Britain’s largest wealth manager, St James’s Place, has reported a notable drop in net inflows for the first half of this year, driven by major shifts in the UK pension system and an overhaul of its own fee structure. The company disclosed that net inflows fell to £2.7 billion, down from £3.8 billion in the same period last year, a result that aligned with market expectations.

CEO Mark FitzPatrick noted that while the overall market environment has been favorable, investors are still grappling with imminent, significant changes to retirement policies. Under new government rules, pensions will be included in the inheritance tax net starting next year. FitzPatrick emphasized that this tax adjustment has already prompted some investors to withdraw funds from their pension accounts early, aiming to avoid a future punitive tax rate of up to 40%.

At the same time, St James’s Place is facing pressure from the departure of several large advisory firms. The company operates through a nationwide network of partner advisers, who are restricted to selling only its own products rather than offering clients options from other providers. Since the firm restructured its fees last year, reducing the upfront advice commissions available to advisers, multiple competitors have aggressively sought to poach its partners.

The company stated it has completed a review of its compensation and benefits system and is further refining its fee structure. Starting next March, ongoing adviser fees will be switched from an annual to a monthly payment model. The firm said these improvements are funded by efficiency gains across its entire business, forming part of a broader strategy to strengthen adviser services.

Regarding changes to its partner network, Prospera Wealth Management in Sheffield and Wellesley Investment Management in West Sussex have recently left the St James’s Place network. Notably, Sovereign Wealth, which manages approximately £3 billion in assets and is one of the company’s largest partner advisers, is also considering an exit. Wellesley has already moved to the Söderberg Group, a firm backed by private equity giants KKR and TA Associates, which is rapidly expanding in the UK market. Söderberg’s non-executive board includes David Bellamy, the former CEO of St James’s Place.

Citigroup analyst Andrew Lowe remarked that the company saw a 0.3% increase in its adviser headcount during the first half, and he expects investors to respond positively to this metric. The management of St James’s Place also emphasized that both the total number of advisers and clients continue to rise, describing staff turnover as a normal part of industry dynamics.