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SJP sets out RDR pricing with up to 5% initial charge

David Bellamy 480

St James’s Place has confirmed its post-RDR charging structure 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.

A note was sent from chief executive David Bellamy to SJP advisers this week confirming the changes which will see advisers receive 3 per cent from the initial charge and 0.5 per cent ongoing.

SJP has also confirmed it will be closing its Money Market bond, whole of life plans, stakeholder pension, Section 32 regular investment facility for unit trusts and the SJP Annuity Service. SJP says the products closed represent less than 1 per cent of new business.

The note also confirms the firm’s view that the bond adviser charge will have to form part of the 5 per cent annual withdrawal limit. For unit trusts, the firm warns that HMRC will view the charge as a capital gains disposal, although it is in talks with HMRC about a “pragmatic approach” given there is no sale of the underlying units due to SJP’s vertically integrated structure.

The note also confirms the script SJP advisers will have to use to notify clients that they are receiving restricted advice. It reads: “As a partner of St. James’s Place my advice is restricted to those products and services that have been carefully selected and approved by St. James’s Place and consequently is guaranteed by them.”

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Comments

There are 36 comments at the moment, we would love to hear your opinion too.

  1. Thank heavens RDR is making the market so much more competitive……….

  2. No change there then and good luck to them. Why are bonds cheaper just out of interest?

  3. Lets see how they fair now their clients actually know and understand how much they’re getting charged.

  4. It will be really interesting to see how long they can maintain these charges in the face of IFA competition where the advice charge is typically 3 + 0.5% and IFA accessed platforms are also cheaper. The next question will be how long SJP advisers stay in place as these significantly higher charges become less palatable to their clients…

  5. Good for them to have the bottle to stick their head above the parapet first.

    Will there be a downward trend in charges overall? Don’t think so. More likely to be the mind set of “if they can get away with it so can we…”

  6. Why do the “knockers” still not get it. SJP advisers treat their clients like Kings and Queens and offer a great face to face simple route to suitable advice. So many so called IFAs on here believe they offer something special and then talk about platforms. Had most (and I emphasise most) IFAs been really independent with a capital I then RDR would not have entered their world. By the way the fees quoted by SJP are maximums I would think. Stop moaning and focus on the new year.

  7. To fellow Anon – I only get to see those people wanting to leave SJP so don’t get all the happy ones clearly – those I see are treated like Kings and Queens as part of the initial sales process to hoover up all their pensions/savings and then once fully milked, are left to stew for 6 years facing penalties – apart from the odd contact about paying some extra money in.

  8. I am not a financial adviser and the only experience I have had of SJP is a salesman calling me regularly to sell me product.

  9. Transparency absolutely does not mean comparability in the new world. I think it would be a good idea for people to judge for themselves the true value of advice and most importantly the service and performance they get in return. Well done to St James’s Place for being completely open and honest about their costs. I can assure you that they are, by far nowhere near the most expensive and provider in town.

  10. The fees I understand are fixed and not negotiable I.e not maximums, and will be deducted from clients funds with no optiion to pay outside of the fund invested. Handy if you are maximum funding your pension.

    The high early exit penalties will remain so once clients sign up they will be locked in like or not.

    and what makes anybody think that SJP ‘advisers’ will be any more inclined or compelled to disclose fees to clients than they do the commissions and costs now

  11. Transparency absolutely does not mean comparability in the new world. I think it would be a good idea for people to judge for themselves the true value of advice and most importantly the service and performance they get in return. Well done to St James’s Place for being completely open and honest about their costs.(all costs). I can assure you that they are, by far nowhere near the most expensive provider in town.

  12. You get what you pay for and with SJP you certainly do. When you need them, they are there and in my opinion the service from SJP is worth every penny! A few more IFA’s should follow the example made by SJP and practice what they preach!

  13. So much for them saying they could still do 100% allocation. The initial charge is not a maximum it is what they are charging.

  14. Someone (anonymous as usual) posted that some IFAs are moaning. I’m not moaning I’m absolutely delighted. Best Christmas present so far. I am able to absolutely slaughter them on price. As to how they treat their customers – that is debateable from first-hand experience. But I’ll bet that many IFAS don’t do a bad job in this respect either.

    Anyway why not just send the clients to SJP for the advice and then execute at a discount. Here you go Informed Choice – an ideal opening for your new offering.

  15. Sounds like commission to me, in fact so does IFA models, which I agree should be able to continue, what’s the difference as long as the client agrees! A real fee structured should be based on the time spent, but as IFAs do so much work researching and comparing and monertering portfolios this would be hard to quantify, I personally only have 120 clients all who get seen very regularly some almost every month, with all the fund management meetings it makes most sense to charge a flat rate based on the portfolio value. It’s then less time preparing invoices based on hours spent as this would be sending clients bills for preparing bills!

