An activist minority shareholder has praised St James’s Place (SJP) for agreeing to review its cost base after lambasting the wealth manager’s “high cost culture” for eating into shareholder returns.
In a letter published on 11 December, Primestone Capital said it was pleased SJP had expressed “fundamental alignment” with its view and was focused on creating shareholder value and addressing operating leverage. This, it said, followed “productive and constructive dialogue” between the two parties.
The move comes after Primestone, which owns 1.2% of SJP, wrote an open letter to the wealth manager in October saying it had fostered a “high-cost culture” that had destroyed shareholder value. It said this was “especially disappointing given that client assets have doubled over this time”.
Primestone founding directors Benoît Colas and Damian Hahnloser, said in the latest letter they found it positive that SJP recognised the importance of carefully managing its cost base and were “particularly excited about plans to ‘re-create’ operating leverage at SJP”.
“We believe, as we outlined in our letter on 26 October, that St James’s Place has ample opportunity to do so,” they added. “We would very much like this to be translated into ambitious and tangible objectives that lead to positive results for all stakeholders.
“We sincerely hope your efforts will allow St James’s Place to translate strong continued growth into value for shareholders. As we have emphasised on multiple occasions, growth and profitability should not be a trade-off for SJP – profitable growth is achievable and is what shareholders are looking for.”
Generous salaries
Primestone’s original letter had also drawn attention to SJP’s “overly generous compensation” policy, noting annual average salary increases have been consistently 2% to 3% above the national average and a quarter of employees, excluding advisers, earn more than £89,000 ($119,010, €98,517) per year.
SJP was called out repeatedly last year for its controversial “cufflinks and cruises” rewards system for top performing salespeople, a programme which it has since scrapped.
In its debut value assessment SJP concluded its funds represented overall value for investors, despite placing five of its worst performing funds on an internal watch list.
But it was accused of failing to address the questions asked by the Financial Conduct Authority with its focus on bundled fees making it difficult for like-for-like comparisons to be made with asset managers.
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