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SJP hits back at charges criticism

David Bellamy 480
SJP chief executive David Bellamy

St James’s Place chief executive David Bellamy has argued the company’s RDR charging structure is competitive and “by far not the most expensive” on a total cost comparison basis.

SJP set out its post-RDR charging structure last month which will see clients charged an initial fee of 4.5 per cent for bonds and 5 per cent for unit trusts, for advice and fund management, with an ongoing charge of between 2.1 per cent and 2.3 per cent. SJP partners will receive 3 per cent from the initial charge and 0.5 per cent ongoing.

Following a business update today, Bellamy hit back at critics who have suggested the charges are too high.

Speaking to Money Marketing, he says: “We are not the cheapest but by far not the most expensive. We provide an integrated service and I think we provide exceptional value given what we do. We oversee the investment proposition, we source our fund managers, and give support to the partnership. Our scale helps us enormously but I certainly do not see we are in a bad position when it comes to price competition.”

Bellamy says SJP has been transparent in setting out its price structure, adding: “the one thing we are very explicit on is total costs”.

He says: “Sadly as a result of the RDR the industry fragments when it comes to the charging structures of platforms, advisers, fund manager charges, admin fees and in some cases performance fees. Looking across the piece it is very difficult for a client to try and compare costs. From all the comparative work we have done, we are not at all expensive.”

SJP has reported a jump in new business levels of 46 per cent in the last three months of 2012 to £223.8m compared to £152.8m for the same period in 2011.

Bellamy rejects the idea that this surge in new business stems from advisers looking to secure as much business as possible in the run-up to the RDR in order to benefit from past trail commission rules.

He says: “Close to 90 per cent of our business comes from existing clients and referrals. We are not about selling products, we build long-term relationships and we look after people’s money. They top up their pensions, Isas and investment portfolios, and that continues to be the case. We have had strong retention year on year, and there are no signs there has been anything different happening in terms of activity.” Bellamy says new business has been driven by stronger investor sentiment in the second half of last year.


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There are 26 comments at the moment, we would love to hear your opinion too.

  1. Unbelievable. My two favourite bits are
    “I think we provide exceptional value”
    Bellamy rejects the idea that this surge in new business stems from advisers looking to secure as much business as possible in the run-up to the RDR in order to benefit from past trail commission rules.

    What planet is he on?

  2. Looking at the article on Sjp charges, I have no problem if the client understands what they are paying, but it seems that the client would still have 100% allocation and back end penalties, isn’t this just commission?

  3. Mr Bellamy is correct – SJP are not the most expensive. RDR will make advice much more costly to clients, but SJP proves that it is possible to remain highly successful at those charge levels.

    The industry will now divide into those who run businesses to make a profit, and those who are very excited about certificates hanging on walls, who will go under in time. Tough luck frankly.

  4. Maybe the FSA should look and see how a company’s new business can increase by 46% in the run up to no commission being allowed It would appear to go against the norm

  5. I think any IFA worth their salt should have a grudging admiration for SJP. Their marketing is second to none and their profitability is likewise. I beleive however that @anonymous is mischief making when he/she suggests that SJP’s critics are qualification fixated rather than advice centric with a view on staying profitable.

  6. Anon @ 11.23 – dead right !

    Markets decide – if SJP are too dear then the market will vote with its feet – simple market economics that many pro RDR’ers with their SPS in the window cant quite get their minds round !

    SJP will remain highly successful – like it or not !

    Its the same as the pre RDR commission argument – markets ALWAYS decide what works and that is prercisely why trying to buck the market with the RDR dogs breakfast will ultimately fail miserably.

    Stand by for the first of many visits to the OFT from providers claiming restriction of trade – I’m offering odds of about evens that will happen within 6 months !

  7. I’m not surprised their retention is high – 6 years tied in with transfer penalties is a good start!!

    Keep the model though SJP, I’m getting a lovely stream of your ‘well serviced’ clients wanting some service and not just more selling!

  8. I’m not criticising the SJP charging structure – I’m congratulating them. As I said before if any small or medium sized IFA can’t knock spots off these charges and still make a handsome return they need to examine their model carefully. They have presented us with a wonderful opportunity. I can envisage clients going to them for the advice and then turning to IFAs for the execution! They are still working on a transactional model it would seem. How quaint!

  9. Roman Duzinkewycz 24th January 2013 at 12:07 pm

    Call to the FSA (or FCA or whoever) – have a look at these people will you – 46%!!!!!!!!!!!!!!!!!!!!!!!!

  10. Mr Bellamy either consciously obfuscating, or is in denial. Which is it?

    As Harry say’s, this is an transactional model. MM should ask the FSA to opine on it.

  11. So SJP have been stratghtforward and honest with their charging structure and look what it means.1.5-2% cut for SJP, and about .5% annually. Their advisers recieve 3% + 0.5% p.a., the same as I charge my clients for a full IFA service. However my fees have to pay for costs, research and backroom services. No wonder those working for SJP are so enthusiastic. Mind you, many work as associated companies, so advisers working for one of these probably will not get paid as much. The question is: does this level of overall charges, often in excess of 2%p.a. reduce return for clients so the risk premium disappears?

  12. Wasn’t it Mandy Rice-Davies who said, “Well he would, wouldn’t he!”

    No doubt the CEO does think the charges are reasonable, or the company wouldn’t be making them. The acid test will be if their customers think the same.

