St. James's Place plc

Good morning and welcome to our 2025 full year results. I'm pleased to report a year of significant progress for St James' Place. we delivered growth in new business, growth in funds under management, and growth in the underlying cash result, while at the same time delivering great returns for our clients. It was also a year in which we achieved real positive change in our business that sets us up to keep delivering for all our stakeholders in the years ahead. These results reinforce that now, more than ever, consumers need, want and value trusted, personalised financial advice. Our partnership model continues to set us apart as it combines the best of both worlds. Personal advice delivered through local, long-term relationships backed by the scale, strength and respected brand of a FTSE 100 firm. Today, I'm going to start off by running through our new business and financial highlights and the operational and strategic progress we have made during the year. Unfortunately, Caroline is unable to present this morning due to her family bereavement. So I'll then cover the financials before talking about the market opportunity, forward priorities, and how we see the future for SJP. So let's start with the strong flows results for the year. Looking back, 2025 offered a more stable backdrop for UK consumers, notwithstanding challenges persisting. On the positive side, mortgage rates generally moved lower and equity markets posted new all-time highs. However, household budgets have continued to be under pressure. Economic growth has been anemic. Individuals had to contend with protracted speculation and uncertainty ahead of the autumn budget. And the retirement savings landscape has become significantly more complicated with changes announced by the government. This has led people to seek professional advice to secure the futures they want for themselves, supporting a robust flows environment for our industry. Against this backdrop, we achieved another year of growth in new business as we sustained momentum that built across 2024. Gross inflows were high across all products and reflected the importance of having the right blend of wrappers available for clients so that they can weather changes in the financial planning environment. Retention improved on the prior year to 94.9% despite a short-term spike in pensions outflows in the fourth quarter. This was the effect of many clients accelerating tax-free cash withdrawals from their pensions ahead of the autumn budget in November. Outflow rates normalised as we exited 2025 and this has continued into the early part of 2026. The combination of growth in new business and sustained high retention resulted in net inflows of £6.2 billion for the year, up 42% on 2024. We achieved strong investment returns for all our clients. Performance across our range of funds and portfolios represented an investment return of 12% of opening fund net of all charges. Together with net inflows, this drove funds under management to £220 billion, up £30 billion year on year. Now to put that into context, it took SJP two decades to reach 30 billion pounds of FEM after we were founded in 1991. Now we've grown our FEM by that amount in a single year. That's the scale we operate at today as the leading financial advice business in the UK. Strong investment performance together with growth in new business contributed to an underlying cash result of £462 million, which is up 3% on the prior year. So another year of growing inflows and strong financial performance that highlights the fundamental strength of our advice-led model in a growing marketplace. The improvement in our financial performance, together with our operational and strategic progress, has enabled us to update shareholder return guidance a year earlier than originally planned. So, for financial year 2026 and beyond, we intend to increase total annual shareholder returns to 70% of the underlying cash result. I'll provide more details on this later. Beyond the financials, 2025 has been a year of delivery and execution across the major programs of work we've outlined previously. I'll turn to them now, beginning with the successful implementation of our simple and comparable charging structure in late summer. Delivering our new charging model required by far the biggest change program SJP has ever undertaken in its history. Having successfully completed it, we're now much better positioned for the future. Today, we have an unbundled charging structure that clearly sets out what and how we charge clients for each element of our service, namely financial advice, long-term investment products, and investment management. These charges can now be more easily compared to others in our marketplace. we can now tell a more compelling story about investment performance and how it supports clients in achieving their financial aspirations without the cost of advice and product charges being deducted from investment performance. This puts our reporting of investment performance on an equivalent basis to others in the market. The new structure has also unlocked how we can develop our business and proposition for the future. Turning to our second key program of work, namely addressing the historic client service evidencing gaps. This time last year, we highlighted that we were taking into consideration new industry guidance issued by the FCA around ongoing financial advice services. Since then, we've