Advisers at St James’s Place owed £805mn in business loans at the end of 2024 through a scheme which allows them to buy other advice practices.
This compares to £696mn which was owed in at the end of 2023 – an increase of more than 15 per cent.
But at the end of 2024, £81.6mn of those loans were impaired – an increase of 62 per cent on the previous year.
SJP describes impaired loans as those which have more than 30 days in arrears; where the partner in question has left the company with a debt outstanding; or where there are negotiations regarding the refinancing of the loan.
As FT Adviser has previously reported, SJP partners borrow money, either directly from the company or through a network of banks, to buy the practices of exiting or retiring partners.
The £81.6mn figure of impaired loans is comprised of loans SJP said are either “under performing”, which accounts for £48.5mn of the total, or “non performing”, which accounts for £33.1mn
The sharp increase of impaired loans over the past 12 months is driven by an increase in the “non performing” category, with debts in that category rising from £8.5mn to £33.1mn.
Loans made by banks through this scheme are guaranteed by SJP so appear in the FTSE 100 company’s accounts as “financial commitments.”
SJP sells on some of the loans and so is no longer liable for those.
The interest rate on SJP’s loans to its partners is 3.5 per cent above the Bank of England base rate, on a declining balance.
The company tries to ensure repayment by collecting the client fees centrally and deducting the cost of the repayments before passing the remainder onto the adviser.
In 2024 the company collected £43mn in interest payments from advisers which equates to just over 10 per cent of SJP total profits for the year, which were £398mn.
SJP has previously described this model as “proven”.
Several SJP partners had previously contacted FT Adviser to state their fears that the loan repayment levels risked pushing them into negative equity.
But the company has said the conservative loan-to value ratios it applies means negative equity is unlikely to be a factor for most.
Facilitating business loans to partners is a key way in which we are able to support growing partner businesses.
At the end of 2024, SJP increased the amount it directly loaned to advisers to £386.6mn, up from £340mn the previous year.
The amount loaned to advisers by banks and guaranteed by SJP fell to £248mn, from £289mn the year before.
SJP also securitises some of the loans on its books, and sells them to investors.
Once those loans have been sold, the adviser repays the loan to the investor, but SJP is no longer liable if the adviser defaults.
In the most recent financial year, the company sold £170mn of adviser loans to investors.
Adding the total of the three types of loan together, the total debt owed by SJP advisers is around £805mn.
The reduction in loans owed to banks and increase in securitised loans has been driven by SJP’s decision during 2024 to buy some of the loans which advisers owed to banks and then immediately sell them on through securitisation.
By doing this it can reduce its liability to non-performing loans because while it acts as guarantor on the loans owed to banks, this is not the case once they have been securitised.
In the accounts St James’s Place state: “Facilitating business loans to partners is a key way in which we are able to support growing partner businesses.
“Such loans are principally used to enable partners to take over the businesses of retiring or downsizing partners, and this process has multi-stakeholder benefits.”
Among the benefits they cite are the continuity it provides to clients, supports the “next generation” of advisers and helps St James Place retain assets under management.
david.thorpe@ft.com
