Investor drought hits St James's

WEALTH management group St James's Place Capital felt the pain from investors delaying their long-term savings decisions as new business volumes for the first six months fell by up to a fifth.

Founder and chairman Sir Mark Weinberg said: 'With six months of volatility in the equity markets there are a lot of people still sitting on their hands. There has been a month of relative stabilisation but it will take time for them to adjust.'

His comments came as St James's Place delivered a £9.7m pretax loss for the first half to the end of June, in line with market expectations but down from £13.8m profit over the same period last year.

New business from long-term savings was down 17% on last year, investments from pensions dropped 23% and pensions business fell 23%.

The firm is prepared to lay off up to 110 of its advisers, described as partners, or 10% of its workforce over the coming half-year in response to the drop in new business and in sales of the more profitable equity-based products.

Chief executive and chairman designate Mike Wilson said: 'The exact number depends on the coming months' productivity. Those people earmarked only accounted for 4% of last year's production so the effect on new business, with new applications for partners accelerating, will be minimal.'

Sir Mark said St James's was taking about £60m a month in new investment and needed between £80m and £90m 'to be really flying again'. He was reasonably confident that people would quickly realise the need for better returns from longer-term equity-based products to outpace inflation.

Overall funds under management increased 2% over the past 12 months to £6.7 billion and were up 14% since the start of the year.