The St James’s Place business model is no more restricted than most IFAs, says SJP chief executive David Bellamy.
In an interview with Money Marketing, Bellamy says SJP has strong fund management links, whole of market for protection, stakeholder pensions and employee benefits and its advice benefits from being backed by a big company.
He says: “I do not believe that it is any more restricted than an IFA who is having to scour the whole market, pick which fund managers he is going to access for his clients and basically paddle his own canoe.”
Bellamy believes attitudes towards restricted advice are changing, with advisers and the wider industry becoming more accepting of the restricted label.
He says: “More and more of the commentators in the industry seem to be suggesting a large proportion of the IFA community will find themselves in the restricted area.”
He argues that, as a result, the Solicitors Regulation Authority must reconsider its position that solicitors can only refer clients to IFAs for investment advice.
Sifa, the representative body for solicitor IFAs, recently warned that SJP advisers are continuing to market themselves to solicitors. In August 2009, SJP was forced to issue new guidance to its member firms after the SRA clarified that referrals by solic- itors for investment advice can only be made to IFAs.
He says: “Most of the industry is beginning to realise you have to bring some constraint around your operation. You may select from the whole market and create your own panels and if that means you call yourself restricted, so be it.
“The pace of the thought process that is developing around restricted advice ought to encourage the SRA to say, ’Look, we are living in a world where independence is not what we thought it was years ago’.
“The restricted area is where the majority of the industry sits and therefore the SRA should talk about ensuring clients are introduced to qualified advisers that have the right backing and solvency. That is what is important, not whether an adviser is IFA or tied.”
In its annual results last week, SJP posted an annual profit of £84.2m on an IFRS basis, up by 69 per cent from £49.9m in 2009. On an European embedded value basis, total profit was up by 25 per cent from £363m to £455m.
The firm was hit with a £4.8m Financial Services Compensation Scheme levy, mainly to pay for claims relating to Lifemark. This contributed to total regulatory costs for the year of £6.2m. The distribution part of SJP suffered a £1.2m FSCS levy and the fund management side took a £3.5m hit. The total industry levy for Lifemark was £326m across advisers and asset managers.
Bellamy says the levy is frustrating but consumer protection is worth the cost. He says: “It is fundamentally crucial that confidence is maintained in financial services. Whatever the failure, if the consequence of pro- tecting confidence in the market is the occasional one-off levy, then that just might have to be the price we pay.”
Bellamy hopes lessons will be learnt as a result of the Lifemark debacle.
The results show adviser numbers rose by 6 per cent during 2010, from 1,464 to 1,552. The firm says 700 advisers have the required diploma qualification to meet the retail distribution review standards and a further 700 are within one or two exams of reaching it.
The firm also claims the FSA is satisfied that SJP’s charging and remuneration structure is RDR-compliant.
Bellamy says: “Because we straddle both the adviser and fund management areas, we wanted to make sure we are interpreting the RDR requirements properly and that our product structures and the way that our annual management charges and exit penalties work is in keeping with the legislation. The FSA has confirmed it is.”