St James Place : Annual Report and Accounts 2023

Providing trusted

Annual Report and Accounts 2023

Protecting what matters

Good advice means making better decisions, allowing you to choose the right path and achieve your goals. Trusted financial advice at St. James's Place helps nearly one million clients experience greater peace of mind and security. Creating a financial future they believe in.

01

How we do business

Strategic Report

Our purpose	What we do	Our vision	Governance
To give you	We work in	To be the best
confidence to	partnership to plan,	place to create
create the future	grow and protect	long-term financial
you want	clients' financial	security
	futures		FinancialStatements

Strategic Report

Chair's report Stakeholder engagement Our business model Market overview

Chief Executive Officer's report Implementing our strategy Our responsible business

Chief Financial Officer's report Financial review

Risk and risk management Approval of the Strategic Report

Financial Statements

04	Independent Auditors' Report to the
07	Members of St. James's Place plc				164
10	Consolidated Financial Statements
12	under International Financial
Reporting Standards							172
14
Parent Company Financial
18
Statements under Financial
24
Reporting Standard 101					247
50	Supplementary information:
54
Consolidated Financial Statements
74	on a Cash result basis (unaudited)			254
85

We will get there by working together

Being a responsible business						Other
					Information
Our culture drives our business	Our Responsible Business Framework
#1 Doing the right thing

Governance

Other Information

Shareholder information

262

Board of Directors

88

How to contact us and advisers

263

Corporate governance report

Our scenario analysis

264

(including section 172(1) statement)

90

Aligning our progress with recognised

Report of the Group Audit Committee

106

frameworks

274

Report of the Group Risk Committee

118

Glossary of alternative

Report of the Group Nomination

performance measures

276

and Governance Committee

125

Glossary of terms

279

Report of the Group

Remuneration Committee

129

Directors' report

158

Statement of Directors'

responsibilities

162

		Financial
		wellbeing
#2 Being the best version of ourselves		Purpose
Investing	Climate
	responsibly	change

#3 Investing in long-term relationships

Community

impact

Find out more about our culture and being a responsible business on pages 22 and 24

	Strategic enablers
People	Governance

www.sjp.co.uk

02 Strategic Report

2023 highlights

03

Financial highlights

£15.4bn

Gross inflows

Down 9% from 17.0 billion in 2022

£5.1bn

Net inflows

Down 48% from £9.8 billion in 2022

£168.2bn

Funds under management Up 13% from £148.4 billion at 31 December 2022

£117.0bn	£129.3bn	£154.0bn	£148.4bn	£168.2bn
2019 2020	2021	2022 2023

£392.4m

Underlying cash result 1

Down 4% from £410.1 million in 2022

£(9.9)m

IFRS loss after tax

Down from £407.2 million profit in 2022

23.83p

Dividend per share

Down 55% from 52.78 pence in 2022

£1,041.0m

European embedded value (EEV) operating profit1 excluding exceptional items

Down 35% from £1,589.7 million in 2022

Why invest in SJP

Helping you to create your future, your way.

Established market leader

We are the UK's leading provider of advice-led wealth management with the associated economies of scale, operating in a structural growth market.

Strong track record

We have a strong track record of driving growth in funds under management, delivered through

1. proven and sustainable advice- led business model.

Investing in the business

We continue to invest in the Partnership, our pioneering SJP Academy, our client value proposition, and in technology. This drives competitive advantage, underpins growth and enables

Strategic Report

Chair's report	04
Stakeholder engagement	07
Our business model	10
Market overview	12
Chief Executive Officer's report	14
Implementing our strategy	18
Our responsible business	24
Chief Financial Officer's report	50
Financial review	54
Risk and risk management	74
Approval of the Strategic Report	85

Strategic Report

Governance

Financial Statements Other Information

Non-financial highlights

+3%

2023 growth in advisers

2022: 3%

Page 18

87%

2023 percentage of employees who feel proud to work at St. James's Place

2022: 87%

Page 40

10,000

Children reached through financial education 2022: 5,800

Page 27

ESG risk rating: Low

Overall percentile rank: 88%

efficient operations as we scale.

Revised fee model

We are revising our client fee model to meet expectations for simplicity and comparability, drive competitive advantage, and deliver strong long-term earnings growth.

Financially robust

We are financially robust and operate with a simple cash generative financial business model.

1. The Underlying cash result and EEV operating profit are alternative performance measures (APMs). The glossary of alternative performance measures on pages 276 to 278 defines these APMs and explains why they are useful. The Underlying cash result is reconciled to International Financial Reporting Standards (IFRS) on page 191.
2. MSCI did not perform a rating assessment during 2023, so the rating above relates to our 2022 assessment.

