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Sunday Times takes SJP to task over charges

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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.’ ”

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Comments

There are 50 comments at the moment, we would love to hear your opinion too.

  1. Come on FCA – is this a good outcome for consumers? It is way past time this was dealt with. We all know how much SJP are paying so why can they not offer clarity to consumers?

  2. Regarding the penultimate paragraph, isn’t that exactly what we have to do as independent financial advisers? How long will this 1980’s model be allowed to last?

  3. The FCA set out an ideal fee proposition client disclosure model, including cash equivalents ,so why the smoke and mirrors from this firm, it seems like the dark ages to me and one rule for IFAs and another for whatever SJP call themselves these days!

  4. SJP seem to be the only adviser and provider to be able to continue using the pre-RDR charging model. Consequently the ABI, PFS and APFA should be asking the FCA why the rest of the industry/profession has spent millions complying with the RDR rules when we could have perhaps just hired SJPs lawyers instead to find their loophole in the RDR rules.

  5. Can someone explain how SJP seem to have a set of disclosure rules that sit within their own world and no one else’s? I have spoken to SJP clients who can never tell me what they pay. Apparently their stationery is top notch though.

  6. An unfair, uneven playing field. Just what we expect from the FCA. One rule for us and one for their pals at SJP. It’s no surprise that no-one in the industry has the tiniest bit of respect for our low quality, unfair and unjust regulator.

    Stand up and do something for once, FCA.

  7. A new client came in to see me armed with his SJP documents, looking for advice.
    Together we worked through the myriad of complex charges levied throught his investments and and pensions and we came up with a truly massive Reduction in Yield that shocked both of us.
    If I had to disclose that RIY to my clients and express it in £s terms, I would not have any clients at all.
    This obsifaction by SJP is disgusting, yet the FCA choose to ignore it and continue to hammer the rest of us.

    • Hi Douglas, I am a journalist at The Times, and i would love to have a chat with you about this if you could spare a moment at some point? andrew.ellson@thetimes.co.uk thanks in advance.

      • andrew, I’m glad to see the Sunday times are investigating SJP, but if I was you I would start right at the top with the FCA and ask them why they allowed SJP to offer such products which clearly breach the FCA guidelines, by the way I’m sure a senior member of SJP is on the board as such at the fca

  8. Not that old ‘John Lewis’ quote again. I remember this being trotted out when I was a member of a direct sales force in 1990. It was trite rubbish then and it still is now.

    I would also be fascinated to see the outcomes from the ‘quality of its investment advice’ because, with those horrendous charges, they are going to have to be delivering the kind of outperformance which hasn’t been seen since the days of Lance Armstrong.

    People will still line up to buy their product though because there’s a sufficient portion of the investing public who are, to but it bluntly, suckers

  9. St James Place should be the true definition of a restricted advisory firm. To pay 4% up front for a model portfolio that isn’t constructed by your adviser, seems a bit steep to me.

  10. High charges, unclear charges, tapered scales of early exit charges, obfuscation away from giving straight answers to straight questions all sounds to me very like terms long since past for everyone but SJP. Yet Mr Bellamy would have the world believe that the FCA is completely happy with its business model and terms. Smells damned fishy to me. One wonders what the FCA would do if another firm/provider started to operate a similar product model.

    No, no, no, you can’t do that, it’s contrary to various parts of our COBS.

    But you seem quite happy for SJP to operate that way. And you don’t seem to have any problem with HL’s exit charges, even from their ISA. Why can’t we do the same?

    Never mind that, they’re different. Just go away and do what we’re telling you and don’t argue or there’ll be trouble.

  11. I agree with what they are trying to say about questioning the need to have to separate out every cost factor. However rules are rules and this is the thrust of RDR, so if there is non compliance then it should be dealt with… However, this ‘revelation’ has been well documented by other advisers for some time, so if there is a problem then I hope that nobody at the top dares to say they didn’t know! If there ‘isn’t’ a problem with the offering by SJP, then other providers may want to take note. What’s sauce for the goose and all that

  12. When the Government continues with the crusade against investment/pension charges, will they make an example of this outfit? Probably not, many politicians are likely to be clients or social acquaintances.

  13. SJP – Rip Off merchants? Well who would have thought it?

  14. The FCA will do nothing
    End of story

  15. So SJP compare themselves to John Lewis Q. 1. Are John Lewis happy with this? Q. 2. Are therefore, SJP never knowingly undersold. Q3. If they are undersold, do they refund the difference? Answers on a post card. SJP = Secret Juggled Pricing.

