Two of the UK’s largest financial services companies have been in the news recently for all the wrong reasons.
St James’s Place
The UK’s largest wealth manager announced last week that they had made provision to pay back £426 million to customers who have been overcharged for services. As a result, their share price collapsed by over 30% in one day and has fallen by around 70% over the past few years.
It’s no secret that SJP fees and charges were high and their investment performance was poor, but that didn’t stop them from becoming a FTSE 100 company and amassing over £150 billion in client assets.
The regulatory body, the FCA, seemed unhappy with SJP’s sales-driven culture and failure to deliver on promises made to clients for which they had been charged fees and insisted that they resolve the issue immediately.
With this decisive action, let’s hope it marks the beginning of a more client-centred business with a keener focus on value and positive outcomes for investors.
We’ve recently met with several former clients of SJP who are in the process of moving their financial planning requirements to Capital to benefit from lower costs, better investment returns and our status as an independent advice business.
Second Opinion
Clients of SJP are understandably concerned by the recent news, and many are looking for an informed second opinion before deciding on their next steps.
If you have friends or family in that situation, I’m pleased to confirm that we can provide them with an objective view and outline of the options currently available.
A 30-minute call is usually all that’s needed to review the key issues, and there is no cost. Feel free to pass on our details.
Abrdn
The company, formally known as Standard Life, has also hit the headlines due to its recent performance and results, which have been disappointing.
This one is closer to home as we recommend Abrdn’s wrap platform to provide custody and administration services on behalf of many clients. Therefore, we pay very close attention to their fortunes.
Abrdn comprises multiple business divisions, from asset management to advice and wrap platform services.
The key challenge they have is in their asset management division, which is experiencing a global shift away from expensive active fund management towards a lower-cost, systematic form of investing – precisely how we manage client portfolios.
As a result, they need to make structural changes to their business to reshape it for a future that will be different from the past. On the other hand, the part of the business that we use is profitable and growing well.
Nevertheless, I have met with Abrdn’s CEO recently and expressed my disappointment with the negative press reports. We are assured that they will emerge as a stronger business and will continue to keep a close eye on developments.
