Primestone, which owns about 1.2% of St James’s Place plc, says the company’s organisational structure is “bloated” and the share price has underperformed for five years.

Primestone wants a radical shake-up of the company to improve performance.

While Primestone accepts that SJP is a “fundamentally” strong business it says its business model has failed to deliver value for shareholders for the past five years

In the letter Primestone said: "St James’s Place is fundamentally a strong business that has been delivering great value for clients, partners, employees and even the regulator for years. Its business model has yielded best-in-class growth and retention of advisers, clients and assets. However, over the last five years it has failed to deliver value for shareholders."

Among Primestone’s criticism are:

• Shares in St James’s Place have underperformed peers since Dec 2015 and trade at a 50% discount to their peers’ average. Market capitalisation as a percentage of its Funds under Management is less than half the level of five years ago

• SJP has a “bloated organisational structure” while compensation is overly generous, for example more than 120 employees have a “Head of…” job title, Primestone says

• The investment team contains more than 100 investment professionals who do not invest but select and monitor 38 external fund managers assisted by external consulting firms

• The company has 300 – 400 staff in technology, double the size of the equivalent department at a rival

• Compensation level is well above peers while annual pay increases are consistently ahead of the national average

Primestone also added that St James’s Place’s Asian business has lost money every year since it was acquired, with no clear path towards break-even.

Primestone has accused the company of failing to communicate its financial performance in a clear manner which has an “adverse effect” on analysts and potential investors’ appetite to buy into the stock

PrimeStone started investing in St James’s Place last year.

The investment firm believes that SJP has the potential to more than double its share price if the company takes action to cut costs and realise profit potential. It wants consultants to be called in to review the firm’s operations, a cost reduction strategy, better communication and an exit of the Asian business.

In a stock market statement today SJP confirmed that it had received a letter from PrimeStone Capital LLP.

SJP said: "SJP proactively engages with shareholders with regards to group strategy and structure and looks forward to commencing a dialogue with PrimeStone in regard to the views outlined in its letter."

SJP is due to provide an update on the group's third quarter new business performance and funds under management on 27 October.