St. James's Place plc

Annual Report and Accounts 2023

04 Strategic Report

Chair's report

Leading through change

05

Strategic Report

Overview

2023 was a challenging year. High rates of inflation and interest rates have characterised both 2022 and 2023, as have global conflict and political instability. Against this background, clients have understandably used their savings and investments to support themselves and their families. However, the resilience evident in the underlying performance of the business, with funds under management reaching record levels in 2023, continues to give us confidence in the strength of our business model.

More disappointing has been our share price performance, which reacted to the actions we have taken to modernise our fee structure. We believe these actions on our fees leave us well positioned for growth and aligned with

the FCA's Consumer Duty. The system changes we need to make to accommodate a different fee structure will inevitably come at a cost.

We have also experienced a marked increase in clients registering complaints relating to whether they have received ongoing servicing historically. Given this, an initial assessment of client servicing records has been undertaken and the findings from this indicate the need for us to take action to refund clients where ongoing service has not been evidenced. The action we have taken has led to us increasing our provisions for refunds which has impacted our 2023 results. While this is disappointing,

we know for the future that our investment in 2021 in our Salesforce customer relationship management system will enable us to monitor service levels to ensure our clients receive the advice and support they expect. The actions we have taken have involved close engagement with

our key regulators and, as strong advocates for regulated advice, we remain determined to work with all policymakers and other stakeholders to help drive better financial resilience across society.

We cannot be complacent of our market leading position and we will evolve to continue to meet the needs of our clients. Expectations of clients are rightfully high and where we risk falling short of those expectations we must act.

The Board and governance

Our continued growth and success over time have owed much to the strength of our Partnership structure and our management's ability to ensure continuity during periods of transition. Culture plays an important part in an organisation's success and was a key consideration in the appointment of Mark FitzPatrick as Chief Executive Officer. Succession planning is an ongoing process and the Board and Group Nomination and Governance Committee have spent considerable time in the last couple of years ensuring that success criteria balanced the importance of continuity with the value that diversity and a fresh perspective could provide.

The robust process identified Mark FitzPatrick as the outstanding candidate and Mark joined the Board on 1 October 2023, succeeding Andrew Croft as Chief Executive Officer on 1 December 2023. Andrew has been with St. James's Place since 1993, serving as its Chief Financial Officer and then Chief Executive Officer since 2018, and on behalf of the Board I would like to thank Andrew for his unwavering commitment to the business. He will be greatly missed by everyone at SJP, and we wish him our very best in his retirement.

As we announced on 9 November 2023, Dominic Burke also stepped down as a Director on 31 January 2024. Dominic contributed much in his short time with us and I wish him all the best in his future ventures. As part of our ongoing succession planning, plans to recruit further Non-executive Directors were already underway and we hope to appoint a new Senior Independent Director in the near future.

Further detail on the work of the Group Nomination and Governance Committee can be found in its report later in this Annual Report and Accounts.

The Board's priorities and our strategy

In recent years I have outlined the Board's key areas

of focus alongside our strategy to 2025: the Partnership, investment performance, administration and digital. These are all key contributors to good client outcomes and the Board continues to monitor our progress in these areas. Our work on strategy beyond 2025 is also well underway.

While our financial results have been significantly impacted by the increase in the provisions relating to ongoing servicing evidence, the underlying performance of the business remains strong. The Board recognises the importance of returns to shareholders and is confident that sufficient capital and liquidity has been set aside to deal with this legacy matter. In light of this, the Board believes

it prudent to recommend a final dividend for 2023 of 8.00 pence per share. Combined with the interim dividend of

15.83 pence per share we declared at the half year, this brings our full-year dividend to 23.83 pence per share.

The Board has also made the decision to revise guidance for future shareholder distributions, believing that this approach strikes an appropriate balance of ensuring the business retains sufficient capacity for investment alongside the importance of returns to shareholders.

Whilst 2022 and 2023 have presented

tough environments for clients, savers and investors in general, the value of advice has never seemed more important.

Paul Manduca, Chair

Governance

Financial Statements Other Information

St. James's Place plc

Annual Report and Accounts 2023

www.sjp.co.uk

06 Strategic Report

Chair's report

Stakeholder engagement

Engaging with our stakeholders

07

Clients

What they care about	Strategic
Clients place great value on trusted face-to-face advice,
Report
seeking guidance and reassurance where they lack
the time, inclination or confidence to manage their
financial affairs.

Our culture and responsibilities

Culture is a critical enabler for any organisation and what we understand by the term culture continues to change over time. We have committed to being a responsible business, and what it means to be a responsible business is not solely about the actions we take but also about how we respond to threats to our culture and how we foster inclusive behaviour.

Responsibility is also not measured just through our own expectations, but through the eyes of our stakeholders. Our corporate governance report on pages 90 to 105 sets out how the Board has listened to our stakeholders and taken account of their views in our decision-making.