been focused on adapting our program infrastructure and capability to better reflect our revised approach to redress. And I'm pleased we are now deep into the operational delivery phase of the program. The experience we gathered in the second half of the year means we have been able to release a further £25 million from the provision held with respect to this work on a pre-tax basis. This equates to £19 million post-tax. and the board has decided to return this to shareholders in full via a share buyback program. This was the same approach we followed for the £63 million post-tax release we announced at the half-year, with the associated share buyback program for that concluding in October. While we have a lot of work ahead to complete the job over the course of 2026, as originally expected, I'm confident in the progress we're making. Our third key program of work relates to delivering our cost and efficiency program. During the year, we completed our transition to a new organizational design to ensure we have the right people in the right places to align to our strategy and drive growth. This led to a 14% year-on-year reduction in group headcount. We also took important steps in optimizing our commercial relationships with suppliers and rationalizing our property footprint, where work during the year secured a 15% reduction in the property square footage we occupy. What's been really pleasing from my perspective is the way in which our people have supported our efforts and adapted to change. This is never easy, but the efforts we're making to operate more efficiently will create the financial capacity for us to invest at scale to enhance our proposition, improve our technology, and extend our competitive advantage. This is SJP driving the benefits of scale market leadership for all our stakeholders. The program is on track to be delivered by 2027 and in line with guidance. As we expected, the program has had no material impact on our 2025 results. And this is because the savings we have made during the year, less the cost to achieve these savings, have been reinvested in the business as part of our strategy, funding items such as the launch of Polaris Multi-Index. For the same reason, we believe there will be no material impact on our 2026 results. Delivering these major programs has been and continues to be a key priority. We're making great strides with other aspects of our strategy too. We've already capitalized on the implementation of our unbundled charging structure by launching a new addition to our investment offering, our Polaris multi-index range of funds that went live during October. This range of low-cost, multi-asset funder funds implements our active asset allocation expertise through index tracking funds. They complement our existing range of solutions, enhancing choice for clients across risk profiles. By broadening our investment product shelf in this way, we're helping advisors in their conversations with existing and prospective clients and deepening the positive impact they can have. This is a key part of our differentiated client proposition. The new range has been received well by clients and advisors, and it has grown to over 1 billion pounds of thumb at the end of the year, just two months after launch. So to summarize, it's been a year of significant progress for SJP. We've delivered growth in new business and our financial results, and we're positioning the business for sustained growth and success. I want to take this opportunity to recognize and thank our entire SJP community, from our advisors and their support staff through to every one of our employees. They've all delivered brilliantly through a period of significant change across the business. Now, moving on to our financial results. I'm delighted to be able to present the set of numbers you can see on the slide, with strong investment performance and growth in new business contributing to an improvement in our financial results for 2025. I'm going to provide detail on our financial performance for the year, where I'll take you through our cash result, our liquidity position. I will then set out our approach to shareholder returns. I'll cover both returns for the 2025 financial year and more detail on our new shareholder return guidance, which I mentioned earlier. This will apply from the 2026 financial year onwards. I'm not going to cover IFRS or EEV, but information about these metrics can be found in the appendix. So let's start by taking you through our cash result. We're really pleased to have delivered an underlying post-tax cash result of £462 million for the year, which is an increase of 3% on 2024. There are three key drivers of this result. Firstly, average FUM increased by 12% year on year. This has increased the net income we earn from FUM to £725 million, up 6% year on year. This increase is despite the step down in margin we earn on FUM under our new charging structure, which we successfully implemented in late August. The result is within our 54 to 56 basis points guidance range on mature FUM, when we were on our previous charging structure, and within our 43 to 45 basis point guidance range on our new charging structure, as expected. Going forward, we continue to anticipate that net income from FUM will be within the 43 to 45 basis point range. We expect to be at the lower end of that range in 2026 and to increase within the range over time, which will be driven by factors including