UK wealth manager St James’s Place has poached its new chief investment officer from rival Legal & General Investment Management as competition heats up and the industry braces itself for consolidation.
The FTSE 100 group, which oversees nearly £150bn, said Justin Onuekwusi would lead the development of investment products, asset allocation and fund manager selection from October.
Onuekwusi, who has more than 20 years of industry experience, was head of retail investments for the Emea region at LGIM. Tom Beal was chief investment officer of St James’s Place until September last year, when he became director of investments.
The appointment comes as the industry struggles with rising costs and competition from lower-fee investment supermarkets and cheap index-tracking funds.
Last week, Rathbones announced a merger with Investec’s wealth and investment business in the UK and Channel Islands to create one of the largest competitors in the sector, overseeing £100bn. The enlarged company, which will use the Rathbones brand, is aiming to make about £60mn of annual cost savings.
Analysts expect more merger and acquisition activity as wealth groups seek to cut costs and preserve profit margins. Rae Maile, analyst at Panmure Gordon, said: “Consolidation has many drivers but the need to protect operating margins is key.
“Revenue margins are under inexorable pressure from competition, squeezing operating profits and operating margins from above. Fixed costs of regulation, technology and operations are inflating, squeezing operating profits and operating margins from below.”
According to data provider PAM Insight, St James’s Place is the largest wealth manager by funds under management, in an industry that oversees about £1.2tn in total on behalf of UK customers.
St James’s Place owns the discretionary fund manager Rowan Dartington, which manages nearly a third of its total assets. The bulk of the group’s business consists of personalised financial advice ranging from investments to pensions and tax planning.
The company, co-founded by Lord Jacob Rothschild more than three decades ago, has more than 4,600 advisers, the largest network in the country. It trains many of these in its own “Academy”.
Even though wealth managers are facing competition from DIY investment supermarkets, St James’s Place chief executive Andy Croft said earlier this year that “demand for trusted face-to-face advice is only getting stronger”. The company reported 2022 as its second-best year for new business, with £17bn of gross inflows.
David McCann, analyst at Numis, said “people’s fundamental need to save and invest for retirement and other future financial objectives” is positive for St James’s Place and that “a more complex” planning and tax environment “drives the need for advice”.
He added that the group’s “better-off customer demographic are relatively less financially impacted by cost of living pressures on their ability to save”.
