St James Place share price death cross points to more pain ahead

St James Place (LON: STJ) share price has suffered a harsh reversal this year as concerns about the company remain. The stock, which soared to a record high of 1,585p in January last year, has now plunged by more than 44%. It is hovering near its lowest level since November 2020.

Concerns about fees remain

St James Place, the biggest wealth manager in the UK, is going through a rough patch amid rising concerns about the company. One of the biggest challenges is a rule by the Financial Conduct Authority (FCA) that ensures that customers get lower fees from wealth advisors.

In July, St James Place was forced to slash its fees, which analysts believe will lower its margins. The firm said this as it delivered results that were relatively weaker than expected.

These results showed that St James Place’s gross inflows in the first half of 2023 were £8 billion, down from over £9 billion in the same period in 2022. Its net inflows stood at £3.4 billion, lower than the previous £5.6 billion.

St James Place now manages over £157.5 billion, a 6% increase from the end of last year. These assets have grown rapidly from about £40 billion in 2013. In all, its profit after tax was £55.7 million while the NAV per share was £16.28.

As St James Place looks for a new Chief Executive, the company faces numerous challenges. The biggest one is that inflows are not growing as fast as they did in the past.

Further, the company has been forced to slash fees in a time when the UK economy is not doing well. Fees are an important part of the company charges a management fee. It is estimated that over a quarter of its revenue comes from management fees. In a note, an analyst at Numis wrote:

St James Place share price forecast

The weekly chart shows that the St James stock price has been in a strong bearish trend in the past few months. It is now sitting at an important level, which was slightly above the October low of 862.2p. 

Most importantly, the stock is forming a death cross, when the 200-week and 50-week exponential moving averages (EMA) makes a crossover. In most periods, this is one of the most popular bearish signs.

Therefore, the outlook for the stock is bearish, with the next support level to watch being 800p. This target is ~10% below the current level.