  16. A blanket 4.5% initial + 2.3% trail.

    This is the reason why we have an aggressive regulator.

    This is the reason why we’ve had the pain of the RDR.

    This is the reason why we’re a million miles from being treated as ‘professionals’.

    This is the reason why most of the public put us in the same category as used-car salesmen.

    It’s outrageous.

  17. SJP make their clients ‘feel’ like kings but that’s not the same thing as treating them like kings. Pretty sure you’d find that Bernie Madoff made his investors feel pretty special too. If you don’t know you are being ‘shaken down’ over charges then you don’t mind.
    As for RDR, SJP will continue to thrive. Not because they’re excellent advisers (they’re certainly not), not because they give added value (not a chance) but because they are good (no, make that great) salesmen – and that skill allows them to charm the cash out of their hapless customers.

  18. “due to SJP’s vertically integrated structure.”
    So the fees include the advice plus the fund and the provider charges.

    “(SJP) advisers receive 3 per cent from the initial charge and 0.5 per cent ongoing.”
    “in the face of IFA competition where the advice charge is typically 3 + 0.5% ”

    No comment necessary.

    “It will be really interesting to see how long they can maintain these charges in the face of IFA competition ”
    21 years in, I would say …. indefinitely.

    “IFA competition” – bring it on…

  19. @Anon (if you want to be anon please take a nom de plume, it gets confusing if there is more than one Anon in a thread)

    SJP work on a good brand image and charge for the BS that goes with it. Don’t get me wrong, they have a good standard of professionalism and are better than some IFAs, but they are fundamentally a sales led organization who rely on showmanship over substance.

  20. RegulatorSaurusRex 16th December 2012 at 6:02 pm

    I saw one “Customer Agreed Remuneration” agreement set at 10%, they had worked out that was what it would cost to do the job.

    When the FSA were told that firms could charge 25% or whatever the rate was for the work they lost the plot.

    SJP is the man from the pru on steroids.

    IFAs are doomed.

    Fickorwhat?

  21. Great news Im an IFA and I can deliver a better service for half what SJP will charge and have been doing so for the last two years I feel sorry for the SJP partners they are going to really feel the squeeze

  22. It looks to me very much as if the only concession SJP has made towards the charging side of the RDR is to reduce its maximum percentage on Investment bonds. Other than that, it’ll be business as usual.

    The FSA could have prevented such a state of affairs by outlawing adviser charges being expressed in percentage terms. If you’re charging for advice, as opposed merely to flogging a product, then why should your charge relate directly to the amount of money being invested? Why should the adviser charge be twice as much for an investment of £100K as it is for one of £50K?

  23. RDR = replace the term commission with the word fee.

    The only people to benefit out of this are product providers.

  24. I have now spent 40 years in this so called business, Ive done it all, tied , multi tied, Ifa (for 20 years) not part of networks and part of networks.

    I watch with huge amusement the whinging, blathering etc of mainly IFA’s

    My function has always been to deliver the best service I can to my clients. viz the fact that average length of time they have come to me for advice is in excess of 25 years

    The reason we have RDR is mainly due to IFA’s continual whinging about everybody bar themselves.

    yes I remember as an IFA 7.5% commisssion on bonds wonder how many of you rebated some of the commision to the cliuent ???

    When are you all going to realise that clients neither understand charges nor care all they want is someone to trust and to do what is the best for them, and be always avialble.

    Rant over

    We are the people that have brought the effective demise of the industry upon our own heads and left it with so few people able and willing to give face to face advice

    May I wish all of you left a Merry Christmas and a whinge free 2013

  25. Come on boys and girls, why should we get so excited? If their customers are daft enough to swallow the BS, let them get on with it. They can’t be dragging everyone’s name in the mud because their customers seem to vote them as The Telegraph’s Wealth Manager of the Year, Turkeys and Christmas spring to mind but why should I really care? Do I really want such gullible numptys as clients? With the amount of orphans about (picked up a few already, thank you RDR) perhaps it is time to take a leaf out of their book and make some hay whilst the sun shineth……

  26. You are all missing the point, this is a marketing masterstroke. Just imagine the good will and clients that will be “suckered in” by the sentence We usually charge 5% up front and 2.3% trail for this service but for you we will discount the rate by30%! Please sign here.

