SJP's delayed cut to investment fees will kick in next month
After criticism of its charging structure, the UK's largest wealth manager initially said it would reduce fees and make them more transparent in October 2023, then later told staff that it would implement the changes in May this year. But the plans were postponed after pushback from its advisers, who said that there wasn't enough time to adapt their systems.
St James's Place (SJP) has now said that the changes will take effect from August 26 and apply to more than one million investors, who use the firm to manage their savings and pensions.
SJP's fees have been under scrutiny for years amid claims that they were opaque and could be expensive. Last year the company set aside £426 million to refund clients who had paid for advice that they never received.
The decision to overhaul the charging structure came after the City watchdog, the Financial Conduct Authority (FCA), brought in new consumer duty rules which demand 'good outcomes' for clients.
• From threats to inviting us to tea: SJP changes its tune (and fees)
SJP is changing its initial advice fee of 4.5 per cent to a tiered structure: the first £250,000 will cost 3 per cent, the next £250,000 will have a fee of 2 per cent and anything over £500,000 will be 1 per cent.
For example, if you had £400,000 you would pay 3 per cent on the first £250,000 (£7,500) and 2 per cent on the next £150,000 (£3,000). You would pay a total of £10,500 for the initial advice, which works out at 2.63 per cent.
The firm's ongoing advice fee of 0.5 per cent — which typically pays for a yearly review — is increasing to 0.8 per cent. This is roughly in line with the rest of the industry, but will make things more expensive for loyal customers who will not benefit from the reduced cost of initial advice.
SJP customers will also pay an ongoing product charge for their investments. Bonds and pensions cost 0.35 per cent a year, decreasing gradually for larger sums down to 0.25 per cent for any money over £3 million. Isas and unit trusts cost 0.27 per cent, decreasing gradually to 0.17 per cent on amounts over £3 million.
The charges for fund management have also been reviewed. The amount charged varies but SJP said it ranges from 0.09-0.69 per cent for 95 per cent of its funds.
As part of the overhaul, SJP has split its charges into three components: the advice charge, the product charge and the fund charge. While this makes it easier for new customers to work out what they are paying for, it means that comparing the new fees to the old system is complicated. Part of the controversy around SJP's old fees was their lack of transparency.
• St James's Place bullied and belittled me, but I was right all along
SJP said that a very small group of customers may end up paying more due to the prices of certain funds increasing during the restructure.
The company said that moving to the new charging structure had required an 'extensive IT infrastructure build'. James Rainbow, the chief executive of SJP Wealth Management, said: 'We see the real value in the relationship between our clients and their advisers every day. These changes will make it much simpler to see just how competitive we are on a like-for-like basis for the fully personalised, trusted advice our advisers provide.
'It's a good thing for our advisers, our business and most importantly our clients, the majority of which will benefit from lower overall charges over their relationship with us.'
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