The Board also recognises that there is a compelling commercial case for being a responsible business and the progress we have made in 2023 is detailed in the Our Responsible Business section of this Annual Report and Accounts on pages 24 to 49. Further information on how our commitment to being a responsible business feeds through to the remuneration of Executives,

can be found on page 139 of the report of the Group Remuneration Committee.

Concluding remarks

I would like to express my thanks to my Board colleagues and management for their support and hard work during a challenging year, and commend employees and in particular our Partner businesses for the strong underlying performance achieved in a challenging year. I have provided a high-level overview of some of the key areas of the Board's activity in 2023, and would encourage you to read the corporate governance report which covers this in more detail. Whilst 2022 and 2023 have presented tough environments for clients, savers and investors in general, the value of advice has never seemed more important. This is reflected in the FCA's recent statement of its aims for forthcoming consumer policy initiatives which highlighted that it wants consumers of all wealth levels to be able

to make good investment decisions and invest with confidence, understanding the risks and the protection involved. The Board is confident that SJP can contribute to helping the FCA meet its aims. I look forward to welcoming shareholders to this year's Annual General Meeting, which will be held on 15 May 2024.

Paul Manduca, Chair

27 February 2024

Building long-term relationships with our stakeholders

We regularly engage with all of our stakeholders, listening to what is important to them and building the long-term relationships that enable us to respond to their evolving needs and help them move forward with confidence.

St. James's Place's stakeholders

Clients	We help you feel confident about your
	future by empowering you with clear
	financial advice to help you achieve
	your personal goals and improve your
	financial wellbeing.
	We give you the freedom to build and
Advisers
	grow your financial advice business,
	your way, with the confidence of a large,
	financially strong company behind you.
	We give you the opportunity to create
Employees
	the career you want and the confidence
	to chart your own career path.
	We are committed to being a responsible
Society
	business. To us, this means considering
	responsible and sustainable decision-
	making in everything we do.
	We offer the opportunity to invest in the
Shareholders
	leading wealth management business
	in the UK, giving you access to long-term
	structural growth through a business that
	has sustainable competitive advantage
	and a clear direction.

Section 172(1) statement

The Directors have a duty to promote the success of the Company for the benefit of its members as a whole. Further information on how the Directors fulfil this duty is set out in the section 172(1) statement.

Section 172(1) statement is on page 90

How do we help our clients move forward
with confidence?
Whether it be day-to-day finances or long-term financial	Governance
planning, our advisers are on hand to support clients.
From initial fact-find meetings through to regular reviews,
each engagement provides an opportunity for our
advisers to better understand clients and ensure
the advice provided is best for them.
2023 proved a challenging period for many UK savers and
investors, who had to contend with high and persistent
inflation, rising borrowing costs, stock market volatility
and continued macroeconomic and geopolitical	Financial
uncertainty. Our advisers have supported clients through
these times, keeping them on track for the long-term
futures that they have planned for themselves and
their families.
Statements
How do we engage with our clients?
We want to support our clients to achieve great outcomes
and we're always looking for ways to improve the client
experience. Our advisers enjoy strong relationships with
clients, so they are a key source of regular feedback.
We complement this through engaging directly via client	Other
focus groups, regular and ad-hoc client surveys, and
targeted market research. Using this feedback, we're
able to ensure SJP remains the best place to build	Information
financial futures.
The introduction of Consumer Duty has set higher
standards of consumer care and protection. As part of
our Consumer Duty programme of work we partnered
with the Wisdom Council to carry out testing on some of
our client-facing literature, ensuring it was clear, relevant,
and supported strong client understanding.

958,000

Number of clients

2022: 917,000

St. James's Place plc

Annual Report and Accounts 2023

www.sjp.co.uk

08 Strategic Report

Stakeholder engagement

Advisers

What they care about

• Our advisers rely on us to provide the support that they need, in order to focus on delivering high-quality, trusted advice to clients.

How do we help our advisers move forward with confidence?

• Our advisers help clients create the futures they want for themselves, so we enable our advisers to deliver sound financial planning advice and build great businesses.
• We attract not only experienced advisers, but also train our own through our Academy programme, helping them to grow, succeed and stay safe by providing a range of services including marketing support, business checking, technical support, technology and training. By providing an efficient structure, we enable advisers to spend more time doing what they do best: helping clients grow and protect their wealth over time.
• We do this because we've always believed the best financial advice and the best client outcomes start with supporting the best financial advisers.

How do we engage with our advisers?

