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Blog: Calling out Which? on its SJP advice probe

Having a go at St James’s Place has become something of a sport among consumer journalists over recent months.

Trade journalists too, are far from immune from embarking in a spot of SJP-bashing should the opportunity arise.

In the adviser space, this is because it is written into adviser folklore that most, if not all, advice firms love to hate SJP. Advice firms have tended to revel when the latest wave of negative publicity comes around. They are keen for a light to be shone on what are generally regarded to be murky charging practices, despite SJP’s assurances to the contrary.

There is a reason why when outgoing chief executive David Bellamy told Money Marketing “there are no smoke and mirrors” with the company’s charging structure, the resulting article was among the most read that year.

But where criticism is levelled, this should be done in both a fair and an accurate way. This is why I take issue with some of the points made in the recent Which? article accusing SJP of poor practice.

Exclusive: SJP chief reveals all on charges, FCA and the future of advice

Before everybody accuses me of defending the indefensible, let me first state my case. I would agree with the concerns raised that four out of 12 SJP advisers failed to address the issue of what advice was likely to cost, and that there seems to be no standard approach to charges disclosure across the business. Equally, failing to disclose that the company offers restricted advice, and the nature of that restriction, does not subscribe to the FCA’s overarching principle of being clear, fair and not misleading.

But for an organisation like Which? to haul SJP over the coals while making sweeping statements about advice alongside glaring errors about the RDR reforms makes a mockery of the journey many advisers have been on.

Error 1: Restricted advisers are paid commission

The Which? article states: “We were particularly interested in two issues- what SJP’s advisers said about charges, and how clear they were about the fact they aren’t independent financial advisers, which means they’ll only recommend products where they get paid a commission – even if cheaper, more suitable options are freely available.”

Any article that conflates upfront advice charges with commission is misleading in the context of the RDR’s commission ban. Commission is paid by the provider, and advice charges are paid by the client. That is the central tenet of the RDR. While no one likes the up to 5 per cent initial charge levied by SJP, using terms like commission muddies the waters.

When I broached this with Which?, they said their undercover researchers were told by SJP that advisers receive 3 per cent of initial fund charges, which “seems like commission in all but name”. Which? has since decided to change the “commission” wording to “fee”.

Error 2: Restricted advisers don’t give suitable advice 

This is how Which? describes the difference between independent and restricted advice:

Setting aside the inaccuracy that it is only restricted advisers that base their charges on the amount invested, it is also incorrect to suggest restricted advisers have no obligation to deliver suitable advice.

Some advisers will be restricted because, after sufficient due diligence, they have made a conscious decision to discount esoteric or alternative investments from their selection. This is clearly not the same as flogging their own products.

In response, Which? says: “Regarding suitability, we don’t say that SJP advisers don’t need to provide suitable advice. We say they aren’t obliged to consider all the options on the market. So we’re saying that investors can’t assume they’re getting the most suitable recommendations. Our article also makes clear that we’re concerned specifically about SJP’s restricted advisers because of their tied nature, rather than about advisers who are restricted because they choose to focus on particular subjects or product areas.”

Error 3: Only IFAs put their clients’ interests first

Which? also states:


It is true that independence is something to be celebrated. For firms that have managed to maintain their IFA status, that is an achievement that is up there with the best chartered and certified financial planning firms in the country (another thing Which? fails to reference – the drive towards higher professional standards).

But there are firms that through no fault have become restricted thanks to the unnecessary changes to the definition of independent advice foisted upon them by the FCA.

In the wake of the RDR, Money Marketing reported at length on how the FCA had got it wrong on its definition of independence, where firms referring to a specialist could not call themselves independent. The subsequent industry outcry led to an FCA U-turn.

This victory was hard fought, but problems with the restricted definition still apply. Which is why it is frustrating to see the independent/restricted debate reduced to the above caveat. It is also unfair to tar all restricted advisers with the same SJP brush.


Finally, any article about SJP charges should look to set out how the exit charge works. This would probably swing the pendulum against SJP far more than any misleading statements about restricted advice.

As Rory Percival and others have pointed out, where articles like this are inaccurate it takes away from the otherwise valid findings of the investigation.

I am no apologist for SJP. And like any other journalist (or good adviser for that matter), I want to see injustices exposed. But I also think that unbalanced articles that seem to suggest that SJP=restricted and restricted=bad advice, without explaining there are many good advice firms out there (offering both independent and restricted advice), do a disservice to the advice profession at a time when the need for advice is greater than ever.

Natalie Holt is editor of Money Marketing. Follow her on Twitter here.



