St James’s Place Shares Are Down 37% This Year – Here’s Why

St James's Place (LON: STJ), the wealth management firm, has seen its share price tumble 37.36% so far in 2024. As of May 2, shares are trading at just 432.4p, a notable drop from the year's highs. But what's behind this decline?

Several factors have been putting pressure on St James's Place. In February, the company set aside a hefty £426 million to cover potential refunds to clients who were said to have been mis-sold investment products or overcharged for fees and advice. This move raised concerns about the company's past sales practices and its ability to retain customers.

There was a rising tide of customer complaints about fees and the performance of investment products. These complaints have impacted the company's reputation and eroded investor confidence.

Adding to investor woes, the board also slashed the company's dividend payout in February.

More recently, St James's Place revealed there had been a sharp decline in net inflows in the first quarter as the company deals with customers withdrawing in light of the developments mentioned above. According to the FTSE 100 company, net inflows dropped to just over £700 million in the three months to the end of March, down from £2 billion a year ago. 

In the Q1 trading statement released on April 30, the company's CEO, Mark FitzPatrick, said “outflows remain at an elevated level.”

These issues, combined with clients continuing “to draw upon their savings to meet continued financial needs,” have led investors to pull back from St James's Place. The net result is a noteworthy decline in the company's share price.

Whether St James's Place can turn things around remains to be seen. The company will need to address the current issues and headwinds impacting the business, as well as rebuilding trust.