• We enjoy a close relationship with our advisers, as, by working in partnership with them we can better help our clients.
• We provide regular bulletins and updates to them through our digital communication channels, but we focus much of our effort on face-to-face engagement, from individual meetings to regional conferences and our Annual Company Meeting.
• We host consultation sessions and conduct adviser engagement surveys so that we better understand the issues and opportunities that matter to them.
• We also offer learning and development opportunities so that our advisers are constantly improving in what they do, and we provide regulatory oversight so that we keep both advisers and clients safe.
• We support our advisers with the tools and knowledge required to meet their regulatory and Consumer Duty requirements.

4,834

Advisers

2022: 4,693

Employees

What they care about

• Our employees look for the opportunity to create the careers that they want, and the confidence to chart their own career path.

How do we help our employees move forward with confidence?

• We want to attract, retain and develop the best talent in the UK. Beyond offering a career with an ambitious and fast-growing business, we are committed to personal and professional development, helping our employees achieve their potential with us.
• Our SJP House learning app provides functionality
  for an intuitive, innovative learning experience, so that employees can complete highly flexible, self-directed learning to drive their own development.
• We want an engaged and motivated workforce, so we work hard to ensure our employees understand their contribution and feel they're making a real difference. We want a diverse workforce, so we're always doing more to ensure that we're an inclusive community where all people are embraced, and people can be themselves.
• We're constantly reinforcing our culture and values so that our employees share a strong sense of purpose and feel confident that they're part of a business with a real positive impact.

How do we engage with our employees?

• Hearing directly from our employees is very important in ensuring we have real insight into how our people are feeling. Frequent one-to-one, team and divisional meetings ensure communication is regular and two-way.
• We conduct online pulse surveys, with feedback
  and ideas circulated to the Board. This complements the activity of our Workforce Engagement Panel and our active presence on social media, as we embrace digital communication platforms.

94%

Retention rate for core UK employees

2022: 87%

Society

What they care about

• Society expects us to meet our ambition to be a responsible business, with responsible and sustainable decision-making in everything we do.

How do we help society move forward with confidence?

• Our aim is simple: to always act in a way that considers the long-term needs of our clients as well as the impacts of our actions on our communities and society at large. We do this through our Responsible Business Framework, with a focus on enhancing financial wellbeing, leading the conversation on investing responsibly, giving back to support local communities, and taking action on climate change.
• Through our Responsible Business Framework, we have an opportunity to help address the social, environmental and economic challenges faced by all in society. First and foremost, this means delivering great financial advice to our clients. It also means delivering financial education in schools and other institutions, supporting charities and the St. James's Place Charitable Foundation, and developing an investment proposition that helps clients align their investments with their values.

How do we engage with society?

• To make sure that we understand the issues and topics that matter most to our stakeholders, our Responsible Business Framework reflects feedback from both internal and external stakeholders, is backed by a detailed materiality study, and is measured against clear goals and key performance indicators (KPIs). These help us to focus and flex our efforts in being a responsible business.
• We also engage with industry bodies, regulators and the UK government to help shape our wider support for society.

£9.5m

Raised by the SJP

community

2022: £10.5 million

Shareholders

What they care about

• Shareholders look to us to create long-term shareholder value, with a sustainable and responsible business model.

How do we help our shareholders move forward with confidence?

• We're the largest advice-led wealth manager in the UK, with the necessary economies of scale to deliver great client outcomes while also providing returns to shareholders. We see a fantastic market opportunity ahead with the demand for financial advice continuing to grow, driven by a large savings gap in the UK, the persistent complexity of the country's savings, tax and pensions regimes, and the challenge of managing intergenerational wealth transfers.
• We've set out ambitious plans to grow our business in the years ahead, building on our long-term track record of net inflows and increasing funds under management. We're confident that this will result in significant value creation for shareholders in the years ahead.
• We'll do all of this while making sure we are financially resilient, ensuring we can continue to invest for the future and provide returns to shareholders. We'll also do it responsibly, ensuring we take a leadership position on matters most important to us.

How do we engage with our shareholders?

• We seek to build close and direct relationships with our shareholders, so they better understand what we do, and we better understand their views of SJP.
• We host regular shareholder meetings to explain our strategic progress and corporate performance, and members of the Board have direct engagement with major investors. We also commission shareholder feedback reports with third parties, giving us valuable and independent insight as well as an understanding of the issues most material to our shareholders.

£168.2bn

Funds under

management

2022: £148.4 billion

09

Strategic Report

Governance

Financial Statements Other Information

St. James's Place plc

Annual Report and Accounts 2023

www.sjp.co.uk

10 Strategic Report

Our business model

How we deliver value

11

We are the UK's leading provider of advice-led wealth management, with an integrated client offering that provides financial advice, platform administration and investment management as part of a single service.

Advice	Platform &	Investments
	administration

Strategic Report

Clients

We help clients to move forward with confidence, creating the future they want.

