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SJP makes transparency commitment after charges criticism

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SJP chief executive David Bellamy

St James’ Place has agreed to publish its pension and bond charges online for the first time after being hit with criticism over the transparency of its fees.

The wealth management giant has previously published its unit trust pricing on its website, but had not made pension or bond charges clear to non-clients.

SJP chief executive David Bellamy says: “We have one set of wrappers online and we will be moving to put our pension and bond wrappers onto our website.

“All clients get this information before they do business with us. A few have told us that if you’re not a pension or bond client then you can’t see the charges online. We’ve said many times our industry can do better in terms of making these things more transparent.”

Bellamy also backed his firm’s long-term approach to clients, who face 6 per cent early withdrawal charges for the first year of pension or investment bond products, dropping by a per cent a year.

Bellamy says: “We would not and should not deal with clients who have any notion of taking their money out over the next two or three years.”

Unit trust customers pay 5 per cent up front but do not face an exit charge.

SJP has recently come under renewed fire for the clarity of its charges, after a number of client stories were reported by the Sunday Times, including that of a retired solicitor who was unable to calculate his charges.

Liverpool-based IFA Angus Millen posted a note on LinkedIn earlier this month criticising SJP’s charges and informing anyone with money with the firm to get in touch for a review of their SJP funds.

Yesterday, SJP reported net new funds were up 26 per cent in the final quarter of 2016, taking assets under management past £75bn.

Bellamy, who is 63, said he had no immediate plans to leave the firm.

He says: “I’m 63 years old. Am I leaving one day? Yes, of course. Do we plan for succession in these businesses, yes we do. Am I announcing today that I’m leaving? No, I’m not.”

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Comments

There are 22 comments at the moment, we would love to hear your opinion too.

  1. Neil F Liversidge 27th January 2017 at 11:51 am

    Great. I take it then that the amount paid to the SJP ‘partner’ will be specifically set out, just as we have to show it? Or will that still be disguised in the overall fee? Money Marketing – Why not invite the FCA to explain why we don’t have a level playing field?

  2. “We’ve said many times our industry can do better in terms of making these things more transparent”…….erm well that would really just mean SJP wouldn’t it, not the industry as a whole? I suppose at last SJP has finally admitted there’s a problem with transparency, so that’s a bit of progress towards playing by the rules the rest of us have to adhere to! I’ll put £20 on the new transparency still having a fair degree of opacity

  3. 5% fee for unit trusts is a rip-off in itself – this should tell people all they need to know about SJP charging structure. Will be interesting to see the actual info for pensions/bonds once released – no doubt it will be run through the SJP ‘spin machine’ prior to release and exactly how transparent it is open to question I suspect.

  4. Reminds me of the very high bid offer spreads of the past that made a PEP more expensive than a MIP. Of course an older client might not live for the 6 years required or do they waive it for mortality? I guess you get what you pay for.

  5. One of the most challenging things I found about the SJP proposition (other than the complete lack of transparency over what the charges are for and how it is broken down) is that older clients going into drawdown still suffer the penalties for withdrawing their income. An SJP adviser transferring in £250,000 into immediate drawdown will see their client suffer penalties of 6% on the amounts they withdraw in year one. So if they immediately take their PCLS of £62,500 there would be a 6% charge of £3,750. If they then withdraw £700 per month they would have £42 per month in penalty charge. All on top of the standard charges and drawdown fees. An extra £4,254 in charges in the first year just for doing what they want to do and the adviser recommends to them. In what universe can that be “right”?

    • Even I have to defend SJP here. After I read a clients drawdown illustration, they are allowed to take 7.5% income withdrawals without incurring the charge. And existing customers transfer their exit charging structure from their pension to Drawdown. Not sure about new customers though?

  6. So 6% Exit fees are ok because nobody who invests ever has financial changes in their lives?

  7. Matt Worthington 27th January 2017 at 4:12 pm

    Absolutely agree with Ted; you can’t plan for every eventuality and clients should not be penalised for accessing their money. Exit charges don’t sit right with me, especially not at up to 6%!