gestation FUM maturing. As usual, you can find a summary of all our 2026 guidance in the appendix. Gestation FUM maturing provides a high degree of visibility around future income growth, and this remains the case. Caroline's CFO report provides more granular detail for those who want to understand the mechanics underpinning this. The key message today is that at the end of 2025, we had 53 billion pounds of gestation fund. And once this is fully mature by 2032, it could contribute in the region of 300 million pounds of additional income to the cash result every year. and this is without incurring any additional costs. Another important point to note is that while the margin range has reduced upon implementation, it will apply to an increasing proportion of FUM over time. This is because all new business under the new charging structure will immediately flow into mature FUM and the remaining gestation FUM will mature over the next six years. Together, these dynamics build a powerful picture of how our income can develop and compound in the medium term. As already guided, following the expected dip in profitability in 2026, as we experience our first full year under the new charging structure, we anticipate that the cash result will accelerate from 2027 onwards. This supports our ambition to double the underlying cash result from 2023 to 2030. The second driver of our strong cash result is the margin arising from new business, which was £100 million in 2025 and driven by business written during the year on our previous charging structure. This margin represents the initial charges on new business after the payment of directly associated costs, such as initial advice fees paid to partners and third party administration costs. The profit recognized in this line was historically driven by initial product charges. These have been removed under our new charging structure, and so we expect margin arising from new business to be approximately zero for 2026 and beyond. Again, this is in line with our previous guidance. The third and final driver is our continued focus on cost management. our controllable expenses and the cash result increased by 5% year on year to 306 million pounds in line with our guidance. This guidance continues to apply for 2026. 2025 charge structure implementation costs were 53 million pounds, bringing the total post-tax amount spent on implementation to 119 million pounds. This is in line with our guidance that we expect total costs to be towards the upper end of our original 105 to 120 million pound post-tax range. There will be no further charge structure implementation costs to come in 2026. More information on the other lines within our underlying cash result can be found in the appendix. Releases from our ongoing service evidence provision are not recognised within our underlying cash result. For 2025, these releases amount to £82 million post-tax, and so our cash result for the year is £544 million. So all in all, a strong financial result for the year, which sets us up well for 2026 and beyond. Now, I'll move on to our balance sheet. One thing we committed to do as part of our work to simplify our financial reporting is to articulate our liquidity position more clearly, which is more relevant than capital in our ability to provide shareholder returns. As a result, I'm going to take you through our new and improved liquidity disclosures, which you will also find in section three of the financial review in this morning's press release. At the end of the year, we had approximately £2.7 billion of liquid assets on our shareholder balance sheet, which are predominantly investments in AAA-rated money market funds. Much of these are assets which we need to hold to run the business, covering items including working capital, amount set aside for policyholder tax, and our assessment of the amount we need to hold to cover capital requirements in our regulated entities. This is known as the Management Capital Coverage Assessment. After deducting these, you are left with liquidity of £271 million, which we refer to as free liquidity held at Group Centre. You can see a full reconciliation between total liquid assets and free liquidity held at Group Centre on the slide. We are comfortable holding this level of free liquidity as it provides a layer of both prudence and flexibility in how we run the business. We will regularly review this to ensure we continue to optimize our capital allocation priorities in line with our capital allocation framework, which is set out in the appendix. In addition to reconciling liquid assets to free liquidity group center, we've added a table setting out cash flows into and out of free liquidity over the year. You can see a summary of this information on the slide and it demonstrates that our business is highly cash generative. Over time, the net remittances from subsidiaries will broadly reflect the profit generating capacity of the business. The disclosure clearly demonstrates that we have strengthened our balance sheet over the past year. This was the next step in getting the balance sheet into the position we wanted it to be in, after we put an end to regular usage of our revolving credit facility and repaid our bridging loan. As I said earlier, our new liquidity disclosures are part of our work to simplify our financial reporting and make it more comparable with peers. Caroline and her team will complete this work by improving how we