Questions raised over SJP’s RDR charging

Several advisers and industry figures have questioned St James’s Place’s charging structure over whether it complies with Retail Distribution Review remuneration rules, which came into force in January.

According to two former adviser ‘partners’ at the firm, St James’ Place’s charging structure does not appear to have significantly changed since the new rules came into force.

One ex-SJP adviser, who wished to remain anonymous, said that then he worked at the firm an SJP partner recieved an initial fee of 3 per cent when a product was sold, part of a larger 4.5 per cent overall ‘cost of advice’.

A recent email sent to an adviser by a current partner relating to an SJP bond states that there is no initial fee charged on the product, with the costs being recouped over a six-year period from product fees.

According to a factsheet on the SJP bond, available on the firm’s website, the product has no initial charge and a 1.5 per cent annual management charge.

A key facts document from SJP discussing its charges, seen by FTAdviser, says: “...the cost of initial advice and our services will be 4.5 per cent of the amount you invest... This cost covers all of our expenses incurred in providing, checking and guaranteeing your advice.

“The remuneration of your [adviser] is only one element of this cost...”

Under the heading, ‘Your payment options’, the document says: “If you decide to invest with St. James’s Place, the cost for our advice is paid for out of the overall charges levied on your investment.

Specifically relating to lump sum investments, it continues: “As for a single investment, the charge is paid out of the overall charges levied on your investment which we will discuss with you.”

The Financial Conduct Authority conduct of business rulebook states a firm must “not solicit or accept... adviser charges... which are paid out or advanced by another party over a materially different time period, or on a materially different basis, from that in or on which the adviser charges are recovered from the client.”

St. James’s Place said that the regulator is aware of and has approved its charging methods.

A spokesperson for SJP said: “St James’s Place is a vertically integrated business, meaning we offer clients a fully integrated service comprising both individual and bespoke advice and our approach to investment management.

“As a vertically integrated business, we facilitate the payment of the advice from the charges we take from our clients’ investments. The cost of our advice along with the other costs of doing business, such as the costs of our services and those of our fund managers, are included in the charges clients pay and is not an additional amount.”

Compliance expert Phil Billingham, managing director of Phil Billingham Associates, said in his view adviser charge should be “brought out separately and shown in pounds not percent”.