958,000

Clients

The Partnership

We promote financial advice and wealth management through the St. James's Place Partnership.

4,834

Advisers

St. James's Place

We support clients and the Partnership,

ensuring they can create financial wellbeing.

£168.2 billion

Funds under management

Responsible business

We are committed to being a responsible

business, putting responsible and sustainable decision-making at the heart of everything we do and helping our clients and communities to move forward with confidence.

Client assets

Financial

advice

	Annual
	management
	fee based
	on client
Assets	funds under
management
invested

Assets

managed

Clients

Strong demand for advice to help clients plan and protect their financial future.

Clients are attracted to an end-to-end connected proposition focused on great long-term client outcomes.

The Partnership

We provide advice through the Partnership, the collective name for our advisers

who are appointed representatives of St. James's Place.

Partners and advisers are attracted by superior support to build a great business over the long term.

St. James's Place

Investments are managed through our unique investment management approach, aiming for long-term sustainable growth in funds under management.

We operate a fee-based income model where we receive fees based on the level of client funds under management.

Responsible business

We want to be a responsible business that creates financial wellbeing, invests responsibly, has a positive community impact, and commits to

limiting climate change.

Financial	Investing	Climate	Community
wellbeing	responsibly	change	impact

Find out more on page 24

79%

of clients would recommend

St. James's Place

2022: 81%

Find out more on page 42

+3%

2023 growth in adviser numbers

2022: +3%

Find out more on page 18

+13%

2023 growth in funds under management

2022: -4%

Find out more on page 55

44%

Reduction in weighted average carbon intensity of our investments since 2019

2022: 33%

Find out more on page 28

Governance

Financial Statements Other Information

St. James's Place plc

Annual Report and Accounts 2023

www.sjp.co.uk

12 Strategic Report

Market overview

Demand for advice is increasing

Competition in the advice market

There is a wide range of different offerings in the UK wealth management and financial advice industry, ranging from technology-led solutions to the holistic face-to-face financial planning and advice service that we provide.

Our UK market

The mass affluent market in the UK is often defined as individuals with between £50,000 and £5 million in investable assets. We estimate that there were 13.5 million such individuals at the end of 2023, and this number is expected to grow to 14.3 million by the end of 2026 (source: GlobalData). The liquid assets of this group are forecast to increase from £2.7 trillion to over £3.0 trillion in this time (source: GlobalData). We target

13

Strategic Report

The UK wealth market

Rising affluent wealth

Retail wealth in the UK is large and growing. We estimate that retail liquid assets alone account for some £4.0 trillion as at the end of 2023 (source: GlobalData). Our target market includes mass affluent individuals with around £50,000 to £5 million of investable assets, who are estimated to control around 67% of UK investable wealth, including £2.7 trillion of retail liquid assets (source: GlobalData). We know that the market opportunity is even greater when we look beyond liquid assets and also consider personal pension assets and insurance- wrapped savings.

Retail liquid assets £'trillion

5 Growth in Mass Affluent target market = 6% CAGR

4

3

2

1

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 2024 2025 2026

Mass market (<£50k)	Mass affluent (£50k-£5m)
High net worth (>£5m)
(Source: GlobalData)

We are advocates of the need for individuals and families to become more financially resilient and confident of their futures, but we know that holistic financial planning advice, delivered by professional advisers, will not be accessible to all. We're therefore supportive of initiatives, such as the growth of robo-advice offerings or a review of the Advice Guidance Boundary that may support more people to make better decisions around their basic finances.

However, despite the ongoing market evolution, we have not seen the competitive landscape for our holistic face-to-face financial planning service change materially: many of the newer advice offerings that have emerged in recent times aim to support individuals with more straightforward requirements to save

the mass affluent market but also look after clients either side of this space, be it individuals in the early stages of accumulating wealth, or at the other end of the spectrum, high-net-worth individuals who need specialist support from our Private Clients team.

Our FUM compared to target	Our clients compared to
market liquid assets	individuals in our target market
2023	2023

£2.7 trillion	13.5 million
		£168.2bn			958,000
Market size	Individuals in our core target market
SJP FUM	SJP clients

Governance

Financial Statements

Average household wealth is typically accumulated throughout working lives, reaching a peak when the head

Increasing demand for financial advice

There are a number of systemic

Despite this, there aren't enough advisers in the UK to meet this demand and the shortfall is likely

and invest for the future.

Other

of household is aged between 55 and state pension age(SPA) (source: Office for National Statistics), before gradually decumulating throughout retirement. There is a strong demand for financial advice during the accumulation phase to maximise growth and ensure clients have a clear plan to meet their goals, and also during the decumulation phase as clients look to manage the impact of longevity on personal finances and optimise the intergenerational wealth transfer to come.