  8. There is no need for exit fees as charges should be reasonable and we have integrity
    Ooops silly me it’s SJP

  9. Forensic Analysis 27th January 2017 at 6:42 pm

    I don’t think there is a penalty on PCLS when converting to drawdown at the same time. I’m happy to be corrected. Withdrawals up to a maximum of 7.5% drawn down per annum are not penalised. I guess its hardly flexible in the first 6 years.

  10. Unit trust customers pay 5 per cent up front but do not face an exit charge…….
    so that’s OK then

  11. Rob. Your comments re drawdown charges are simply wrong. The tax free cash does not attract any early with drawl charge and income upto 7.5% of the amount invested is charge free. May be get your facts right before putting them in writing

  12. That’s actually not correct

  13. i westminsterwills.co.uk 29th January 2017 at 12:02 pm

    It would appear Angus Milne’s linked in “offer ” is more aligned with a sales and marketing gimmick instead of a more considered response. I wonder how transparent or open MR Milne is ? I wonder what his background is ? I wonder what qualification he has – over the investment and in a ” sustainable Business model ? I have my money invested in St James Shares for their good returns on Shareholder value. I assume the SJP clients are happy with their shareholder value and service – for the price they pay, for the service they receive. Mr Milne may have a different requirement for his “service ” and is not willing to pay for an all round service. It seems to me that Mr Milne needs to be more open and transparent. At best he could confirm his percentage fees or service provided – to allow all of s on Linked in to “Compare “.

  14. SJP advisers are free to agree the initial fees
    with clients. 5% is the max that SJP will facilitate. It never gets reported or acknowledged that there are lots of SJP advisers that never charge their clients 5%.

    SJP TER’s are around 1.80% on average for wrapper, funds and advice. We all know that a lot IFA clients are paying TER’s well over 2% pa. I know a local IFA who charges 1.5% pa for ongoing advice AND a further 2% for fund switches.

  15. 20 years on both sides 30th January 2017 at 11:35 am

    It seems that the headline story is the maximum fee that can be charged. Whilst SJP are capped at 5% initial on Unit Trusts, few rarely charge this. I certainly wasn’t. As for the pension withdrawal charge, again, I negotiated a fee with my SJP partner and this was removed completely. Therefore no withdrawal charges. And we are talking about withdrawal charges as i was not planning to retire for at least 10 years the 6year penalty was irrelevant. One question if this is all about the maximum charge – what is an IFA’s maximum charge. I am sure they are not capped at 5%. So as this is a maximum and not a common reality. Is an IFA’s initial charge capped – NO. Are their ongoing advice fees capped at 0.5% – NO. The reality is IFA’s charges are just the same, if not higher.

    • The article is about transparency, or lack of it. An IFA’s fees have to be transparent. SJP’s aren’t. IFA charges are indeed uncapped but we have a duty (as does SJP, funnily enough) to treat our clients fairly so if a new client feels our fees are too high they can simply walk away.

      Even if your partner waived his part of the initial charge entirely you’d still pay SJP a net 2-2.5% for setting up a unit trust compared to 0% (in many cases) through an IFA. You must have met some very bad IFAs if you prefer to pay SJP’s charges for restricted advice!

      P.S. Ask your partner if you can invest in a low-cost passive fund – you can’t. I wonder why? (rhetorical question)

  16. Lost in France is correct with their comments. Transfers In for Immediate Drawdown incur no withdrawal charge on the PCLS and there is 7.5% withdrawal allowance for income taken before any charge accrues.
    I’m not a huge SJP fan but the correct facts should be taken into account.

  17. Steve,

    You’re correct in that the total initial charge paid by an SJP client is split between SJP and the adviser however SJP advisers can invest clients at 0% whereby no initial charge whatsoever is paid nor is there any exit penalty.

    This does happen in some (admittedly rare) instances.

    SJP do not insist on the client paying an initial charge to invest with them. If the adviser wants to do it at 0% for his/her own business reasons then SJP allow it.

  18. Thank you retirement chap for confirming what I know is correct.

  19. Aren’t the exit penalties simply early payment of higher establishment charges over the first 6 years anyway? So either way the client is getting stung. In any case, 5% set up is ludicrous, we charge £300 regardless of investment sum.

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