report our financial performance, which we plan to do for our half-year 2026 results. We will provide full details about this in advance of the half-year. I'm now going to spend some time setting out our approach to shareholder returns, which are a key component in our capital allocation framework. In line with our current guidance, we will return 50% of the full year underlying cash result to shareholders for 2025, structured as 18 pence per share in annual dividends with the balance distributed through share buybacks. This means ordinary shareholder returns are £231 million for 2025, subject to shareholder approval of the final dividend at the AGM. And you can see the component parts on the slide. In addition, as I mentioned earlier, we will be buying back £19 million of shares as we return the post-tax release from the ongoing service evidence provision to shareholders. This means that the share buyback programme, which will commence shortly, will be for £123 million. Adding in the £63 million of shares we bought during the year following the release from the same provision at half-year means that we are delivering total shareholder returns for 2025 of £313 million. As I mentioned earlier, I'm delighted that the board has been able to update our forward-looking shareholder return guidance. This update has come a year earlier than originally planned, driven by our strong financial results for 2025 and the operational and strategic progress we have made. Therefore, for the 2026 financial year and beyond, the Board intends to return 70% of the underlying cash result to shareholders. This will comprise an ordinary dividend, which we expect will make up at least 40% of total shareholder returns, and a share buyback for the balance, subject to the Board's ongoing assessment of the most appropriate mechanism for that return. Put another way, we expect the dividend component to be at least 28% of the underlying cash result. The Board intends to pay an interim dividend and conduct an interim share buyback following our half-year 2026 results. We anticipate the interim dividend will be six pence per share and that the interim buyback will be a third of the total ordinary buybacks in respect of 2025, excluding those relating to releases from our ongoing service evidence provision. And so to conclude on the financials, I'm really pleased with the result for 2025, with both strong investment performance and growth in new business contributing to this. We have strengthened the balance sheet while also returning a total of £313 million to shareholders in respect of the year through the dividend and the buyback programs I've set out. and we will be moving forward with an increased 70% payout ratio for ordinary shareholder returns for 2026 and beyond. I now want to talk about the exciting market opportunity ahead of us and our near-term priorities. While consumers have been under pressure for some time, there remains considerable household wealth across the UK. Analysis suggests that UK individuals have £3.5 trillion in invested assets and an additional £2.1 trillion in cash savings, totaling £5.6 trillion of addressable wealth. This wealth is expected to grow 6% per annum, compound to 2030. At the same time, many consumers are missing out on the opportunity for greater financial freedom as they're over-saved and they're under-invested. Recent analysis shows that approximately 15 million people in the UK are holding an estimated £614 billion in surplus cash that could be invested. That's money sitting on the sidelines, not working for individuals nor for the wider economy. Reshaping the financial well-being of the UK through great financial advice represents a huge opportunity for us, our industry and the UK economy. Yet there is an advice gap today with only 9% of adults in the UK receiving regulated financial advice. We know from multiple studies that lack of access, combined with issues of awareness, confidence and affordability, means there are millions of individuals who aren't getting the benefits of financial advice. And this matters. Great financial advice doesn't just invest your wealth, it changes lives. It helps people make informed decisions, navigate uncertainty, have the confidence to act and gain control over their financial futures. It supports families in planning for education, retirement and care. It builds resilience and confidence through a trusted long-term relationship. Great financial advice can deliver these wide-ranging benefits through the combined power of technical expertise, which is assisted by technology and human relationships. Now I want to focus on the human element for a moment, as it's an important aspect of financial advice that shouldn't be overlooked. Our recent proprietary real-life advice research found that 92% of those receiving ongoing advice still want human involvement in financial decision-making. Similarly, a Vanguard survey found that 93% of those taking advice say the human element is extremely important and that a neglected relationship is the main reason clients leave advisors. Advisors take time to build trusted long-term relationships and to understand their clients' goals and aspirations. They get to the bottom of what makes clients tick. They understand their hopes and their fears. These advisor-client relationships are invaluable. Relationships enable advisors to be effective behavioral coaches, ensuring clients understand the need to take