Total wealth by age band £'000

		553.4	468
		366	.7
		.6
22	76.8	198.1
.3

16 to 24	45 to 54
25 to 34	55 to SPA
35 to 44	SPA and over

(Source: Office for National Statistics)

factors driving the need for advice: the complexity of personal taxation; the decline of defined benefit pension schemes; the options and challenges open to savers through 'pensions freedom'; the scale of the UK savings gap; and intergenerational wealth transfer.

Financial advice creates real value and helps individuals to feel confident in their financial futures, as demonstrated by research from the International Longevity Centre.1

We estimate that there are approximately 13.5 million individuals in the mass affluent market in the UK, including a large number who are currently non-advised but are open to receiving financial advice.

As a result, the demand for personal face-to-face advice is increasing, as people lacking the time, inclination or confidence to manage their financial affairs seek help from

a trusted adviser.

to worsen as more and more experienced advisers approach retirement or sell their businesses: the average age of a financial adviser in the UK is 58 (source: Professional Adviser). There's already an 'advice gap' today and we think this will widen.

How SJP can benefit from the market opportunity

We're the leading advice-led wealth management business in the UK, with 4,834 advisers at the end of

2023. We have a proven track record of attracting and retaining great financial advisers, as well as those looking to build a new career with

us through our Academy programme, which means our adviser population is growing. Our advisers have an average age of 46 and so are able to establish and build long-term relationships with clients. Those training in our Academy have an average age of 35. As a result,

we are ideally placed to take advantage of the increasing demand for financial advice, despite the relative appeal of cash deposit rates in the current market.

Market trends

The UK wealth landscape is evolving, providing opportunities and challenges. We list below four key trends shaping the UK wealth management landscape of tomorrow.

Growing advice gap

The demand for financial advice continues to grow, driven by increasing affluent wealth and the persistent complexity of the UK savings, tax and pensions regimes. Together with a shortfall of qualified financial advisers in the UK, this contributes to a widening advice gap and an associated market opportunity.

Shifting regulatory landscape

The introduction of the FCA's Consumer Duty regulation in 2023 set clearer and higher standards of consumer protection across financial services, requiring firms to put clients at the heart of their business, with a focus on value for money and client outcomes. The interpretation of Consumer Duty across the industry will continue to evolve as the new regulation is embedded.

Technology: shifting client expectations and digitally- enabled advisers

Financial advisers are making greater use of digital solutions to improve client experience and run more efficient businesses: for example, using digital tools to help service their clients. Clients are also embracing technology and are increasingly expecting the companies they interact with to use data to deliver unique, personalised services.

Responsible investment

Clients want to see their investments act as a force for good, and for wealth managers to be responsible businesses. At the end of 2023, retail funds under management in environmental, social and governance (ESG) funds accounted for £98 billion or 7% of the industry (source: Investment Association), with this expected to increase in the future as ESG-related investment approaches move further into the mainstream.

Information

1 'What's it Worth - Revisiting the Value of Advice'.

St. James's Place plc

Annual Report and Accounts 2023

www.sjp.co.uk

14 Strategic Report

Chief Executive Officer's report

Setting up for success

I am delighted to be leading St. James's Place, the largest advice-led wealth manager in the UK, and a business that has a critical role to play in helping secure the futures of our clients and their families.

During my initial weeks and months at the Company, I've met a lot of people from across the St. James's Place community and I've listened carefully, with every conversation bringing new insight. I've been really struck by the importance of what we do for clients and how passionately the whole community cares: supporting clients with trusted financial advice that provides peace of mind and the confidence to benefit from investing over the long term.

This focus has helped us to build a fantastic position within our marketplace over the past three decades, where we now look after £168.2 billion of funds under management for our clients. We've achieved a lot already, but I believe we can still do better for all our stakeholders.

Operating and financial performance

The economic environment in 2023 was undoubtedly challenging. It is at precisely these times that financial advice can really help clients, acting as a steady hand to keep them on track to meet their long-term financial goals. High inflation and high interest rates have put pressure on UK consumers, with rising mortgage rates contributing to rising living costs more generally. This impacted some individuals' capacity and confidence to invest. Meanwhile, those with capacity to invest may have been attracted to elevated short-term savings rates over long-term investing.

Against this backdrop, we have attracted £15.4 billion of new client investments and client retention rates have remained high at 95.3%, contributing to net inflows of £5.1 billion; these figures highlight the sheer scale of SJP today and the fundamental resilience of our business model in challenging market conditions. This new business performance, together with strong investment returns, has seen funds under management close the year at a record £168.2 billion, up 13% compared to the beginning of the year.

We have delivered an Underlying cash result of £392.4 million (2022: £410.1 million), which is 4% lower year on year. This result reflects growth in average funds under management during the year and tight cost control in line with guidance, but this robust underlying financial performance was largely offset by an increased UK corporation tax rate.

