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Sifa slams St James’s Place recruitment letters

Solicitor IFA trade body Sifa has accused St James’s Place of making “distinctly misleading” claims that advisers who join the firm can continue to get solicitor referrals and is reporting SJP to the Solicitors Regulation Authority.

The SRA’s code of conduct states solicitors can only refer clients who need investment advice to “independent intermediaries”. It defines an independent intermediary as an IFA who can advise on investment products from across the whole of the market and offers a fee option.

As part of a recruitment campaign, St James’s Place regional manager of business acquisitions Darren Ginders has written to a number of advisers.

The letter, seen by Money Marketing, includes a section detailing “common misconceptions” about SJP.

Under the heading: “I will not be able to deal with my professional connections and as a result, I will lose new business enquiries”, Ginders writes: “This is incorrect. Despite the SRA’s rules, many partners are still able to maintain a successful business relationship with solicitors. In fact, any partners who are active in this arena usually prosper to a greater extent.”

Sifa received two complaints from member IFAs who received the SJP letter. Sifa managing dir-ector Ian Muirhead (pictured) wrote to Ginders, suggesting the statement is untrue and advisers who follow the advice would be “inciting infringement” of SRA rules.

An SJP spokesman says: “There is nothing to prevent a solicitor from referring a client to a partner for non-investment business, provided it is in the
best interests of the client.”

Muirhead says: “The paragraph quoted in the letter is distinctly misleading. We are aware that there are still firms giving regulated investment business to SJP salespeople. SJP is trying to keep this under the radar by suggesting they are not advising on regulated business. I will be reporting SJP to the SRA.”

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Comments

There are 25 comments at the moment, we would love to hear your opinion too.

  1. SIFA has done sterling service in previously raising this concern, which resulted in the SRA formally reminding solicitors of their professional obligation to only refer clients to independent advisers.

    The fact that SJP has yet to learn from previous infractions, says a lot about that organisation and the cultural differences between them and professional firms.

    Ian is to be applauded for continuing to pursue such flagrant breaches, like a dog with a bone (pedigree, of course). Indeed, I hope that the SRA will formally request details of the firms who, according to SJP, continue to maintain “successful business relationships” with their salesmen.

    It may well be that this is a misunderstanding and that SJP actively ensure that their salesmen do ‘inadvertantly’ encourage solicitors to breach their professional obligations (whether in respect of regulated, or unregulated, business).

    But, if so, how do they consider their relationships to be successful business relationships!

  2. This is something that St James’s Place is doing all over the country and surely either the Law Society or the FSA need to take action against St James’s Place for this infringement.

    The Law Society also needs to fine solicitor practices that continue to refer clients to St James’s Place as I have experienced problems getting referrals from solicitors when they have existing arrangements with St James’s Place advisers.

    It’s interesting that I had a approach from one of their recruiters recently who did not confirm that St James’s Place was tied even though I confronted them.

  3. I’ve always wondered how, as only SJP Partners can provide access to SJP funds, solicitors can refer to IFAs without also giving details of an SJP Partner.

    By referring to an IFA a solicitor is effectively deciding that the client shouldn’t have access to SJP funds.

  4. @Anonymous 10.15

    Your ‘innocent’ wonderings appear disingenous – please disclose if you have a connection to SJP.

    In any event, it is not for the solicitor to decide on the merits of individual companies, but to refer their client to a firm that legally acts for the client rather than for single product provider.

    However, why would an IFA recommend an SJP segregated fund, when he or she can normally select the underlying fund directly, and at a lower cost?

  5. Annoymous 10.15

    The Law Society rules state that solicitors should refer to an IFA – it is up to SJP whether they distribute their products and funds to IFA’s but I suspect they will never do that.

    I get very annoyed with organisations that tried to circumvent rules that are meant to protect the client. People go to solicitors to get
    independent and unbiased advice – not tied!

  6. Anonyous 10.15

    You are a genius. I’ve always wondered why solicitors don’t have to provide clients with details of every single direct sales force in the country.

    It does seem grossly unfair that clients should be denied access to the overpriced rubbish being peddled by so many esteemed organisations.

  7. @Anonymous 10.24. I am an estate planner who works with both IFAs and SJP Partners and can assure you that my ‘wonderings’ are genuine.

    @Peter. I didn’t suggest that the solicitor be tied, rather that they give the client the opportunity to decide between the two options.

  8. Whilst I am aware how some SJP are studying hard to pass exams, I am curious how others are getting through, without actually knowing what exams they have actually sat!!