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SJP spends £121m on replatforming as a quarter of assets complete transfer

St James’s Place has spent £121.1m on its replatforming project to IFDS Bluedoor so far with pension and bond business yet to be transferred and a retirement account still to be developed. According to SJP’s 2016 annual report, the balance of an “operational readiness prepayment” to IFDS reached £121.1m in 2016. The prepayment relates to costs […]

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There are 34 comments at the moment, we would love to hear your opinion too.

  1. Thanks for actually attempting to be a proper Journalist Natalie.

    I’ve often wondered how it is that many a so called journalist gets away with talking about financial advice and heck even effectively giving advice, whilst having zero qualifications, little knowledge and whilst spouting BS.

    I may not be a fan of SJP, but that doesn’t mean I believe that stuff should just be made up about them.

    Which love to parade themselves as the champion of the consumer, however what they always forget, is that they are just as biased, because they have to “sell” their reviews and the “value” that Which add.

    From personal experience Which seem to add very little value about anything..

  2. Well written Natalie, personally I have taken no notice of anything Which? has said for years, like this report I often find what they say misleading or even wrong. Now they, I assume sell, their logo to what they deem best of brand or just good value products the conflict of interest is there for all to see.
    Many years ago I was a Which? subscriber and bought recommended products before finding out many were really rubbish, as for the endowment “non-recommendations” by Which? so don’t blame us when it all went wrong, don’t get me started although personally unaffected.
    PS I am not and never will be associated with SJP and agree totally about their extremely clear? charges.

  3. A good and necessary piece, Natalie, but I have to say a hugely understated one – you could justifiably have expressed a lot more astonishment at the depths of the ignorance revealed by Which? in their article. They clearly haven’t the faintest idea how the advice market works and in particular how the RDR changed it, and base much of their comment on distinctions between independent and restricted advice which simply don’t exist.

    It may be that these failings reflect the lack of understanding of one particular individual who wrote the piece, but you’d imagine that Which? must carry out some kind of process of editorial review before they publish a piece which could do serious commercial damage. Apparently, however, they don’t.

    In my mind, the piece does indeed do great harm to the reputation of an organisation that emerges as shoddy, amateurish and thoroughly unprofessional. Unfortunately from Which?’s point of view, though, it’s not the organisation they were aiming at.

  4. You are aware that the 5% initial charge (or whatever is agreed with the adviser) doesn’t affect the initial allocation rate on investment contracts aren’t you? I think it is that which is at odds with RDR’s principles.

    Happy to be corrected on this, just my understanding, but I have raised it before as not been countered by those in the know!

  5. I have learned not to throw stones when living in the glasshouse, as I commented yesterday SJP are not alone, and the industry needs to improve as a whole.

    I agree with Natalie that we need to be fair and balanced with any criticism, the problem for SJP is they take denial to Lance Armstrong levels and actually believe what they are saying, making them an easy target despite having some very competent advisers providing a good service.

  6. “Some advisers will be restricted because, after sufficient due diligence, they have made a conscious decision to discount esoteric or alternative investments from their selection.”

    No they won’t. If they’ve done sufficient due diligence to discount these products they’ve fulfilled the requirements of independence. Firms go restricted because they can’t or don’t want to justify discounting them.

    • Nope – I know one IFA who went “Restricted” for TCF reasons – they had no interest in advising in eg. UCIS, VCTs and EIS and felt it unfair to be seen to be a Whole of Market IFA when they had no intention of advising in those areas.

  7. Having sat on the AIFA board when they invited a senior SJP individual to be interviewed prior to considering them for membership, I remember well the astonishment at what was policy chicanery about the rules and regulations.

    However there is more than enough criticism along these lines – others too have their experiences.

    Reading through your article I will just refer to a couple of points:

    1.”there seems to be no standard approach”
    2.”what advice was likely to cost”

    Both these statements point firmly to the assumption that these ‘partners’ are in fact employees. From all the conditions used to determine either employment or self- employment SJP seems to fall within the former. How is it then that they seem able to skirt HMRC rules (as well as – as far as many in the business are concerned – regulatory rules)?

  8. Robert Milligan 25th July 2017 at 10:43 am

    If the Fee is not agreed directly with the client, and paid to the Adviser Firm as such, and if the Non disclosed element of the Fee ie Conventions Office Allowance’s and VQB enchantments are not disclosed, then it is Commission, to call it anything else is untenable, misleading and an absolute lie

  9. Stephen Underwood 25th July 2017 at 11:52 am

    I seem to remember somewhere in the deep dark recess of my mind that not so long ago, Which Mortgages were hauled over the coals by the Regulator for not being clear on the fees. I could be wrong.

