St James’s Place chief executive David Bellamy says more advisers are approaching the company to join as they realise they are likely to be classed as restricted after the RDR.
Speaking to Money Marketing following the publication of SJP’s first-quarter results last week, Bellamy says he is pleased with the momentum the company has seen in the number of partners joining but denies this is a result of a concerted recruitment campaign.
Bellamy says: “With the bar being raised for independence, there is a realism among IFAs that they were already operating a restricted model where they had selected their panel or decided which fund managers to work with. There is a realisation that more and more people will end up in the restricted area and that is leading more of those people to talk to SJP.”
SJP’s number of partners rose by 6 per cent in 2011 from 1,552 to 1,649. The latest recruitment figures will be announced in the company’s half-yearly accounts.
Bellamy says he is frustrated at how independent and restricted advice have been defined by the FSA. He says: “Restricted is an unfortunate label that is probably in danger of misleading people. There is nothing restricted about the advice our people give to clients. What gets us into restricted is we have predetermined the number of fund managers on a corporate level. What we do in terms of protection, mortgages, annuities and general insurance is whole of market. But where we have decided to control our investment proposition in terms of fund managers and wrappers, that unfortunately gets us labelled as restricted.”
Bellamy argues that advisers who are considering joining SJP should not reduce their argument to whether they want to be independent or restricted.
He says: “It is more about whether advisers feel by joining us they can do a good job for their clients, with the backing and strength of a company that can help with training, oversight and governance, with technical support from tax experts, lawyers, actuaries and so on.
“If the answer to those questions is yes, maybe that is the sort of business advisers should be working with rather than trying to maintain a perceived independence when their ability to research 2,000 investment funds in the UK is pretty impossible.”
Bellamy questions whether it is logical for an adviser to carry out that level of investment research, including on products such as exchange traded funds and investment trusts, just to be able to say they are “truly independent”.
He says: “I do not think that is a practical place for advisers to be in the medium term. More and more IFAs are acknowledging they do not even attempt that level of research. They are being encouraged to make this very polarised choice as to whether they are independent or restricted when they are currently operating in a way which is fine for their clients but in the new world is going to be referred to as restricted.”
SJP reported a 9 per cent rise in funds under management from £28.5bn to £31bn for the first three months of the year but total new business fell by 3 per cent. Investment business fell by 16 per cent from £87.8m to £73.4m but pension business was up by 15 per cent from £64.3m to £74.2m.
Bellamy attributes the rise in pension business to speculation ahead of the Budget that the Government would make changes to pension tax relief. He says the drop in investment business reflects a more cautious risk appetite among retail investors.
He adds: “I do not read anything into what in my view is a temporary shift between pension and investment business. That was a moment in time caused by a number of factors. Any pick-up in investment business will be driven by an increase in investor confidence.”