    Have SJP made special arrangements with the FSA??

    Independence indeed

  9. Dear Anonymous, what is an estate planner when it’s at home? Someone who doesn’t provide full advice, a will writer, a tied agent, an IFA or a deluded title? Add your name as well you plonker!

  10. @anonymous 10.15 (from Anonymous 10.24)

    By estate planner, I presume that you are a fully-qualified STEP member (as am I), otherwise you may be experienced but not qualified (a professional needs both).

    Furthermore, unless you are regulated (as am I), it is not for you to ‘work with’ IFAs and SJP partners, but to follow the Practice Rules and only refer clients to other parties that are independent and objective in their advice.

    While you may mean well, you are in breach and are not acting in the best interests of your client.

  11. “Partners”!!

    ROTFLMAO!!!

    Partners in crime.

  12. It is even better if you are an SJP partner in Belfast as many are shareholders in associated IFA firms therefore getting the best of both worlds and still being able to bring referrals in the back door.

  13. I know the IFA sector reasonably well and I also know SJP business model reasonably well. I have close friends and associates in both sectors. I also know the solicitor maket reasonably well. All three have their merits and they also have their challenges.

    What appears from the comments in this debate is that each sectors is just not prepared to consider the strenghts of the others.

    After a long career I was fortunate to sell my IFA business and I was very proud to be an IFA and also very proud to be a salesman. Seems that some IFAs have taken to the high moral ground and now look down on ‘salesmen’….In my experience, and with due respect, just as most solicitors have always done! What a pity.

    SIFA clearly does a very good job and deserve credit for that but I would reccomend that they also come down from the high moral ground and have a very close look at the SJP track record on performance / service/ amc/ regulation/ commission levels/ exam passes and all of this against the majority of the IFA sector’s performance in these matters. Most of this will compare reasonably well… some better some not.

    Some IFAs ( a small percentage I hope!) are still taking 7% up front and I am aware of an IFA employed within a solicitor firm who recently took such a commission on a large investment bond. (current SJP max Com is I think 3%)

    So all you highly qualified IFAs and solicitors are to be congratulated on your qualifications but not on your balanced comments or your humility.

    My own view is that the consumer, either directly or introduced by a solicitor, should have access to all approved markets including IFA, SJP, Bank wealth management etc and any other provider that is formally approved and registered by the FSA. In general if they are not good enough for all consumers then they should not be approved by the FSA in the first place. Unless I am missing something. If I have missed something, I hope Peter is not going to continue his bad manners and also call me a plonker!

  14. TO THE EDITOR.. CORRECTED VERSION! JM.

    I know the IFA sector reasonably well and I also know SJP business model reasonably well. I have close friends and associates in both sectors. I also know the solicitor market reasonably well. All three have their merits and they also have their challenges.

    What appears from the comments in this debate is that each sector is just not prepared to consider the strengths of the others.

    After a long career I was fortunate to sell my IFA business and I was very proud to be an IFA and also very proud to be a salesman. Seems that some IFAs have taken to the high moral ground and now look down on ‘salesmen’….In my experience, and with due respect, just as most solicitors have always done! What a pity.

    SIFA clearly does a very good job and deserve credit for that but I would recommend that they also come down from the high moral ground and have a very close look at the SJP track record on performance / service/ amc/ regulation/ commission levels/ exam passes and all of this against the majority of the IFA sector’s performance in these matters. Most of this will compare reasonably well… some better some not.

    Some IFAs (a small percentage I hope!) are still taking 7% up front and I am aware of an IFA employed within a solicitor firm who recently took such a commission on a large investment bond. (Current SJP max Com is I think 3%)

    So all you highly qualified IFAs and solicitors are to be congratulated on your qualifications but not on your balanced comments or your humility.

    My own view is that the consumer, either directly or introduced by a solicitor, should have access to all approved markets including IFA, SJP, Bank wealth management etc and any other provider that is formally approved and registered by the FSA. In general if they are not good enough for all consumers then they should not be approved by the FSA in the first place. Unless I am missing something. If I have missed something, I hope Peter is not going to continue his bad manners and also call me a plonker!

  15. SJP advisers in my experience leave investors with the clear impression that they offer independant advice. This I am sure is no accident!

  16. As a previous SJP associate partner (I never ascended to the ranks of Partner and the BS…that accompanys) I know of a vast number of individuals salespeople who make a substantial living entirely from referrals from Solicitors! Just one of the many bad practices endorsed by this organisation!!

