St. James's Place (LSE:STJ, Financial) was a top detractor in the Oakmark International Small Cap Fund's 1st-Quarter Commentary 2024. The wealth manager faced challenges with its fee structure and reported net inflows for 2023 that were significantly lower than the previous year. The fund managers, including David Herro (Trades, Portfolio), expressed concerns over the company's large provision charge for potential client reimbursements, which stemmed from service gaps identified in an internal investigation.
"St. James’s Place (U.K.) was a top detractor during the quarter. In January, the wealth manager reported net inflows for 2023 that were £4.6 billion lower than in 2022. The disappointing update came on the heels of the company’s announcement of a large overhaul of its fee structure. In February, the company reported full-year 2023 results. Underlying cash results fell below our expectations primarily due to the margin from new business and other revenues and expenses. The big miss, in our view, was the large provision charge that St. James’s Place took to account for potential client reimbursements. There were increasing complaints from clients that the company was charging them without actually dispensing any advice. St. James’s Place conducted an internal investigation, which cited service gaps that existed before the company implemented Salesforce in 2021. The provision charge covers the appointment of an investigative assessment, the anticipated cost of refunding service fees, the administration costs to operate the refund program, and an interest expense to compensate for the time value of money. We met with management following the release of results and continue to believe in the long-term prospects of St. James’s Place." — David Herro (Trades, Portfolio), Oakmark International Small Cap Fund, Q1 2024 Fund Letter
Read full letter at gurufocus David Herro's Oakmark International Small Cap Fund 1st-Quarter Commentary 2024 Q1 page.
Also check out:
