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SJP sales incentives come under further fire

Sales incentives to St. James’s Place advisers have been put under the spotlight again.

Internal documents provided to the Sunday Times including the firm’s  Field Management Handbook detail target sales levels for bonuses and overseas conference qualification every year.

These trips have previously included the likes of Venice and Monte Carlo, and the handbook seen by the paper also gives guidance on how advisers can ensure they pay the right tax on the benefit.

The handbook reads: “You will be asked to keep records and submit a log of all business activities undertaken during the..overseas conference, which will assist in reducing taxable benefit…incurred.”

An SJP spokesman says that “the wording that the Sunday Times refer to is not in any current edition of this document”.

The St James’s Place Partnership Handbook, also seen by the paper, details the central pool of funds that SJP collects from advisers for being part of the firm as a proportion of their fees, and how advisers can end up owing SJP interest if they fail to generate enough fees to cover what they owe SJP in any given year.

This is particularly the case when clients leave the firm or reduce investment level – a “reduction or cancellation of business” – or if they have taken out a loan with SJP firm for business purposes, and will incur interest of the Bank of England base rate plus 2.75 per cent.

SJP told the Sunday Times that advisers could top up the central account should they wish, but did not provide a figure for how much its network paid in interest.

An SJP spokesman told the paper: “As is normal in any business trading relationship, our partner businesses have an account with SJP which provides a reconciliation of income and outgoings…Our monitoring and supervision processes take account of the financial position of partner practices to support the delivery of the right client outcomes.”

On the back of the reports, work and pension select committee chair and MP Frank Field called on SJP to “publish a full list of its charges and details of its incentives programme, so savers are not ripped off by a lack of knowledge of what they are letting themselves in for”.

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. I am not a fan of SJP but ‘sales’ is not a dirty word. If there are no sales there is no work and jobs are lost. If sales are conducted correctly in the interests of the consumer there is nothing wrong with incentives either. In a world where the regulator is bonus driven, it wreaks of hypocrisy to criticise a system which rewards hard work. I would also like to know what right an MP has to ‘throw stones’ who is funded by the taxpayer and largely unaccountable. If Frank Field wants to make a difference ask the regulator why it is ‘asleep at the wheel’ as there are more scandals than ever despite the wonderful £9bn RDR!

    • Peter I think the reason SJP come in for so much stick is quite simply because the rest of us are held to one set of rules, whilst SJP appear to be allowed to do pretty much what they like.

      I could speculate the reasons for this, but I would 100% guarantee that if we followed the money we would find out why…

      • Duncan, I have to agree wuth you but I’m becoming sick and tired of the constant attacks on this industry.It would be a refreshing change to read of the positive work we do on a daily basis.

  2. As unprepossessing as their sales practices and charges may be, there is another issue that doesn’t seem to be aired at all.

    Given that:

    1.Advisers are coached as to how to present costs.

    2.These costs are laid down by the company and appear to be non-negotiable. Therefore, advisers are not masters of their own tariff

    3. Charges are automatically deducted by the firm. (rather than being invoiced directly as a fee by the adviser). The word commission seems to be extant in their literature. (The RDR was supposed to ban this?)

    4. For those who sell the most they are treated to expensive junkets that are dressed up as work to avoid tax.

    5.They only sell their own (expensive) funds.

    6. The company deducts various amounts or makes charges to the ‘partners’.

    Now please excuse any ignorance on my part, but can anyone (not least HMRC) please explain in lucid terms, how on earth these ‘partners’ can be deemed to be self-employed?

  3. You are right Peter. Sales is not a dirty word. There are plenty of high street shops selling products to their customers and working on mark ups.

    Most Financial Advisors however, provide a service to their clients who pay fees commensurate with the services provided.

    Question.. do SJP have clients or customers.. do they sell products from a shop or provide a professional service from an office? Do they earn commission or earn fees?..

    • I agree with you Stephen but the constant bleating by MP’s and the FCA is unbearable.Meanwhile,’Scammers’ are at large and causing far more detriment than sales or incentives but the regulator appears to be powerless. I reiterate I am not a fan of SJP and I am certainly not defending them but the regulator is not fit for purpose and this is where Frank Field should be directing his energy!

  4. So SJP is a sales outfit (which we all know anyway) that from time to time rewards those of its partners who bring in the most dosh with a foreign holiday, the costs of which are assessable for tax as a BIK. Hardly front page news, just a bit more clickbait.

  5. Peter, Frank Field is a long-time campaigner for social welfare, pension reform and the rights of financial services / pension consumers. I don’t agree with all his views but he is in favour of pushing the FCA into more timely and more effective action. If he has time to also push SJP into a more transparent revelation of their charges, so much the better. I’m not sure it’s fair to describe him as unaccountable, when also mentioning the FCA.
    The point you make about ‘sales’ is perfectly valid, as long as someone isn’t pretending their stock-in-trade is advice.
    Having started in sales when the financial services landscape resembled, more than anything, the Wild West, all this mention of overseas ‘sales conferences’ is very nostalgic. Also very familiar is attention paid to persistency rates and reclaims on earnings of SJP’s advisers where clients leave SJP. As there are early redemption / early transfer charges during the first five years, this is a clear indication that earnings are based on indemnified earnings against sales where the client sticks around for at least five years.
    This being the case, clearly SJP ‘partners’ bear little relation to the employed partners of John Lewis.

  6. The IFA world is full of hypocrites – I used to be one. For example, how many DB transfers have the IFA world done compared to SJP. Big fees boys !

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