Our Cash result for the year of £68.7 million (2022: £410.1 million) has been significantly impacted by an assessment we undertook into the evidencing and delivery of historic ongoing servicing and the provision we have now established for any client refunds required. The underlying performance of our business means I'm confident we will emerge from these short-term historic challenges as an even stronger business.

Delivering change

While our business continues to perform well against a difficult backdrop, it's important that we address our challenges and develop our client offering so that we remain in good shape for the future.

Managing ongoing servicing complaints

We saw a marked increase in the number of clients registering complaints linked to the evidencing and delivery of ongoing servicing in the past. We've taken this very seriously and where gaps in record-keeping mean that there is a lack of evidence of the delivery of ongoing servicing, we've refunded these charges to clients. With the number of complaints accelerating in late 2023, we engaged extensively with the FCA on this matter and the resulting assessment of historic client servicing records. This assessment indicates that we have an improved body of evidence for the delivery of ongoing servicing since we invested in Salesforce in 2021, but that evidence is less complete before then. Based on assumptions derived from this assessment, we have established a provision of £426 million for refunds, impacting our financial results in 2023. We recognise that this is a disappointing outcome for everyone.

We know that our clients really value what we offer them, and we take comfort from outstanding client retention and advocacy, but we must be able to evidence the delivery of ongoing servicing that clients trust and value. Through leveraging the investment we've made in our Salesforce CRM system and our Consumer Duty work, in 2023 we switched off ongoing servicing charges for 2% of clients where there was a lack of evidence that ongoing servicing was provided in this period. Our central CRM capability gives us confidence in our ability to minimise the risks that clients will be charged for services they do not receive.

Introducing simple and comparable charging

Our charging structures have often been interpreted by commentators as being complex and this has brought some challenge for our business. In 2023 we made some significant decisions around our charges, including the announcement in October that we are implementing our programme to simplify our charging structures, which will be completed in the second half of 2025. The changes enhance the value that clients receive and introduce improved comparability that will help market perceptions of our services.

Our current charging structures have also limited the comparability of our investment performance over time, impacting our brand and reputation. Our simplified charging structure will make it much easier to compare investment performance across the industry on a like-for- like basis, enabling us to tell a more accurate story of how we are delivering for clients.

This move to unbundle our charges, which we announced in October, has been designed to ensure sustainability for the long-term. This gives us confidence that we can grow the business without the need for further changes to our charges that would impact the guidance we communicated to shareholders last October. The changes we are making will be good for clients, appropriate for our marketplace and built for a Consumer Duty world. By extension, they will be good for our long-term business health by giving us the opportunity to consider new propositions and real agility in how we grow the business.

Evolving our investment proposition

We've got an investment proposition that works well for clients, and it's important that we continue to develop our offer so that we meet client needs as they change over time. In late 2022 we launched our Polaris range of portfolios, supporting clients looking to grow their long-term finances, and I am pleased to report that this range has got off to

a very strong start with all four portfolios outperforming their IA and ARC benchmarks since launch. Polaris has also proved incredibly popular with clients, attracting more than £25bn in investments already. We are exploring further developments in our investment approach, including the role of passives in providing greater choice for clients.

Developing our investment proposition is just one example of how we're making changes that ensure we continue to support our clients and the communities in which we operate. Beyond these actions, as the market leader in financial advice we have the opportunity, and indeed responsibility, to promote our business, our brand, and our broader industry. We will build a stronger voice, supported by a new national marketing and media campaign that will launch this spring.

I've been really struck by the

importance of what we do for clients

and how passionately the whole

community cares: supporting clients

with trusted financial advice that provides peace of mind and the confidence to benefit from investing over the long term.

Mark FitzPatrick, Chief Executive Officer

Building for the future

The structural market opportunity for financial advice is clear. The savings gap in the UK is already considerable and it continues to grow because planning for retirement is complicated, as is thinking about investing, managing risk, and considering protection. This is where personal and trusted financial advice can make a real difference.

We're well positioned to seize this market opportunity: we have the largest group of financial advisers in the UK, and we continue to grow it through our market-leading Academy programmes and by recruiting talented financial advisers who are attracted to us because they know we can help them thrive. We accomplish this through scale that gives us real advantage, from helping us curate a distinct investment proposition that works for clients, partnering with leading global businesses to underpin our technology and administrative capabilities, and better supporting the 2,666 businesses that comprise the SJP Partnership. We have a strong and enviable track record of driving growth through an unbroken history of net inflows in every year over three decades.

