INTERVIEW: St James's Place Discusses UAE Ventures, Millennial Strategies

Josh O'Neill Reporter 13 December 2016

INTERVIEW: St James's Place Discusses UAE Ventures, Millennial Strategies

This publication recently caught up with St James's Place to talk future prospects across the globe and gain an insight into how its business strategy is evolving.

St James's Place, until recent years, has always been a quintessentially British wealth management firm. Originally named J Rothschild Assurance Group, the Gloucestershire-headquartered group was founded by Sir Mark Weinberg and Mike Wilson with the backing of Lord Rothschild in 1991. It has been listed on the FTSE 100 Index since 2014. 

Nowadays, SJP is a stand-alone company after Lloyds Banking Group – part-owned by the UK government – shed its 60 per cent stake in 2013. 

What many may consider unique about SJP is that it doesn't employ in-house investment managers. Instead, it operates under a so-called “umbrella” business model, meaning it does all of the heavy lifting and due diligence on clients' behalf and then offers tailor-made solutions in collaboration with its extensive list of vetted partners and wealth management firms. It doesn't pitch a product or service and pretend it is suited to a client's needs – it is better described as an aggregator of wealth managers, and all members must play by the SJP rulebook. It may have its own investment funds on its balance sheets, but SJP doesn't actually manage a penny itself. One of the benefits of doing business this way, it says, is there is no cost to the client if an investment manager is changed, keeping frictional costs low.

Business appears to be booming as funds under management hit a record high of £71 billion ($89.6 billion) in the third quarter of 2016 due to strong inflows and investment performance. 

In light of the firm's recent success, this publication sat down with Tony Dunk, director of investor relations at SJP, to talk future prospects, Millennial strategies, and why heels are digging into the ground over potential ventures in the United Arab Emirates. 

“In the UAE, our primary objective is to find high quality advisors that want to build long-term client relationships as opposed to short-term ones,” Dunk tells us in SJP's London office.

Entering the UAE might seem like the next logical step for the firm, given its burgeoning presence in the Asian market. It currently has offices in Hong Kong, Shanghai and Singapore following its acquisition of Hong Kong-based Henley Group in 2014. Since the acquisition, the number of advisors SJP has in Asia has soared from 42 to over 100. More recently, SJP acquired Rowan Dartington, a Bristol-based private client broker and asset manager, to create the group's discretionary fund management and stockbroking arm.

However, Dunk assures us that hasty decisions will not be made in the case of the UAE, adding: “It’s likely to be towards the end of next year before decisions are made, but we have filed applications with the authorities there to see what we would need to do to operate.”

What may be surprising to some is that SJP does not do business in North America. What is less surprising is that the firm maintains its respectable air by avoiding dealings with high-risk clients. 

“We don't touch anything high-risk,” Dunk stresses.

He says SJP prides itself on being good value for money, adding that there is too much focus on the price of a service and not the quality of service you are actually receiving once cash has changed hands. The average fee for fund management is 35 basis points, he says.

“Everyone talks about price, but very few talk about value these days when, in fact, it is a more important factor. In response to the question “Do you feel that the SJP proposition provides value for money”, he says: “99 per cent of our clients who responded say we are reasonable, good, or excellent, with 85 per cent in the highest two categories.”

Speaking of money, Dunk describes it as “sticky” at SJP, citing a year-on-year client retention rate of 95 per cent. 

New Age Group

Millennial is a term we are hearing more and more within the wealth management industry, whether it is with regards to targeting wealthy youngsters aged between 18 and 34 and the best ways to manage their money or the transferral of wealth between generations.

Dunk claims that SJP is an expert at “bringing new blood” through its partner training programme. He tells us there is an ageing advisor population in the independent financial advisor marketplace, with the average age of an advisor being around 58. In an effort break the status quo, SJP has heavily invested in its own academy to bring new entrants into the profession, together with a next generation academy to help its partners to bring in family members into their businesses and perhaps to one day take over their parents' businesses.

He said: “Our partners have sons and daughters who want to come into the family business and work with their parents. The average age that this happens is 28, and we take them through a two-year training scheme to become fully-qualified wealth advisors. However, the parents will be in the background maintaining the relationships with clients, perhaps having the odd game of golf or lunch, while the youngsters handle the more technical advice matters. We are constantly looking to extend the long-term relationships with our clients and their families so we encourage our partners to explore the intergenerational passing on of wealth. We are doing a lot of work around next-generation products and services that we can bring to the fore.”

Earlier this year, SJP launched an intergenerational mortgage scheme in collaboration with high street "challenger" Metro Bank, in a bid to attract young wannabe home-owners by allowing them to use their wealthy parents' cash as collateral to obtain a mortgage.

“The SJP client effectively invests money in a deposit account with Metro Bank and it is ring-fenced, meaning it doesn't actually go to their child but they can use it as collateral.  As long as the child meets the repayments, the parents' money is never actually used,” explains Dunk.

Although SJP does not do business in the US, it is still safe to say it has its fingers in plenty of pies. Dunk says: “We are very comfortable in our space, we know what we do and we stick to our knitting, so to speak.”

With this being said, only time will tell whether the firm can find the right advisors and ride the wave in the UAE.

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