The Sunday Times has attempted to shine a light on the charging structure of St James’s Place after readers voiced concerns that its advice charges were not transparent.
The newspaper featured a story last month looking at indicative costs for advice among the largest firms. At the time SJP told The Sunday Times the newspaper was “not asking the right questions”.
SJP clients then wrote in to say they wanted further clarity on what they were paying for advice.
One reader told the newspaper: “I use both Hargreaves Lansdown and SJP and both are reputable organisations. Hargreaves Lansdown’s fee structure is very transparent, while SJP’s is anything but.
“Whenever I have asked about its fees I don’t get simple answers, as its fees are incorporated in its unit cost pricing structure, so nothing is transparent. SJP prefers not to talk about fees but focuses on the quality of its investment advice and the personal service to clients.”
Another reader said: “I recently tried to get to the bottom of the fees and charges levied by each of the four advisers, and only SJP has been difficult.”
The Sunday Times article sets out that for Isa and unit trust investors there is an initial charge of up to 5 per cent. For pensions and investment bonds initial charges range from 2.5 to 4 per cent, then ongoing charges of between 1.5 per cent to 2 per cent.
Exit fees of 6 per cent apply on pensions and investment bonds, which declines by one percentage point a year until there is no exit charge over six years.
It also gives the example of the annual management charge attached to the SJP UK High Income fund, managed by Neil Woodford, of 1.67 per cent, including a 0.87 per cent charge to SJP, a 0.5 per cent fee paid to the adviser, and a 0.3 per cent fee to the fund manager.
This suggests SJP charges have fallen from when the company first set out its post-RDR charging structure in 2013, when ongoing charges were set between 2.1 per cent and 2.3 per cent. At the time SJP said partners receive 3 per cent from the initial charge and 0.5 per cent ongoing.
SJP told the newspaper clients are only interested in one overall charge which covers advice and fund management, saying: “If you go to John Lewis and buy a television or a computer, you don’t ask for the breakdown of the costs to find out what the margin is that John Lewis makes versus the manufacturing costs and everything else.”
It adds: “The client doesn’t care about comparison with other funds typically, as long as the portfolio is delivering against their individual and specific needs, such as: ‘I want a return or yield of 5 per cent a year, and if the portfolio is producing that return, net of all fees, I’m happy.’ ”