SJP Shifts to Internal Decision Making for 90% of Manager Selections

St. James’s Place, the UK’s largest wealth management firm, has gone against its traditional approach in choosing fund managers by no longer relying significantly on outside consultants. This is a significant development for the company as a whole.

An SJP spokesperson explained that the reasoning behind this, in the face of rapidly changing markets and increased competition, was the need to fully take ownership of investment outcomes-in the face of which, they said, the role of consultants in decision-making had declined significantly.

“Previously, around 75% of the decision to change a manager was driven by consultants, while 25% was up to us. Now, we control 90% of the decision, with only 10% influenced by consultants,” the spokesperson said.

The cost factor also played a crucial role in this move. “When working with consultants, there comes a point where managing assets in-house becomes more cost-effective. This applies to any outsourcing relationship. You eventually realise that the money you’re spending could be used to build your own team,” he added.

The shift to internal decision-making allows SJP to ensure full control over investment choices. “One of the challenges with consultants is that their views can change, and when they do, it creates uncertainty over who ultimately owns the decision. We decided it was time for us to take full responsibility for these decisions.”

Historically, SJP has heavily relied on two major consultants, Stamford Associates and Redington, to help identify managers for its segregated mandates. Stamford, in particular, played a key advisory role, including during the time when fund manager Neil Woodford was in charge of some of SJP’s investments.

In 2011, Stamford provided SJP with a report advising that Woodford should avoid unquoted and smaller companies, and instead focus on listed firms in the FTSE 250 or 100. This warning proved to be critical for SJP, as unquoted stocks later contributed to the downfall of Woodford’s funds.

The relationship between SJP and Stamford ended in 2021, though SJP continues to work with Redington, which remains listed on its website as of February this year.

In addition to shifting away from consultants, SJP’s investment process has undergone broader changes as the firm faces increasing pressure to revamp its charging structure. This includes adopting a more consistent approach to fund charges.

During this transformation, SJP’s net flows fell again in the third quarter, largely due to higher client withdrawals, even as the firm’s assets under management reached a record £184.4bn.

Among the other adjustments, SJP has streamlined its fund range and added more managers to its existing funds, which Ellis, a key figure in SJP, described as a necessary adaptation to cope with growth.

“In the past, we managed scale by introducing new products,” Ellis said. “When a manager performed well and their fund attracted significant inflows, we responded by creating similar funds. However, from a client perspective, this made our fund range more complex and harder to navigate.”

SJP’s move away from consultant-led decision-making is a major change in the company’s approach, reflecting its broader efforts to simplify its operations while maintaining control over its investment strategy.

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