  13. You can put lipstick on a pig, but it’s still a pig!

  14. Norm d’plume – customers clearly do think the same as SJP have £34.8bn under management and increased new business by 48% last quarter.

  15. Dont knock them guys. They have done what they think is right. They are hear to make money, the same as the rest of us. I have increased my own charges post RDR and make no bones about it. If my clients leave then so be it but I am fed up absorbing more and more costs and having less and less profit for doing more and more work. 1st of Jan was a turning point for us all, clients included. I am up front with them and if clients feel they can get better value elsewhere I will be sorry to see them go but that is just part of business life. I view my clients as a my source of income and in return I provide them with the best service I can but I have to make a profit and want a decent living from this profession or what is the point? Lets get real about things: Most IFA’s deal with clients they get on with and like and half the problem is that we have in the past maybe felt that this relationship means we have to do what we have always done regardless of the cost to our business. How do you think your clients would feel if you go out of business because you couldnt make a living at it? I bet a lot of them would feel bad about it and would have happily paid a bit more in commission/fees from the fund if it meant they could have retained their IFA instead of having to now go and start a relationship elsewhere and probably go through a couple of firms before finding one that can can actually fill your boots. Dont be shy about letting them know you have had to put up your remuneration even if you only do it to cover any additional costs. We should all act more like business people than pussy foot around the periphery of the business. We may all lose some clients but that would natuarlly happen any way. Of course we would try to maintain the relationship but if they are intent on trying to get cheaper elsewhere they will go anyway but there are not irreplaceable.

  16. Well said Marty!

  17. I think Ivor Park is missing a trick. Surely the best howler of all is “We are not about selling products…”

    “Larf!? I nearly bought me own beer”

  18. It’s a bit early to be making any rational comments on whether their charges are either fair or sustainable. Time will tell.
    Our local SJP associate also likes to ensure value for money. The Bentley will be driven all over town to find a free parking spot, it costs £3 all day if you pay!

  19. Agree with Marty, at the end of the day we don’t have registered charity stamped on our stationary.

    I admire the balls required to charge some of the rates quoted, however we’ve seen examples from Clients coming to us and they are extremely expensive.

    Announcing a 46% rise in new business in the 3 months leading up to RDR should be like a red rag to a bull to the FSA. Surely they should be asking questions as to why such a dramatic rise.

  20. Ancient a IFA in N3 25th January 2013 at 7:58 am

    SJP – Love em or hate em – they have the profits, their revenues are on the up, the funds under management are on the up and consumers like their clever marketing.

    If you cant beat them – join them.

  21. So just what else in addition to the 3% and 0.5% charge do SJP provide? Research, literature, PI cover compliance etc? If these are taken into account, and they should be, what is the real remuneration to the “partner”?

  22. If someone invests in a SJP pension or investment bond – in year 1 there is a 6% charge for them to get their own money back!
    They are tied in for 6 years on sliding penalty basis. If SJP so confident of their services then they would meet the FSA – TCF Rule 6 – “Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider…”
    Once the client signs on the SJP dotted line then they are stuck there unless they pay massive penalties on their own money. It’s spectacularly poor value for money – like a bit trip back to the 80s.

  23. I have no beef with SJPs charges as they can charge what they want frankly. But I’m confused. The CEO of a financial product provider saying “We are not about selling products”. That’s like McDonald’s saying that they’re not about selling burgers.

  24. Life (and business) is about setting your morel compass. All parties should be able to find common ground. SJP and its sales staff don’t have a moral compass. Why else would they manufacture and shovel highly polished c**p for a living. If this model is now held up as the beacon of success and the business model to have post RDR then the industry and the individual will suffer a painful demise. Shameful. 

  25. Makes interesting reading

  26. Dear Mr Bellamy.

    Please explain to me why one would charge a fee of 4.5% for setting up a bond and 5% for a Unit Trust.

    Given that one is reporting on suitability I would have thought the advice process would be exactly the same even though a conclusion may not.

    Is it not true to say that (if anything) there is more involved in setting up a bond than a Unit Trust?

    And why is there a %age charge anyway?

    Does it actually cost five times as much time and expertise to advise on £500K as £100K?

    I don’t think so.

    Could it be that the total charges are set to encourage the sale of bdins because it is more profitable business for SJP? It rather looks like the charging structure has been set to encourage advisers to recommend bonds on the basis of the total charge and given that there is little difference on a self interest basis I suspect SJP will continue to be the bond sales team they always were.

    I find the claim that SJP are not about selling products as risible as anything I have read in many a year.

    The entire SJP processis about creating a sausage factory through which individuals are seduced by a slick marketing and sales machne that squeezes them into those products that make money.

    It works well, but at some point people will become aware of the insidious nature of the process and when that day comes and SJP are revealed for what they are – I will welcome it.

    Let’s face it, SJP are a rip off and one very easy to demonstrate – as I constantly do with cients old and new who are unfortunate enough to receve invites to one of your champagne luncheons.

    Let me assure you that my views are not based on jealousy or resentment. If you were a top class outfit prividing top class advice then I would laud you, but your model is not remotely connected to advice – it is 100% sales motivated and delivered in a shockingly cynical and underhand manner.

    Ian Coley
    Medical Investment Services

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