Wealth managers predict strong growth as clients invest pandemic savings

The UK’s largest wealth manager said the spectre of inflation would push people to invest their cash savings even if confidence in the UK economy slipped in the coming months, as it predicted strong growth in assets for the rest of the year.

St James’s Place said its funds under management hit £148bn at the end of September, up 14 per cent since the beginning of the year, boosted by the flow of pandemic savings into investments and improved consumer confidence.

Despite a barrage of negative news for the UK economy in recent weeks, from supply chain disruptions to fuel shortages, the wealth manager increased its expectations for asset growth by the end of the year.

“Clearly at the moment there are a bit more negative headlines around. There’s always two sides to the coin. Inflation will get people worried about the erosion of their savings,” said Andy Croft, chief executive.

He said a large chunk of the money that well-off clients could not spend during Covid-19 lockdowns had become “permanent savings” and that customers were feeling more pressure to invest as higher inflation threatened the value of cash sitting in their bank accounts.

The FTSE 100 group said it expected the pace of asset growth to pick up in the final months of the year and increased its guidance for gross inflows in the second half from 20 per cent to about 25 per cent.

St James’s Place found it challenging to attract new business during Covid-19 lockdowns in 2020, but Croft said those difficulties were “predominately gone” as restrictions eased and the group’s vast network of financial advisers adapted to remote working.

Wealth managers have reaped rewards this year as their affluent clients moved to invest cash stockpiles saved during Covid-19 lockdowns. St James’s Place has outpaced UK rivals this year, with its share price outperforming peers by about 38 per cent according to analysts at Citi.

The pandemic has also brought a flood of client money to investment platforms. AJ Bell on Thursday reported about 30 per cent growth in client numbers and assets for the year to the end of September, closing the period with £72.8bn under management.

Andy Bell, chief executive, credited “very strong demand from retail investors throughout the pandemic” with helping to drive growth. The FTSE 250 investment platform said net inflows from self-directed investors rose 52 per cent to £3.2bn as more savers stashed money in their pensions and tax-protected ISAs.

Bell said retail trading activity had “returned to more normal levels” in the third quarter, but net inflows were still 73 per cent higher than the same months last year. Larger rival Hargreaves Lansdown last week also reported a substantial year-on-year uplift to the amount of money flowing in, as some analysts predicted customers had more cash savings to deploy in the markets.


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