Ex-SJP boss Bellamy defends charging model

Outgoing SJP chief executive David BellamyThe widely-held view that St James’s Place is one of the most expensive advice firms has been shot down by its former chief executive, David Bellamy.

The charging structure at SJP faced more scrutiny last year after an undercover investigation by Which? that found charge disclosure varied and restricted advice limitations were not properly explained to clients.

Speaking today at Money Marketing Interactive, Bellamy, who is now Weatherbys Bank chair, says there is rife misunderstanding over how SJP stacks up overall.

He says: “We as an industry talk about advice charges, investment charges, platform charges, performance charges and then other fees and costs. Seldom do we put all the charges we have together into one picture. As a vertically-integrated firm, we consider all charges together and we are not the most expensive in the market.”

He adds: “Our prices are constantly being compared to the rest of the market. We are lower than average but it’s very hard for us to get that message across.”

Bellamy explained the firm’s upfront six per cent fee, saying ongoing charges were limited to a 1.5 per cent annual management charge.

He did not provide details of how the charge is split between advice and product charge, confirming the structure still effectively locks clients in for six years.

He says: “It is an alternative way of funding rather than an excessive way. Clients pay the upfront charge, and then we wave one per cent of charges through the first six years, so that squares away the upfront charge.”

Bellamy also spoke against favouritism towards SJP due to its size and market position. While confirming the regulator ensures “fixed” firms have a dedicated team providing guidance on regulation, he says the FCA does not give preference to large networks.

He says: “I don’t think we are privileged in any way, shape or form. We get no special treatment from the regulator and it’s bizarre to think so. The preferential treatment is a fallacy that doesn’t exist.”

He adds: “The marketplace is huge and big enough for us all to find a place to add value into that market.”

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Comments

There are 21 comments at the moment, we would love to hear your opinion too.

  1. He wants his old job back, obviously.

  2. “He did not provide details of how the charge is split between advice and product charge, confirming the structure still effectively locks clients in for six years.”

    COBS Rule 6.1A.14: “A firm must not use a charging structure which conceals the amount or purpose of any of its adviser charges from a retail client.”

    TCF Outcome 6: “Consumers do not face unreasonable post-sale barriers imposed by
    firms to change product, switch provider, submit a claim or make a complaint.”

    Go figure…

  3. Robert Milligan 3rd May 2018 at 12:15 pm

    David, I would love to discuss this in the open with you, this exact topic, what a self appointed obnoxious view, SJP is a corrupt cross subsidised and incentivised selling organisation, only interested in rebating its funds management charges to support a dysfunctional, financially untenable Advice system of products and funds. It completely flies in the face of the RDR and quite honestly should be banned. You have my name.

  4. Robert Milligan 3rd May 2018 at 12:16 pm

    Bloody hell, I am so angry.

  5. His arguments are ludicrous and could be cut to shreds by any 10 year old with a basic grasp of maths.
    The man has zero shame.

  6. Philip Milton 3rd May 2018 at 2:36 pm

    Oh so it’s only 6% lump sum, that’s all. Isn’t that called commission? Our subscription charges are zero. Clients pay a fee for advisory work and a management fee which provides the investment management (discretionary) and ‘complimentary annual reviews’ with the client. Clients can exit at any time. We guess of course that SJP mention about the underlying costs of investing as well of course, things like inert Stamp Duty,bid-offer spreads on components in funds and brokerage etc.

    • Julian Stevens 3rd May 2018 at 6:51 pm

      Of course it’s still commission. SJP still operates the same charging model as it did pre-RDR. They call it an adviser charge now, but nothing else has changed.

  7. So what would you expect?

    To quote Mandy Rice-Davis:

    “Well he would wouldn’t he.”

    Still doesn’t justify it or make it acceptable or right.

  8. Philip Castle 4th May 2018 at 9:09 am

    @MM Have you moderated (removed) one of my posts? Please email me and explain why

  9. James Hurdman 4th May 2018 at 1:36 pm

    I was there for his presentation yesterday (a very well organised event by the way MM!). He seems a nice chap and he has been at the helm of a firm that has grown to be in the FTSE 100. Quite an achievement.

    He also spoke about how much the financial services industry and advice profession has developed over the years. And he’s right, it’s changed a lot. Everything apart from the product/advice charging structures on their Bond and Pension products that is! When asked about the charges he was weeing in the wind and left with wet feet. He was struggling to explain their Pension and Bond charges, let alone justify them. The Achilles heel was there for all to see. I felt a bit embarrassed for him.

    It is very clear that SJP receive special treatment from the FCA. The fact that they are the ONLY firm allowed to get away with this type of charging structure post RDR is clear evidence of that. How can anything else be argued? I genuinely want to know. Until this charging structure is changed to reflect the rest of the profession, the link between the FCA seemingly ignoring it and the fact that SJP are present on FCA panels, will continue to just look dodgy.

    Mr Bellamy also spoke about how he felt that the SJP advice model isn’t that different to IFA’s due to the range of non-SJP products their advisers are able to recommend. If the man at the top is saying this, then it explains why there is so much anecdotal and actual evidence (the latter from Which?) of the confused (or misleading?) descriptions their partners give as to their regulatory status. No figures were supplied about what proportion of non-SJP products are actually recommended by partners. I would be fascinated to find out. It would provide useful insight into how “unrestricted” their restricted model is.

  10. Where is the FCA in all this then?

  11. Anthony Peters 4th May 2018 at 5:38 pm

    This is interesting because in 6 years of working with many leading IFA firms the maximum I have seen charged is 3% initial plus 1% ongoing with many less than that!

  12. ‘Alternative Facts’ at play again.

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