    As Keith S states, this from an organisation that takes money in order to display the logo.(Independent?)

    It has become fashionable to bash SJP because as a nation, one of our more unpalatable traits is to berate success and want to bring it down.

    As for SJP offering their own products, there are IFA’s that act as if they are restricted choosing from a narrow selection of choices. There are many providers that are chasing vertical integration. In the end £80+ billion of AUM speaks for itself.

  10. I wrote the piece in question and hope you’ll forgive me sticking my oar in.

    As you point out, we’re happy to clarify that SJP charges fees, not commissions. I’m not sure most consumers would see the distinction and it seems a discrepancy that SJP bundles this charge within their product fee.

    I think we made the distinction between the two types of restricted advice quite clear. I did not mean to suggest (nor do I think I did) restricted advisers don’t need to provide suitable recommendations – but they’re not based on an comprehensive and fair analysis of the market.

    Ultimately, I feed that if someone makes an enquiry with an(y) adviser, they should be able to understand what they’ll pay, and what they’ll get. We found that wasn’t always the case with SJP.

    SJP may say there are “no smoke and mirrors” around its charges, but we regularly receive calls from members who don’t understand what they’re paying.

    • Tom, you’re quite simply wrong with your analysis of what “Restricted” means as it applies to Financial Advisers.

      They are NOT Restricted in terms of the Providers they can deal with; they are restricted in terms of the Advice areas they choose to deal with.

      You really should be utterly clear what you mean when you level criticism, as you will be read quite possibly by millions of people who rely on you for unbiased and accurate comment.

  11. What SJP know is that many Clients are not interested in the whys? and wherefores? and how the adviser got there, they do know that the majority of Clients are interested in how much more money they have now than when SJP fist invested their monies. I am not SJP, do not like their systems and processes and would never ever become an SJP adviser, BUT if you ask the majority of their Clients what they think, they will say SJP are great because the Clients now have a lot more money than they did 10-25 years ago. Or am I wrong?

  12. Very good article Natalie

  13. Some good points but I align with Harry Katz, Steve D and Sascha.

    My understanding is that the separation between plan charges and adviser charges can be vague due to the integration of the services and (whilst I stand to be corrected) if an adviser is being paid through product charges, that – IMO – is commission in all but name.

    Likewise, a lack of clear disclosure of non-independence (given that this was the mystery shoppers clear requirement) is very very poor. If a client asks for independent advice, there should be no avoiding the fact and they either walk away or understand that the restriction on the advice is acceptable to them.

    With regard to advice fees, Clients needs to agree and understand, in £s not %ages, the cost of initial and ongoing advice. This is a regulatory requirement and, for me, the key benefit of RDR…. the client agrees the advisers fees in advance.

    I’m sure it’s not just SJP who skirt these topics and I’m wary of the movement back to integrated ‘sales teams’ – particularly if disclosure is unclear or, worst still, lacking.

    I’ve said for a while that, post RDR, disclosure statements should be pre-formatted by the FCA to avoid the nonsense of individuals ‘going off piste’ with their verbal disclosure leaving the client potentially unclear on the advice they are receiving.

    • Julian Stevens 25th July 2017 at 1:22 pm

      I quite agree with your observations Paul. Why the regulator allows SJP to get away with an unarguably muddy emulsion of product and advice charges is very fishy.

      And why, from its recent study into the standards of disclosure of costs across the FA community, was SJP excluded?

      When asked about SJP (so I’m told), the reaction of the FCA people tends to be to cough uncomfortably and look at the floor or out of the window.

      Draw your own conclusions.

  14. Very well put Nathalie.

    Your reference to the exit charges are what really differentiates SJP from any other advice firm – can any other firm or adviser charge fees for services they aren’t going to offer? I don’t actually know the answer to that question…

  15. There are issues here that cannot be ignored and Which? were correct to flag them.

    With respect to “Error 1”, can anyone name another advice firm who recommends Pension and Investment Bond products where there is no initial charge to the client but the “adviser” receives a lump sum payment up front from the provider of said product? It is for all intents and purposes commission. If the FCA enforced factory gate pricing on such products (SJP do operate a transparent charging structure for their Unit Trusts/ISAs) there would be no debate and the mud-slinging would stop. The CEO of SJP has himself accepted in Money Marketing that their charging structure is “complicated”.