  16. I would assume the FCA are all over this, I’m sure we will hear something in the press soon about the action they are taking. However, it does amaze me how long SJP have been able to get away with this.

    If we had charges as high as theirs, I guess we might be a little embarrassed to fully disclose them in a clear/easy to understand way.

    I understand the FCA are not a pricing regulator, but they do have a duty of care to consumers to ensure all their members are abiding by and complying with the same set of rules regarding fee disclosure, and SJP are just trying to pull the wool over peoples eyes with their posh stationary. Their investment advice and service is no better than ours, in actual fact I think ours is better, plus we don’t have any exit penalties or initial charges, our clients pay us a simple 0.5%pa

  17. And their website and literature are strangely silent on regulatory status and charges.

  18. As one wag put it some time ago, SJP is a classic example of all fur coat and no knickers. That aside, there’s something definitely fishy going on for them to have been allowed (by the regulator) to continue in this vein for so long.

  19. If past performance is a guide to the future the FCA will ignore this for 20 years. Then, once people realise that they’ve lost a lot of money through high charges, the FCA will launch a review into why this was allowed to happen. By then SJP will no longer exist, except through some other company so the FCA won’t be able to make it pay claims so the whole lot will fall on the FSCS.

    At that time we’ll be four or five regulators further down the line so it won’t be the FCA, it will be some other incarnation, employing roughly the same people in the same building but completely different and therefore not responsible at all for the failures of the FCA.

  20. Lack of clarity will always present opportunity for the less scrupulous. Sadly, the current methods of disclosure are pathetic e.g. KIIDs which show the maximum initial charges when in reality our clients are paying zip investing via a platform. Is it any wonder clients get confused and mistrust the industry (not a profession yet, sadly).

  21. I don’t work for SJP, however have had some dealings with them in the past. Some of the comments are pretending like SJP effects the day to day running of your business model – incidentally I largely agree with most. If SJP get away with it, guess what, most big firms with big budgets generally do…Google? Starbucks?…

    All it takes from a clients perspective is a simple search on the internet to see that if you want your ego to massaged and hold a SJP bank card then fine…but you will pay for it! And some!

    Investors always have choice.

  22. Why initial charges AND exit fees as well?.

  23. SJP or ticker STJ: their shares have tripled since 2010- all the growth is the last two years – so the markets think they are cleverer than RDR. P/e steep at 26
    Will it all crash and burn? Current value 4.5 billion. After the last debacle of regulator investigation (insurers) and share drop – I am sure they will be pretty careful with this one. Plan b is offshore (Henley G) where I think they will be playing with some real nasties.

    Fingers on the triggers for a short?

  24. Has anyone heard about their ‘protect your home from care fees’ trust product/ Most Clients do not read the disclaimers/caveats in the fine and very small print?

  25. I must focus on the job advert in mm offshore earning 750k pa!!!
    Hahaha that’s the offshore provider market – why tell a small lie when a huge one is available – why not 7.5 million a year

  26. When I was made redundant by AXA in 2012 SJP were one of the companies I explored via an informal chat. It was like going back to my interview with Pearl in 1994. Stack em high and sell em expensive. I didn’t go back for another chat as I thought they were too slick and underhanded

  27. Ted
    Just a variation on a theme.
    I met a lady who was transferring all her and husbands Isa’s into a bond through you know who to avoid IHT. It was bonkers and I didn’t have time for all the hassle so I walked away from it.

  28. The cars in the car park say it all!

  29. Mike
    You think it’s a good idea ?
    Transfer into a bond from Isa’s ?when husband and wife early 50’s transfer a few hundred thousand out of Isa’s with no private pension to speak of
    It’s pretty much a churning exercise
    Fos will love it 🙂

  30. An isa switched to a bond above and I would have a field day on compensation % commission – Shame I am not over there I would look her up

  31. I am very much in favour of charges being fully disclosed and reasonable for clients. It does feel though like there is a race to the bottom ethos within this industry amongst advisers. So often are we quick to deride each others fee structures whether its SJP vs IFA’s, % fees vs fixed or what other permutation.

