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Is St James’s Place bridging the advice gap?
by Danielle Levy on Nov 05, 2013 at 13:19
‘I think it is going to be slower growth than it has been, but still healthy growth. It may not be 20% but could be 10-15% over the next few years. There is a decent outlook ahead of them and it is difficult to see massive issues and difficulties picking up business over the next few years,’ he said.
Nonetheless, he says the theme of long-term savings acts as a structural growth story, while the prospect of continued strength in equity markets could also provide a boost over the short term.
‘The area they are going to target is where there has been a fallout from the banks. There are a number of people that would have sought advice from the banks in the past who will be natural customers,’ he said.
There remains a danger that SJP could see its margins squeezed from next year however, when new rules for investment platforms, described as ‘RDR II’, come into force.
‘I think we are all well aware that with increased regulation and pressure on product pricing, margins will always be keenly fought over. They might see margin pressure, but their margins are good and they have surprised everyone by maintaining margins,’ Chillingworth said.
Morton also acknowledges he previously had concerns that SJP’s charges could come under pressure, but having survived the first year of the RDR with little pressure, he is relatively upbeat.
‘There is enough growth in the industry generally to offset the fact we have some pressure on pricing and we will continue to have that pressure on pricing, but the power in this industry is with the person who controls the client and the strength of SJP,’ he said.
AA-rated Giles Hargreave, who holds SJP in the Marlborough Special Situations fund, has taken some profits on his holding but said he has no target price in mind on the remainder of the position.
On pricing pressure and the impact of the RDR, he added: ‘Their charges are high but they seem to be able to maintain them. As a result of the RDR there is not much competition for them now, which is very good.’
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on Dec 10, 2013 at 12:57