15

Strategic Report

Governance

Financial Statements Other Information

St. James's Place plc

Annual Report and Accounts 2023

www.sjp.co.uk

16 Strategic Report

Chief Executive Officer's report

Our marketplace will evolve as client expectations and preferences change over time, so it's important that we keep looking forward to consider how we are best placed to capture both existing and emerging opportunities over time, and drive sustained growth in the business.

I've therefore commenced a business review, supported by a leading external consultancy, so that we build on everything we've achieved and the changes we're already making. Putting aside the matter of our charges, which has

£15.4bn

Gross inflows in 2023

2022: £17.0 billion

17

Consumer Duty and	Strategic
stakeholder implications
	Report

already been dealt with, the review is comprehensive in its scope, with the aim of ensuring we plot a sustained path for growth as market trends evolve, focus on cost and efficiency to drive operating leverage, and manage our resources effectively and efficiently so that we drive improving returns.

This work is underway and we plan to update the market on the outcome of the review at the time of our half-year results.

Summary and outlook

The underlying performance of our business has been robust in what has been a very difficult external environment, highlighting the strength of our advice-led model in attracting and retaining client investments, as well as the resilience of our financial model. 2023 was also a year in which we faced into some important historic challenges. We are working hard to put these challenges behind us so that we can move forward with confidence as we plot our path to 2030.

In the near-term, we expect the industry outlook to remain challenging in 2024 given the pressures consumers continue to face. The near-term environment notwithstanding, the longer-term structural opportunity for the financial advice industry is hugely attractive. With scale advantage, a strong Partnership of fantastic advisers, and an investment approach that delivers for clients, we are very well placed to capture this opportunity and perform for all our stakeholders.

Mark FitzPatrick, Chief Executive Officer

27 February 2024

Delivering against SJP's six business priorities

Our business priorities

Building community

Page 18

Being easier to do business with

Page 19

Delivering value to advisers and clients through our investment proposition

Page 20

Building and protecting our brand and reputation

Page 21

Our culture and being a responsible business

Page 22

Continued financial strength

Page 23

The FCA's Consumer Duty (the Duty) came into force on 31 July 2023. It is a major development in the regulatory regime for retail financial services in the UK and, as such, it is naturally a key focus for our business. We have engaged our entire SJP community in understanding the Duty as it has implications not only for our clients, but for all our stakeholders.

Consumer Duty represents what the regulator terms a 'paradigm shift' in its expectation of firms: moving them away from simply good intentions and towards evidencing that the processes and frameworks firms have in place are effective at delivering good client outcomes.

What is Consumer Duty?

The Duty sets clearer and higher standards of consumer protection across financial services.

Firms are required to put clients at the heart of their business, and to offer products and services that are fit for purpose, represent fair value, and are focused on the actual outcomes that clients experience.

This is achieved through an overarching consumer principle and three cross-cutting rules that aim to deliver four key consumer outcomes.

Implementing Consumer Duty

As a business that has always sought to achieve good client outcomes through a holistic end-to-end client proposition, we started in a good place. Nonetheless, we've undertaken a very significant programme of work to review a huge range of elements across our business, including our systems, controls, policies and procedures, and training frameworks.

We have three core commitments that underpin good client outcomes at SJP:

• We deliver fair value
• We support each client to make effective, timely and informed decisions throughout their journey with us
• We help clients to achieve their financial objectives.

Having considered the principles and processes that we already had in place ahead of Consumer Duty coming into force, we have made a number of changes in how we and our advisers operate in order to ensure that we continue to deliver and evidence good client outcomes.

The most significant change following our Consumer Duty review was the introduction in August 2023 of an annual product charge cap to client bond and pension investments that have reached their tenth anniversary or beyond. This cap further increased the competitiveness of our bonds and pensions through the product lifecycle, enhancing value to clients who have invested for the long term and enabling them to share in the economies of scale of our business today.

Governance

Financial Statements Other Information

Consumer Principle

A firm must act to deliver good outcomes for retail customers

Cross-cutting Rules

Firms must:

• Act in good faith
• Avoid causing foreseeable harm
• Enable and support retail customers to pursue their financial objectives

Four Outcomes

1. Products and services	3. Consumer understanding
2. Price and value	4. Consumer support

Beyond Consumer Duty

We treated the work required under Consumer Duty as an opportunity to continue to evaluate our business and enhance long-term value for clients, the Partnership, shareholders, and all other stakeholders.

We have always been confident that SJP offers its clients real value that helps individuals and families achieve financial wellbeing. However, clients are increasingly seeking simple comparability, and so to reflect this evolution, we announced during 2023 that we are simplifying our charging structure from the second half of 2025, while ensuring that it remains competitive and sustainable for the future.

Find out more on page 97

These changes are consistent with the principles

of Consumer Duty, as they offer improved simplicity, and comparability and enhance value for clients.

St. James's Place plc

Annual Report and Accounts 2023

www.sjp.co.uk