appropriate investment risk to achieve their long-term goals. And in this way, advice also plays a role in supporting and strengthening our economy. Relationships provide peace of mind for clients who know their financial affairs are being managed by an expert that they trust. This also reduces the risk of clients overreacting in moments of volatility. Relationships deliver emotionally intelligent support to clients during key moments in their lives, be it marriage, having children, or dealing with their bereavement. Each of these factors make a material difference to clients. We believe that human-led financial advice grounded in personal relationships is not only here to stay, but will thrive in the future. At SJP, we have the best financial advisors working alongside leading technology, a trusted and respected brand, and an attractive product and investment range that works for clients. This is a powerful combination that offers a prospect for improving efficiency in how we and advisors operate, while enhancing client experiences and delivering good outcomes. Technology will strengthen relationships between clients and advisors, not replace them. This is great financial advice and the opportunity is huge. As the market leader, we see this clearly. We have the expertise, the experience and the ambition to reach more people, help them on the journey into advice and keep delivering value that helps them realize bolder ambitions. When we succeed, we not only grow our business, we contribute to a stronger, more financially confident UK economy, where wealth works harder and people feel empowered to invest in their own futures. So with this market opportunity in mind, I want to briefly recap on the strategy we set out in 2024 and where we are focusing our time and attention. We set out that from 2024 to 2026, we would focus on the strengthen phase of our strategy, which is predicated on enhancing the fundamentals of our business. It's about creating a robust base from which we can then amplify our growth ambitions. So what does this mean for 2026? Under the strengthen phase of our strategy, we are focused on completing our remaining major transformation programs. We will achieve the guided run rate savings on our cost and efficiency program by 2027 so that we can open the aperture of our reinvestment program, which allows to shape an even more exciting future for our business. We will complete our historic ongoing service evidence review and put this legacy issue firmly behind us. We will continue working to embed a more performance-focused culture across the organizations. We will continue to simplify and standardize our processes, improving administration and embedding more automation. This will improve the client experience and enhance efficiency for our advisors. Ensuring we continue to provide a leading advisor offering with advisors able to build bigger, better businesses within the SJP partnership will be a key area of focus for us. We will be evolving the range of support we offer advisors by extending our investment into testing and trialing additional technology tools designed to streamline processes, reduce administrative burden, and boost day-to-day efficiency. Now we already have a range of AI enabled and digital tools which we've introduced. These include tools which respond to questions on our advice framework and business submission processes. We are also rolling out tools to capture client advisor conversations and turn them into structured and compliant ready to use reports. In 2026, we will continue to build on this range. The goal is simple. to free up more time for advisors to focus on what they do best, building trust, deepening client relationships and delivering personalized high quality advice. We have a really privileged position here As the market leader, we have the scale and capability to be able to work alongside leading global technology vendors as we leverage their technical expertise. And we are combining this with the practical end-user focused insight that only we can get from working day in and day out with nearly 5,000 advisors across the UK. We'll lean into these as we continue to expand and enhance the suite of technology tools that are available across the SJP Advisor ecosystem going forward. This will improve the great service advisors already provide to their existing clients. It will also enable them to reach more clients, growing their businesses and growing our business. In 2026, we'll also be preparing for the Amplify phase of our strategy. This includes refreshing our cash proposition for clients, which is important given the central role that cash plays in every sensible financial plan. And we'll be taking the first steps towards enhancing our high net worth proposition, reflecting our desire to have a differentiated proposition for this fast-growing client segment. So, to conclude, 2025 was a year of strong delivery and execution. We produced growth in new business flows and funds under management. We successfully implemented our simple, comparable charging structure and made good strides setting SJP up for sustained growth and success. The changes we're making will ensure we are best placed to continue to capitalise on the compelling market opportunity in UK wealth management, where the need for financial advice is growing. We are the scale operator and the home of financial advice in the UK. We're privileged that over 1 million clients