St James’s Place’s chief investment officer has revealed to City AM that there will be a continued significant reshuffling of who manages some of the UK’s largest funds.
In December, the country’s leading wealth manager withdrew £2bn from Somerset Capital Management, a firm founded by Jacob Rees-Mogg, leading to its immediate closure as the mandate accounted for about two-thirds of its assets, as reported by City AM.
This week, Gloucestershire-based St James’s Place made a similar move, dropping Impax Asset Management and two others as managers of a struggling £9.9bn fund, causing the smaller asset manager’s stock price to drop six per cent over the past two days.
Justin Onuekwusi, who took on the role of chief investment officer a year ago, stated that investors should anticipate “a number of changes” in terms of which asset managers control the substantial amount of money in its coffers.
“But I think it’s important to take a step back as well and say the proposition always has to evolve. It’s not that I’ve come in and now it’s a big bang,” added Onuekwusi. This move could have serious implications for the entire UK financial industry, as asset managers vie to manage money for the wealth giant.
Over the past year, St James’s Place has had to evolve more than most asset managers, following accusations that it was ‘stuck in the past’ and the introduction of consumer duty.
The Financial Conduct Authority’s Consumer Duty, introduced last year, mandates all financial services to “put their customers’ needs first”. Despite this, St James’s Place has faced challenges due to high charges, exit costs, and non-transparent fee bundling, prompting a need for reform to maintain its status as the industry’s leading wealth manager.
Savers have struggled to determine if they’re getting value for money from St James’s Place because the bundled fees make it difficult to compare with other similar funds. “From an investment perspective, we obviously really welcome disaggregation, because it means that we can be compared like-for-like with other managers,” Onuekwusi remarked to City AM.
Onuekwusi, when questioned about whether St James’s Place would apply the separated fees retroactively to allow analysts to assess fund performance accurately, stated that discussions are ongoing. “I think it would make sense to backdate for people to understand the journey they would have been on from a fund perspective,” he added.
Onuekwusi, who began his role a year ago, noted part of his job was to innovate the firm’s offerings to clients. He emphasised that while there is a shift towards more cost-effective investments, it doesn’t solely mean moving into index funds.
The Chief Investment Officer (CIO) of a leading wealth management firm has highlighted the evolving landscape of investment strategies, noting: “As the market has innovated, now we have different types of index strategies, different types of low cost strategies, whether quant, fully indexed, or others.”
He also emphasised the importance of emerging asset classes, stating: “In 2035, you can’t guarantee much in investment, but you will have new asset classes.”
The CIO’s remarks reflect a forward-thinking approach, particularly as he acknowledged the potential of crypto, digital assets, tokenisation, and private equity sectors that might be avoided by firms with an outdated ‘cultural DNA’.
“As the largest wealth manager in the UK, we’ve got a responsibility, I think, to be on top of that,” Onuekwusi remarked.
However, this push for innovation is at odds with the company’s goal of becoming a lower-fee St James’s Place, given that new asset classes like private equity are known for their higher costs.
“We are very conscious that the newer asset classes tend to be more expensive, so we’ve been very cautious about dipping our toe in the water there,” he explained.
Onuekwusi further commented on the integration of these asset classes into the company’s offerings: “The thought is, do we want them in our centralised investment proposition, or do we want them in more bespoke types of propositions? That’s something we are clearly aware of,”.
Yet another challenge is the £500m in cost-cutting measures that St James’s Place has committed to over the coming years, which could conflict with the resource demands of innovation.
Onuekwusi emphasised that “all of the innovation that we’ve done has been utilising existing resource” and noted that his team’s focus areas “will be invested in”.