that will blow harder for the next 10 years”.
“Scale and brand mean that it is well-placed to maintain its lead in the market,” they added. “Regulatory risks are already well-known and transparency should help mitigate them.”