SJP: 'Independence is not what we thought it was'
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The St James’s Place business model is no more restricted than most IFAs, says SJP chief executive David Bellamy.
In an interview with Money Marketing, Bellamy says SJP has strong fund management links, whole of market for protection, stakeholder pensions and employee benefits and its advice benefits from being backed by a big company.
He says: “I do not believe that it is any more restricted than an IFA who is having to scour the whole market, pick which fund managers he is going to access for his clients and basically paddle his own canoe.”
Bellamy believes attitudes towards restricted advice are changing, with advisers and the wider industry becoming more accepting of the restricted label.
He says: “More and more of the commentators in the industry seem to be suggesting a large proportion of the IFA community will find themselves in the restricted area.”
He argues that, as a result, the Solicitors Regulation Authority must reconsider its position that solicitors can only refer clients to IFAs for investment advice.
Sifa, the representative body for solicitor IFAs, recently warned that SJP advisers are continuing to market themselves to solicitors. In August 2009, SJP was forced to issue new guidance to its member firms after the SRA clarified that referrals by solic- itors for investment advice can only be made to IFAs.
He says: “Most of the industry is beginning to realise you have to bring some constraint around your operation. You may select from the whole market and create your own panels and if that means you call yourself restricted, so be it.
“The pace of the thought process that is developing around restricted advice ought to encourage the SRA to say, ’Look, we are living in a world where independence is not what we thought it was years ago’.
“The restricted area is where the majority of the industry sits and therefore the SRA should talk about ensuring clients are introduced to qualified advisers that have the right backing and solvency. That is what is important, not whether an adviser is IFA or tied.”
In its annual results last week, SJP posted an annual profit of £84.2m on an IFRS basis, up by 69 per cent from £49.9m in 2009. On an European embedded value basis, total profit was up by 25 per cent from £363m to £455m.
The firm was hit with a £4.8m Financial Services Compensation Scheme levy, mainly to pay for claims relating to Lifemark. This contributed to total regulatory costs for the year of £6.2m. The distribution part of SJP suffered a £1.2m FSCS levy and the fund management side took a £3.5m hit. The total industry levy for Lifemark was £326m across advisers and asset managers.
Bellamy says the levy is frustrating but consumer protection is worth the cost. He says: “It is fundamentally crucial that confidence is maintained in financial services. Whatever the failure, if the consequence of pro- tecting confidence in the market is the occasional one-off levy, then that just might have to be the price we pay.”
Bellamy hopes lessons will be learnt as a result of the Lifemark debacle.
The results show adviser numbers rose by 6 per cent during 2010, from 1,464 to 1,552. The firm says 700 advisers have the required diploma qualification to meet the retail distribution review standards and a further 700 are within one or two exams of reaching it.
The firm also claims the FSA is satisfied that SJP’s charging and remuneration structure is RDR-compliant.
Bellamy says: “Because we straddle both the adviser and fund management areas, we wanted to make sure we are interpreting the RDR requirements properly and that our product structures and the way that our annual management charges and exit penalties work is in keeping with the legislation. The FSA has confirmed it is.”
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Readers' comments (25)
Zorro | 7 Mar 2011 9:50 am
He says: “I do not believe that it is (SJP) any more restricted than an IFA who is having to scour the whole market, pick which fund managers he is going to access for his clients and basically paddle his own canoe.”
Well recently I looks at the entire OEIC market via Aequos and used a genrefic DNA sift. The questions was: How good are the SJP funds?
Aqueous, is the same research software used by the FSA. There are some 70 pages of funds and to save you the trouble the first showing of SJP is:
Page 24 one fund
Page 26 two funds
Page 28 one fund
Page 30 one fund
Page 34 two funds
Page 39 one fund
Page 44 one fund
Page 48 one fund
Page 52 two fund
Page 54 one fund
Page 56 one fund
Page 63 one fund
Page 64 one fund
Page 68 four funds
No quite as good as whole of market in terms of fund choice. If you had a choice would it be SJP?
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SJP Distributer Influenced Funds (DIFs) | 7 Mar 2011 9:52 am
SJP reps are obliged to use SJP Distributer Influenced Funds (DIFs) which can increases costs and complexity and reduces choice. This concern was expressed by the Financial Services Authority (FSA) who has issued a fact sheet on the subject which is available via the FSA website.
In short this is what the FSA say:
“We have seen increasing use of these funds and firms using them should ensure that they are in the best interests of each client and do not simply increase complexity and costs without providing new services that are suitable for the client.”
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Anonymous | 7 Mar 2011 9:54 am
Looking at the photogroph of David Bellamy, I didn't recognize him without the beard! He does make a valid point though.
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The Botanist speaks! | 7 Mar 2011 10:25 am
David Bellamy’s (the botanist) is not a believer global warming but this version is, and what a load of hot air!
SJP is a direct sales forced modeled on Allied Dunbar with restricted products and sharp suits!
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Anonymous | 7 Mar 2011 10:37 am
So they can churn more quickly then?
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Harry | 7 Mar 2011 10:46 am
David Bellamy - what a joke!
So anyone who thinks being an SJP adviser means best advice for their client is a clown!
Eg. would an SJP adviser EVER recommend, or be able to recommend, say Dimensional funds? No.
So there. SJP = a glorified sales force pretending to be wealth managers.
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DIFa | 7 Mar 2011 11:20 am
Mucky
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Tony Slimmings | 7 Mar 2011 1:26 pm
Sorry IFAs I think he is right, most IFAs are commission sales people using the same product providers, aka SJP sales people and are confirming restricted is their preferred option.
The gauntlet being thrown down is that to be "I" means more than fund/provider selection it means acting in your clients best interests, something SJP will never do but solicitors take for granted.
Please move the argument away from product selection and the "I" sector will flourish, thereafter SJP will follow the banks into history, fight them on their ground and you will lose.
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Ron Jones | 7 Mar 2011 1:53 pm
Looks like they are seriously rattled by RDR and they obviously think that it will polarise clients into thinking is my adviser indepedent or restricted, and they are obviously frightened of the restricted tag line. At least an IFA can chose where to place the business, rather then being given the choice of the finding the best from a restricted list. Any network that uses this system is going to find the RDR a difficult place to make a living.
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Norm d'Plume | 7 Mar 2011 2:34 pm
"The St James’s Place business model is no more restricted than most IFAs" - As a certain Mandy Rice-Davies once said, "Well, he would, wouldn't he?" (Google it if you're too young to remember the Profumo affair)
Why isn't the FSA doing its job and telling SJP they can't target Solicitors?
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