Mark FitzPatrick takes over as boss of St. James’s Place: These are the key issues he will have to tackle

Mark FitzPatrick has taken over as CEO of St. James's Place, Britain's largest asset manager, after being given the green light to succeed the outgoing Andrew Croft.

FitzPatrick, who joins FTSE 100 insurer Prudential after six years, most recently as interim chief executive, officially took over the reins of SJP on Friday morning.

But FitzPatrick joins after a difficult year for the asset manager and will be tasked with tackling the falling share price, uncertainty over the impact of the charging model and investor unrest over high executive pay packages.

This is Money looks at the key issues FitzPatrick will have to tackle.

The stock price spiral

SJP shares have fallen more than 40 per cent since the start of the year to 651.4p, around 60 per cent below the group's peak of 1683.5p in December 2021.

The company saw huge inflows from the start of the pandemic as lockdown-hit investors put excess savings to work, with assets under management rising from £117bn at the end of 2019 to £148.4bn at the end of 2022.

Although SJP was not alone in seeing record inflows into the asset management sector, the group was rewarded with price gains of almost 140 percent between April 2020 and December 2021.

However, tougher economic conditions have taken their toll on the sector, with nervous and cash-strapped investors heading for the exit and volatile markets hurting returns.

SJP still managed to grow assets to £157.5 billion as of June 30, but investor sentiment towards the sector has taken its toll.

UBS says SJP is undervalued

Analysts at UBS say SJP's share price is 'cheap'.

The bank said in October: 'Significant reductions in earnings per share, pressure on long-term fees and high costs of equity, reflecting uncertainty under a new cost structure, appear to be already priced in.

'Significant long-term growth prospects (up to 24 per year) do not appear to be reflected in the valuation.'

Target price: 735p

Shake-up of the charging model

A much more noticeable impact on SJP's share price is the impact of new consumer rights rules on investment managers in Britain.

The consumer duty, which requires all financial services providers to provide 'fair value' and 'timely and clear information' to customers. This measure, which came into effect in July, caused a price loss of more than 40 percent in just one day.

SJP has long faced accusations that it charges customers excessive or unfair fees for financial advice and early withdrawals.

The solution to this, unveiled in October, was to remove exit charges for new investments in bonds and pensions for the 'vast majority' of accounts.

The move, which will cost the company around £150m when the changes come into effect in 2025, caused a second sharp fall in the share price.

However, analysis has shown that some SJP pension customers will ultimately pay even more under the new model.

Investor pressure on rewards

SJP was forced last year to defend its decision not to cut share awards to top staff after a revolt by mini-investors over its pay policies.

The decision not to reduce share awards to top staff last year, after a revolt by mini-investors over the remuneration policy.

But SJP, which has suffered a heavy drop in share prices this year, told investors on Wednesday that trimming the company's long-term stimulus plan “risks damaging its credibility.”

The group claimed it was “grateful” for investor feedback and said it would keep shareholders' views on the issue “in mind” in the future.

It added: 'The board will continue to deal with shareholders and their representative bodies in accordance with our normal practice and will reflect their feedback, as appropriate, in the Directors' Remuneration Report 2023.

According to SJP's annual report published in March, FitzPatrick's predecessor saw his total salary, including cash and deferred bonuses, fall from £3.6m in 2021 to £3.11m last year.

SJP stock performed well during the height of the pandemic but has struggled since