are already securing their long-term financial futures through the power of SJP's professional advisors and this gives us the experience and insight to keep extending our advantage. We've got a proven track record of delivering growth and we expect to see this translate to accelerating earnings growth over time as we achieve scale operating leverage. We look to the future with confidence While the external consumer outlook remains uncertain, the changes we have already made to our business, combined with our focus to strengthen and grow SJP over the longer term, means we are well positioned to capture the structural market opportunity ahead and deliver for all our stakeholders in 2026 and beyond. Thank you for listening and do please tune in to our live Q&A, which will kick off at 9 a.m. Good morning, everyone, and thank you for joining us. Unfortunately, Caroline is unable to be with us this morning due to a family bereavement. Instead, I'm joined by Charles Wood, our finance director. Before we open for questions, I'd like to briefly reflect on a year of strong delivery and execution for St. James' Place. We delivered growth in new business, growth in funds under management, and growth in underlying cash result. while at the same time delivering strong returns for our clients. Drawing out some of the results which are new today, the underlying cash results of 462 million pounds, up 3% year on year and 4% ahead of consensus. Underlying cash basic EPS of 87 pence per share, up 6% year on year, we're returning 50% of the underlying cash result to shareholders through ordinary dividends and buybacks and a total of 313 million pounds to be returned to shareholders for 2025. Alongside delivering a strong operational and financial performance, we made good strategic progress. Our simple comparable charging structure implementation went live smoothly in late summer. The new structure puts our investment performance on a fully comparable footing with the wider market and enable the successful launch of Polaris Multi-Index. This has broadened client choice and grew to over 1 billion pounds of FUM at year end, just two months after launch. Our review of historic ongoing service evidence continues to progress. Based on our experience in the second half of the year, we have released a further £25 million from the provision today, taking total releases to £109.5 million for the year. We are now deep into the operational delivery phase and are on track to complete the programme in 2026. Our cost and efficiency program also made good progress. For example, we completed the transition to our new organizational design during the year, and we remain on track to remove around 100 million pounds per annum from our addressable cost base by 2027. These achievements give us the confidence in the strength of our business, and our prospects, which has enabled the board to update our shareholder returns guidance going forward a year earlier than originally anticipated. So from 2026, we intend to increase our payout ratio to 70% of the underlying cash result. We anticipate that this will comprise ordinary dividends, which will make up at least 40% of the total shareholder returns, and the buybacks will make up the difference. A different way of thinking about is that dividends expected to be at least 28% of the underlying cash result and buybacks are remaining 42%. That's how you get to the 70. Our priorities for 2026 are completing our remaining transformation programs, expanding the range of technology tools, including those which are AI-enabled, making those available to our advisors with the goal of helping them to work as efficiently as possible. This will give them more time to do what they do best, which is building trust, deepening client relationships and delivering personalized, high quality advice. We see technology deepening the human relationships between clients and advisors, not replacing them. accelerating elements of Amplify where we have the capacity to do so later in the year. And we will focus on refreshing our cash proposition and enhancing our high net worth proposition. We look to the future with confidence. We have already made changes to the business and we're focused on strengthening and growing SJP over the long term. This means we are well positioned to capture the structural market opportunity ahead and deliver for all our stakeholders in 2026 and beyond. With that, I'm very happy to turn to questions.

Thank you. Our first question comes from Andrew Lowe from Citi. Your line is now open. Please go ahead.

Hi, thanks for taking the question. I wanted to ask on Citi, AI and how you see the potential threats from your business. So I'd love to hear a little bit more about what makes you comfortable about the potential threat to growth and pricing power from competitors, including B2C platforms who in time might be able to offer AI-led financial advice as a sort of corollary to that would be really helpful to hear a bit more colour on the AI tools that are operational today, what we might expect in the next 12 months and how much this could improve your advisor productivity going forward. And the second question was just on the advisor numbers which fell by 0.4% in the second half of 2025. Could you please give a little bit more colour on on the productivity of your departing managers and just any comments on the outlook for advisor numbers going forward would be really helpful.