    Ultimately we need to provide clients with a good deal but we must still value our own time and effort. We work within one of the most heavily regulated industries in the UK. You go to a Magic circle law firm, they don’t bend over backwards to try and beat a high street trust planner. If you want to run a more expensive proposition that’s fine in my eyes, as along as you disclose it to your client’s. Charging the lowest fee on the market is not a badge of honour in my eyes, its an attitude that has been propagated by a history of advisers re-churning contracts and selling a cheaper solution. Cheap does not mean best

  32. It’s amusing how any post about SJP, ususally negative, gets such a big response, probably because it is so blatantly obvious to downtrodden IFAs what SJP are all about. The FCA must do too, but choose to ignore it. They will get their cumuppance one day, but all these posters will be dead.

  33. The rules should be the same for everyone and any reasonable person would take the view that how charges are presented ought to be the same for everyone, so that the investor can decide if paying a higher fee is what they wish to do. If it is the case that SJP are not playing by the same rules as everyone else, the FCA ought to act swiftly to ensure compliance.

    However, SJP aren’t the only ones to fudge the charges issue – consider some platforms, which seem more like bucket airlines that add on costs as you progress through the order. Or indeed the services of retail Banks or heaven forbid, the investment management community, whose funds most of us use. Our industry which talks about money, has for decades failed to clearly talk about the cost of managing the money, aside from deriding the “investment banker” when it suits them to do so. There is an uncomfortable reality that everyone (I mean all humans) is paracite-like – making a living off others, we all hope that the exchange is fair and beneficial, but sometimes it seems rather obvious that the paracite has little real interest in its hosts longevity – as there will be another along in a moment.

    The irony of the John Lewis quote is that JL sell brands which command a premium but are “never knowingly undersold”. This is all about branding power and the ability to use it to project a different version of reality. I will never cease to be amazed at how many people prefer the comfort of a brand, despite evidence that other options are better. Never understimate the power of denial…. do you really think SJP clients don’t notice the plush offices? people see what they want to see and how much ego is wrapped up in the process. Shiny things attract.

    SJP make up about 10% of the total adviser numbers, regulatory fees and levies are partly based on income from sales.

  34. Wouldn’t a better way to “shine a light” be for the Sunday Times to ask the FCA for a direct comment on how zero % initial charge and 6% exit penalty conforms with RDR?

  35. Sjp in house AF exams
    Papers marked by trainers who trained the candidate

  36. They get to manage their own exams? How on earth can that be credited as equivalent to the independent bodies?

  37. My gosh… and not a single defence from any SJP representative nor partner – is that the most telling? This is too many defamation cases to run too…..

  38. The Sunday Times enjoy a great reputation for investigative journalism. I am convinced that they will get to the bottom of this. It’s then up to the Regulator to act. My guess is that they are already aware of some of the issues re disclosure and TCF due to some of the rules which seem to be aimed at SJP.

  39. COME ON MONEY MARKETING START ASKING QUESTIONS TO THE FCA AND SJP ABOUT THEIR CLOSE RELATIONSHIP

  40. A couple of years ago I was asked to pitch my services to a local BNI chapter who were looking for an IFA to join.

    There was an SJP “partner” there as well as me. Imagine my surprise when he told the assembled chapter “I’m a fully independent adviser, however I use SJP as my provider of choice because they’re the best in the industry”.

    If this little toe-rag would say that with a Chartered IFA in the room you can just imagine what he’s telling his ‘clients’.

    The mind boggles

  41. Here’s another SJP trick. I actually went to a SJP presentation for potential new partners, one adviser made a presentation saying he had been so successful he could not cope with the number of clients he had so was selling them to another SJP member, I forget the multiple but it was one guaranteed by SJP and far above the normal multiple for ongoing commission (sorry ongoing fee), then SJP lends the new adviser at advantageous rates money to buy the client bank, but at 0.5% renewal it would take about 8 years to repay the loan.
    I had two immediate thoughts, the client bank was being sold after 5 years, just as the exit charge ends, how can the new adviser repay the loan more quickly? How about a client review and a thought on the lines of, this bond no longer really suits your requirements Mr Client, what you need is our new version………

  42. And the difference between:

    SJP,Porchester MI,Levitt Group, Drexel Burnham etc

    is?……………………

    Answers on a postcard please.

  43. A business is entitled to set its charges at whatever level it desires. However every customer should be able to understand what they are paying and how much the products or services are costing them. With this information they can then make an informed judgement as to whether they are happy to pay the price quoted.

    It would really concern me if any financial services business did not clearly and concisely tell a client what their charges are when requested. This is basic stuff, it shouldn’t need RDR to force a company to disclose this sort of thing.

  44. I was looking at joining SJP but the good things are few a far between.
    Unless any one knows better…..

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