    As for “Error 2”, granted the final paragraph of the quote from Which? that is used in the article doesn’t apply to all Restricted advisers, but it does apply to SJP, and the report was about SJP.

    Bring back the “Tied”, “Multi Tied” and “IFA” descriptions and consumers might stand a better chance of understanding, but that doesn’t excuse SJP not outlining the nature of their restriction clearly and in a uniform way.

    • Yep, Error 1 certainly needs addressing, but yet….? Nothing!!

      Makes you wonder why it’s so difficult to resolve; there again, if there is no will to address it, other than on the part of the adviser community (i.e. other product providers are content to sit on their hands and not lobby the regulator, whilst their market-share is eroded), then it’s of little surprise that it continues unabated.

      I understand the difficulty that some trade bodies may have obviously, as you wouldn’t want to lobby against your own customer I guess!

  16. Well said Natalie.

    I think the only thing that SJP – as a whole – are guilty of is charging high fees. However, if their client’s are happy and perceive these as value for money you can’t really argue with that. Some people happily spend more on a product which isn’t necessarily better quality than one at a lower price.

    Plus it’s like any large purchase e.g. buying a house. If you aren’t happy with the price and they other party stand firm, you can choose to back away.

  17. SJP is the provider Natalie.

  18. Tom,

    Just a couple of points to raise about your article.

    SJP clients don’t necessarily pay a 5% initial. 5% is the maximum initial charge that SJP facilitate but their advisers are free to agree the initial charge with clients, subject to the 5% cap.

    Your comparison of the ongoing cost of investing with George Luckcraft via SJP (1.83%) vs an IFA (1.20%) is wrong.

    Almost all IFAs charge between 0.50%-1.00% for ongoing advice and this would be additional to the 1.20% that you have quoted for the account and fund. Yes, that means many IFA’s would actually be (gasp) more expensive than SJP!

  19. Ian – since when do all IFAs charge 0.5-1% for ongoing service?

    • Sam,

      A quick look on one of the many websites listing IFA businesses currently for sale would appear to support my assertion.

      The first three I came across this morning were as follows:

      FUM £6.6m
      Recurring Income £66k

      FUM £16m
      Recurring Income £160k

      FUM £28m
      Recurring Income £140k

  20. And our initial charge is often less than 1%.

  21. The problem is, the public will believe Which? and see any (valid) criticism of them as industry protectionism.

    Physician, heal thyself…

  22. As for the exit fees, it makes it difficult to move clients from SJP to better IFAs or to advisers who have a better “relationship” with the client. Which is a clear and flagrant breach of TCF Outcome 6. That is one reason why Natalie we dislike SJP.
    I could also add something about stones and greenhouses because some of what I read on your site is shall we say unfair and one regular contributor often wrong passing fiction as fact.

    • Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product or switch provider.

      Evidently, in the case of SJP, the FCA has chosen not to classify its 6 year tapered scale of exit charges as an unreasonable post-sale barrier.

      It’s all a matter of interpretation you see, perhaps because SJP calls it a withdrawal rather than an exit charge.

  23. Personally, I welcome the article. It may not be perfectly written (sorry Tom) but the gist is spot on.

    I wonder if any of the SJP partners surveyed was an ex-IFA ?- his/her clients might still be under the impression that the advice now being given is independent. I hope not.

    I’ve resisted many attempts over the years to get me to move to the dark side – pretty tempting given the ‘promise’ of a big, tax-efficient, cheque when I retire but our business was founded on the principle that we always do what’s best for the client and restricted advice simply isn’t.

    • Julian Stevens 26th July 2017 at 2:01 pm

      The extent to which restricted advice is inferior to WoM IFA depends on two things:-

      1. The scope of the restriction (in many cases, it’s no more than openly declaring a preferred provider or platform for certain types of investment) and

      2. Whether or not the client’s circumstances are such as to warrant the generally higher cost of WoM IFA.

      Whilst WoM IFA may, in theory, be the gold standard, not everyone needs it, any more than all drivers are badly losing out by buying a Ford instead of a Merc.

      • Except, where is the evidence that IFA’s are more expensive? The suggested cost benefits of restricted propositions don’t seem (from what I can tell) to translate into lower advice charges to clients (SJP probably being once such example).

  24. “Commission is paid by the provider and advice charges by the client”

    Hmm, I think commission like all costs deducted through product charges is paid for by the client

    • Totally agree Nick. And what a lot of advisers don’t tell their clients is the exponential effect of deducting their “fees” from a fund effectively makes them poorer (rather than paying an explicit fee outside of an investment product) at their intended retirement/maturity date.

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