St James Place faces slower growth, Credit Suisse downgrades

The Swiss bank also lowered its target price on the FTSE 100 resident to 965p from 1,150p, saying it believed the group's current stock price was "fair value given the challenging asset gathering environment".

Credit Suisse noted that St James's had benefited from pensions freedom legislation across the UK which allow individuals to stay invested in equity/bond markets rather than converting pension pots into an annuity and, in turn, extending the period of time client's money remains with the firm.

However, CS believes these flows will come under pressure as rising bond yields and increased market volatility are likely to lead to clients delaying the consolidation of existing DC pension pots with SJP given the impact of its high fee structure during a market downturn.

Credit Suisse also highlighted risks coming from changes in the UK pensions legislation and tax rules that could limit or improve individual savings, lower transfers from defined benefit schemes, creating medium-term headwinds to inflows, lower flows from defined contribution pension pot consolidation and SJP's lower existing asset base due to negative fourth-quarter equity returns.

"Over the past five years, SJP has outperformed both UK Life insurers and UK asset managers by 34ppts and 23ppts respectively."

"However, over the past year the stock has delivered a -19% total shareholder return, similar to UK Life and asset managers as both sectors de-rated following concerns over high credit risk (UK Life) and negative netflows (UK asset managers)."