  27. I am an IFA. I post on here quite often in my own name, but I will post here anon. I have been tied, but spent most of my working life as an IFA.
    I have no axe to grind with SJP, but a poster made an important point about the ability for a client to switch off the ongoing advice cost. Personally i think RDR makes that essential and I would like to know if SJP are going to do that if a client chooses to no longer take advice or instead to replace their SJP adviser withn an IFA. If not, the client is paying twice……..
    To be fair and balance this, and my reason for posting anon, is I use several different wraps and platforms and under Transacts current terms, if a client chooses to dissapoint an adviser without replacing them, then Transacts terms whilst fine pre RDR, don’t seem appropriate post RDR, despite being their new terms and would make it hard to argue that SJP should turn off the ongoing charge (OAF).

    without an Adviser
    For any temporary period during which you do
    not have an Adviser appointed (for example,
    because your Adviser has gone out of business)
    the percentage multipliers for Buy Commission and
    Annual Commission shall be increased by adding the
    following percentage rates to them:
    Buy Commission 3.00%
    Annual Commission (Cash) 0.30%
    Annual Commission (Investments) 0.50%

  28. I feel for the clients here, as they will be like lambs to the slaughter.

    I trust that SJP will be required to notify clients of their option to switch off the commission (sorry, fee) tap. However, I don’t see how encashment penalties can apply to fees.

    Furthermore, will SJP be making the tax consequences totally clear to clients? I doubt it.

    This makes a mockery out of RDR and the FSA should be required to comment, once and for all, whether this is acceptable or not.

  29. Nicholas Pleasure 17th December 2012 at 2:54 pm

    Excellent! Well done to SJP!

    They have conclusively stuck up two fingers to the FSA and told them that they will continue to take commission. The FSA can do nothing because, unlike us small IFA’s, SJP has large resources and expensive lawyers.

    Those lawyers have been crawling through the small print of the FSA’s poorly drafted regulations and decided that this is legal. It’s obviously well outside the spirit of the law but well within the letter.

    It shows the FSA as a cowardly, toothless organisation that is prepared to stamp on the small firm but will bow down and dribble its appreciation at the big firm.

    Thank you SJP for showing us how utterly shallow our dithering regulator is.

  30. This is an all too predictable response to the effective ban on commission (dressed up as ‘customer agreed remuneration’).

    What’s missing is details on how the SJP products are changing in response to these charges. Presumably these will now be cleanly charged, but what’s the difference before/after?

    I suspect that clients will be paying more after. That’s only logical given costs and uncertainties have increased.

    As for comments about competing on price, that ignores much of the economic facts. Like it or not, where financial services are concerned, 90% of clients are not price sensitive. Advisers are, commentators are and regulators are but not clients.

    Most people do not buy on price alone or even mainly on price unless there is no choice. How many people reading this drive a BMW, Audi, or other ‘quality’ marque? Good news – there are cheaper options. However, it’s your PERCEPTION of the relevant value/status that counts not the reality.

    SJP understand this and will survive and thrive. Good luck to them.

  31. Kevin Walker - Blackett Walker Ltd 17th December 2012 at 4:20 pm

    Eye watering charges for advice that’s not fully independent! Let’s hope clients do start paying attention and become more aware so they can make a more informed choice when they appoint their adviser.

  32. Nicholas Pleasure 17th December 2012 at 5:31 pm

    Grey Area | 17 Dec 2012 3:46 pm

    A sensible comment about this at last.

    It’s fair enough that we all hate SJP – they are our competition after all.

    But in reality you have to have some grudging respect for a firm that manages to legally twist to their advantage some silly rules conjured by an out of touch regulator.

  33. RDR

    Intention – to remove commission to stop advisors recommending products based on how much money they make.

    Result – it doesn’t matter what products are recommended now as advisors will (may?) get paid for their services anyway.

    Note that advisors could give the same advice as before and recommend the same products, just get paid differently for it.

    At least the regulator will now be able to focus their efforts on quality of advice as this is so much easier to quantify isn’t it?

  34. Goldfinger D Megabucks 18th December 2012 at 10:29 am

    Lets dispel the biggest lie perpetrated in this industry.

    Its not about price – never has been never will be SJP have the most successful business model like it or not – that aint chaging any time soon

  35. I have held SJP funds for 2 years with no gains and 5% lower than original investment due to charges so this makes you wonder how active they are in moving funds for better performance.I think their charges should reflect performance of clients money.

  36. Adviser charging was intended to get rid of product bias. As a result it is not relevant to tied firms – it’s a non-event. All SJP have done is re-word their commission disclosure and, as I stated earlier, probably taken the opportunity to increase prices to reflect the increased regulatory costs.

    2 + 2 = 4

    The FSA’s hope that 2 + 2 = 5 was always a leap of faith too far…

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