  17. I also wonder what the FSA would make of their practice of recruiting (or as they term acquisition!) bancassurance advisers and then turning a blind eye when vast amounts of investment funds are transferred from bank customers, particularly when the bank concerned is their parent company!!

  18. Julian Stevens 7th April 2012 at 9:03 am

    It’s all very well to state that a solicitor can refer a client to an SJP partner for non-investment business, but there must surely be a very real risk that once the SJP partner has the client in their office and they’re compiling a FactFind they’ll take advantage of the opportunity to raise investment matters.

    I can’t see why any solicitor would make such a referral. And as for any referral to Towry Law……

  19. STEP is one of those self regulated body’s not like the FSA or the law society and it sound to me the you are breaking the rules by referring to SJP anonymous

  20. @John Murray

    You make your points in an articulate and balanced manner. However, you are missing the point – whether unintentionally, or intentionally.

    Solicitors are prohibited from referring clients to non-independent sources of advice. No matter how you dress it up, SJP are not independent, although they employ sophistry to encourage such referrals and their employment activities clearly support this.

    In addition, you are far from the mark when it comes to commenting on the merits of the SJP proposition.

    SJP have been caught out and it is right for SIFA to pursue this matter.

  21. Can SJP confirm that no “investment related business” (pension transfer/income drawdown/ investment bond/ ISA transfer et al) has resulted from a client who has been introduced to the firm by a firm authorised by the SRA? I know a ridiculous question but no more so than the impression given by the SJP statement above.

  22. My office is in a building occupied by a solicitor an accountant, an IT support company and another non synergic business (the latter are very good at what they do, so I did not use the word proffessional for us and not them). We have a shared communal area.
    I was on holiday a couple of weeks ago and as often happens an SJP partner visited the office of someone in the building. I came back to find SJP brochures in most of the brochure stands. It too me a while to work out how they’d been left there after tactful enquiry as most of us have come across SJP people in the past and try to be objective. In my case I have nothing against SJP as I spent about a quarter of my 20+ years advising as a tied adviser, so I have no hangups with tied advice per see.
    It turns out someone from SJP had visited the solicitor, the solicitor had not realised the brochures were SJP brochures and as hw wanted to make the common areas look nice had agree to placing them there.
    When was the SJP member of staff planning on removing the brochures as they became historically incorrect?
    If the SJP person had left their business cards lying around, the proverbial would have hit the fan. In future I will start being as critical of SJP as other INDEPENDANT advisers and probably do it publicly too.
    If I am forced to become a restricted adviser by the FSAs stuid changes, it will be whole of market restricted, so I do hope the FSA gets it’s head round the fact we can be whole of market, but restricted, but I will not hold by breath.

  23. @Anonymous | 5 Apr 2012 10:15 am 13th April 2012 at 6:34 pm

    @Anonymous | 5 Apr 2012 10:15 am

    To answer your questions SJP funds are Distributor Influenced funds which means old boy they have implicit charges built in to cover the SJP deals.The FSA are concerned about such funds. Let them kid you not these are higher charged funds and solicitor that valued his own independence would go near them with a barge pole.

  24. SJP have an excellent direct marketing sales proposition with its roots dating back to Abbey Life, Hambro Life and Allied Dunbar direct sales. Like their forbears they have generated mixed feelings, some of which is generated through their marketing prowess but some of which though high charged products. The fact remains that their sales representatives are “tied” advisers even if they are confusingly called “partners”. Like many firms of this size they have had regulatory issues and been fined for churning products i.e. replacing one product, earning new commission without demonstrating good cause or client benefit.
    Please see link: churning products .
    This SJP tied status is often not fully understood by consumers and even other professionals have made the mistake of thinking they are independent. SJP has sought professional links, especially with solicitors but these have been rejected. It is worth remembering that The Institute of Chartered Accountants in England and Wales (ICAEW) and the Law Society, say their members should “only” use independent advisers (IFA’s). The tied status of SJP means that SJP product must be used with exceptions where gaps are filled by multi-ties.
    Many former independent advisers are attracted to SJP with offers of attractive buyouts and some would say lower compliance requirements. SJP would not agree with this view. However, because their new status is tied these advisers are unable to offer independent advice. SJP get around this by using an introducer agreement passing this business to an IFA based in Scotland for top ups etc with a commission share agreement. The trouble is the IFA never actually sees the client and tied agents (SJP) are not allowed to offer advice on whole of market funds and products. How SJP square this with the FSA I just don’t know?

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