The Lemon Fool

A rather depressing if unsurprising Which article on wealth managers St James Place (SJP).

Among the conclusions of the article:

SJP’s expensive alternative pushes customers into a closed market where they can sell expensive funds as advisers are free to ignore cheaper or better alternatives. We were shocked that a quarter of the advisers we saw didn’t admit they weren’t IFAs.

With several advisers not telling people what they’d charge – and in other cases providing low estimates, our investigation suggests it’s near impossible to make an informed decision when comparing your local SJP adviser to alternative options.

http://www.which.co.uk/news/2017/07/exclusive-wealth-manager-st-jamess-place-misleading-customers-on-charges/

About time the FCA came down hard on these cowboys and spivs I'd say.

I'm not holding my breath though.

Yes, in relation to these guys it is hard to complain about fees on DIY platforms...

Most people who use the lemonfool website would not be tempted by the sales techniques employed by SJP, but the average investor obviously is as evidenced by SJP's profits.

I have seen SJP mentioned before - The Sunday Times has run several articles in the past couple of years until SJP put legal pressure on the newspaper to stop.

I'm sure the FCA know exactly what SJP get up to but they are completely gutless and/or incompetent especially when faced with such a large organisation that isn't afraid to sue.

The Retail Distribution Review legislation was supposed to stop financial products being sold for large commissions, but somehow the FCA turns a blind eye - very dodgy!

LooseCannon101 wrote:The Retail Distribution Review legislation was supposed to stop financial products being sold for large commissions, but somehow the FCA turns a blind eye - very dodgy!

Most users of this site would see clear blue water between the platform providing dealing, custody and tax wrapper services and what you invest in. SJP in effect combine these by offering a platform that only gives access to their in house funds. That give scope for smoke and mirrors as to the costs. At the costs of introducing active v passive debates and advised v non-advised, you might want to see who was better off out of two parallel investors, one of whom went the SJP route and the other who invested in the nearest comparable ETFs or Investment Trusts.

The FCA and its numerous predecessors seems to take the view that consumers can recognise the horse and big hat if they want to avoid cowboys, but that's probably not been demonstrated in practice.

I find myself having to actually stand up for SJP. A while back I had various pension pots all not being managed well, imo. A customer of mine wòrked for SJP at the time and put me in touch with a colleague of his. I was happy with the charges and the managed funds he directed me to and the way they did all the work in getting all the pots together. The 7 years they had my money was quite profitable for me, the only reason I stopped using them is they had a lousy drawdown system, so transferred to HL and managed the pot myself. Never thought I would stand up for an IFA, but you definitely need to understand the charges and what you are letting yourself into.

Raptor wrote:Never thought I would stand up for an IFA, but you definitely need to understand the charges and what you are letting yourself into.

Ironically, one of the charges by Which is that they are not making it clear to customers that they are not an IFA but are a restricted advisor.

Snorvey wrote:To be fair, you have had to work bloody hard not to make money in the last 7 years.

I couldn't agree more with Snorvey's comment.

A financial advisor's best friend is an investor's ignorance of the financial markets e.g. benchmarking against a recognised index. By the way, the world's stock markets in aggregate have more than doubled in value in the last 7 years.

Also, SJP have many advocates e.g. their advisors, family and friends of advisors, newspaper owners who receive considerable ad revenue, ad sales staff, SJP shareholders, hotels who host sales pitches,... etc.

The ignorant investor assumes that because SJP are successful and haven't been admonished by any financial regulatory authority, they will receive a first-class service. In my opinion, a high price is paid for ignorance.

argoal wrote:Ironically, one of the charges by Which is that they are not making it clear to customers that they are not an IFA but are a restricted advisor.

It's a loophole of sorts that tied agents such as the SJP "partners" can promote funds managed by third parties who are independent of SJP except that the funds are exclusive to the SJP platforms.

What would they do for an insistent client who wanted to follow rather than beat market performance?

In partial defence of SJP, I get the impression that they target those with large fortunes, as the joke goes, to reduce them to small fortunes.

Alaric wrote:What would they do for an insistent client who wanted to follow rather than beat market performance?

They don't do trackers as such. Their UK Gilt fund is probably the closest thing on their menu to a tracker but has an OCF of 1.26%. (THIS IS NOT A TYPO)

https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=EUFQ9&univ=O

Does anyone really think this fund, given the charges, has a hope of outperform a Vanguard gilt tracker charging 0.12%?

Why would anyone in their right mind invest in their money market fund with an OCF of 0.52% rather than just hold in in cash?

https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=BLFG6&univ=O

With a 5% fee paid up front for all of their funds you are not even losing money slowly.

A quick look at the addresses and cars of some of these so called 'advisers' will tell you many have become millionaires whilst working for SJP.

All you need to know really....

flyer61 wrote:A quick look at the addresses and cars of some of these so called 'advisers' will tell you many have become millionaires whilst working for SJP.

All you need to know really.... :evil:

I met a fella who has a load of money parked with this outfit. I asked him why, and he replied everyone in his golf club has done the same: the SJP 'adviser' is a fellow club member, drives a new Aston and has a gaff worth millions in the smartest part of town, so he must know what he's doing, right?

It certainly sounds like it...

saechunu wrote: so he must know what he's doing, right?

SJP and those who advise on its behalf are making two sets of profits. First there's the financial advice and second the consequences of the advice, namely to invest in funds where the beneficiaries of profits from charges are SJP themselves.

What sort of rake off are they making from Pension plans? In days gone by, even if you were putting £ 3,500 each month into a pension plan, percentages higher than 50% could disappear in charges and then into the hands of the advisor over the first year or so.

These advisers are not that at all but very good salesman. It is interesting who ends up with them as clients (and as salesman ). I know quite a few of their clients and many are eminently sensible people holding down important jobs. Most glaze over though when I try and explain what 2 percent annual fees can do their fund value. They think they are buying the 'inside track', sadly not.

Raptor wrote:I find myself having to actually stand up for SJP.

I must do the same. I have a small amount of money (4% of my portfolio) with SJP. Their representative recently called around and did a financial review of our families finances. He suggested that my wife do something about an old personal pension that is entirly held in cash, but other than that he didn't advise any changes.

Wealth managers like SJP are really for people who don't want to manage their own wealth, rather than those willing to do so. I don't think that it's fair to compare them with the likes of Vangard. The point being that to choose for example a Vangard tracker, you actually have to find out what is available and make that choice.

I'll put the money I have saved towards a Mercedes E class.

FredBloggs wrote:Not as daft as it sounds. With a tail wind, what I save by not paying HL's fees on four accounts will buy me a new Mercedes E class in maybe 10 or 12 years

.......or, based on not paying SJP fees, a new Merceded E class every 3-4 year

FB...I was only guffawing because I like your style!

The wife still has a holding (which is winding down as soon as CGT allows) in Towry's balanced fund - a sensible mix of equities, bonds, gold, property etc. With annual charges of at least 2% As I would only expect a balanced fund to return c5% pa, that's 40% of our return.

Going into the equally sensible PNL and CGT at less than half the fees.

flyer61 wrote:A quick look at the addresses and cars of some of these so called 'advisers' will tell you many have become millionaires whilst working for SJP.

"Where are the customer's Maseratis?"

XFool wrote:

flyer61 wrote:A quick look at the addresses and cars of some of these so called 'advisers' will tell you many have become millionaires whilst working for SJP.

"Where are the customer's Maseratis?"

An old one, of course, but how many Maseratis does one customer need?