James Hay Partnership has significantly increased the fees charged on a range of ‘non-standard’ investment options available within its retirement wrappers, in response in part to new capital adequacy rules that will come into force next year.
In a letter to advisers, seen by FTAdviser, the firm states that while income drawdown charges will remain at existing levels, it is revising a number of non-standard investment where “additional monitoring, control and capital are needed”.
Separately FTAdviser can reveal the firm has seen its number of regional business development managers drop from 10 to four in the last few weeks, with the advisers they served instead being offered support over the telephone.
The exodus, which follows several senior manager departures, is part of a restructuring as the firm evolves from being a self-invested pension provider to a broader wealth management and retirement-focused platform, according to a statement.
Charge hikes on the Modular iPlan retirement account will see fees for ‘specialist’ investments go up from just £50 currently to £350, while non-panel investment management set-up, ‘whole-of-market’ module and commercial property module charges are all increasing from £50 to £100.
For the Modular iSipp, there will be a sizable rise in the non-mainstream pooled investments charge from £50 to £500. Unquoted shares and charges for lending to an unconnected party will also rise from £250 to £350, while any other specialist investment will go up from £50 to £150.
A new £50 charge will also be made annually for non-panel investment management on the iPlan, while on the iSipp a new non-panel set-up charge of £150 will apply and the annual fee will rise from £50 to £100.
Under the Financial Conduct Authority’s capital adequacy changes, which come into force in September next year, Sipp firms will have to hold a minimim of £20,000 in reserve with the actual figure based on assets under management, with a surcharge for ‘non-standard’ assets.
Following a change from an earlier proposal, commercial property is to be considered a standard asset unless it will take more than 30 days to liquidate the asset.
A spokesman for James Hay said: “We flagged the price increase on DFM back in December and we notified clients of our intention to increases charges on non-standard investments last month to cover the additional monitoring, control and capital needed for particular investment types as highlighted in the FCA’s ‘Dear CEO’ letter.
“It is worth noting that the DFM fee increase impacts 6 per cent of our customers, [non-standard investment] fees are only 1 per cent and even with the increases we remain extremely competitive (full Sipp for £345 p.a.).”
James Hay’s marketing director Chris Smeaton added that in terms of property investment, they tend to attract more sophisticated investors so there is still demand, but they felt it was fairer to use a pay-as-you-go model rather than have a blanket fee funded through cross subsidisation.
On the development manager departures, FTAdviser spoke to one of the BDMs that left recently who explained that there are now four key account managers serving different parts of the UK.
“They are augmented by telesales, but it still brings support into question [and] it’s filtering through to adviser and there’s starting to be some disquiet.”
As for the reason behind the exodus, he stated that since the self-invested pension provider was taken over by the IFG Group four years ago, the new management has been gradually moving the business towards becoming more of a wealth management platform.
A statement from the firm said a restructuring started in October following feedback from advisers on the value placed on the immediacy of phone-based support. At that point the team was reduced to eight BDMs on call to provide phone-based support and nine providing face-to-face support.
“The latest changes reflect the fact that we have successfully evolved the business from being just a Sipp provider to a full platform offering,” explained a spokesperson.
“Within sales we already had a wealth of Sipp expertise but were lacking platform expertise, so we have brought in a number of platform specialists. Some of the existing team has been trained and redeployed to support on both Sipp and platform while others felt their futures lay elsewhere.”
Last month, the firm announced that is set to appoint Iain McCoo as its new finance director at the start of March, replacing John Watson, who said he was to stand down in January.
Meanwhile, Sue Horwood, HR director at parent company IFG, was also revealed to be leaving the business at the end of March.
peter.walker@ft.com
