SJP: 'We are very comfortable with our approach to charging'

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
SJP: 'We are very comfortable with our approach to charging'

One of the most interesting changes, according to Andrew Cullen-Jones, director of business development & advice at St James's Place, was the shift in bank advisers moving to set up their own firms.

There was also the growth of multi-adviser practices and firms building more extensive back office operations and hiring further support staff within their businesses.

But despite this, the industry is still facing an adviser shortfall, especially as large numbers of advisers are nearing retirement, Cullen-Jones warns.

When it comes to charging for advice, which also saw some big changes under RDR as commission payments were banned on retail investment products, it is important to understand that charges are only one side of the value for money equation, says Cullen-Jones.

In a Q&A with FTAdviser In Focus he talks about the changes SJP made early on in its preparation for the RDR and why he believes the firm's charging structure is and always will be RDR compliant.

Andrew Cullen-Jones, director of business development & advice at SJP

 

 

 

Access to the profession and the provision of quality financial advice has never been more important.

 

 

FTA: Looking back, what's your overall assessment of the RDR and the way it has shaped the industry over past 10 years?

ACJ: The RDR has undoubtedly had a positive impact overall on the advice industry, raising standards and improving professionalism through the introduction of increased qualification requirements.

In the 10 years since its introduction, the profile of the profession has made significant progress bringing it on a par with other highly skilled professions where prolonged training and qualifications are a pre-requisite of the role.

Suitability levels are a clear indicator of its success and the FCA’s last formal review showed 93 per cent of advice across the industry as being suitable, with the FCA concluding that the results were a direct result of the “successful adoption of RDR by advisers”.

The one downside has been the reduction in the number of advisers across the industry. We saw a large number of financial advisers exit the marketplace around the time of its introduction and levels continue to remain stubbornly low.

Given the undoubted benefits financial advice can provide for clients, the injection of new advisers and the closing of the advice gap could play an instrumental role in helping solve some of the societal challenges the UK is currently facing.

This includes the simple fact that, at a macro level, UK households are not saving enough or making adequate provision for retirement.

FTA: What's the most 'interesting' thing to have come out of the RDR?

ACJ: With a number of bank advisers in particular becoming displaced, this presented an opportunity for those who wanted to carry on in their capacity as a financial adviser to become their own business owners.

Some of these later joined SJP while others set up on their own or as part of other advice firms.

It is important that clients understand the charges they pay across the full value chain.

Then, there has been the growth in the number of adviser academies over the past 10 years as firms look to address the shortage of financial planners in the UK.

This continues to be a priority issue for our industry but presents a great opportunity to bring new and diverse talent into the financial advice profession.

FTA: What was the first thing you changed in your business related to the RDR?

ACJ: Our advisers started their qualification journey early on in the RDR implementation process and there was a concerted effort to support all of our advisers to reach the necessary qualification levels ahead of the deadline.

This work started a number of years before RDR as you would expect.

FTA: SJP has received a bit of criticism when it comes to the fees it charges. What makes your fee structure RDR compliant?

ACJ: We are very comfortable with our approach to charging, which works well for clients investing for the medium to long-term and through a long-term trusted relationship with their adviser.

We maintain our belief that it is important that clients understand the charges they pay across the full value chain – not just for the advice but also the total charges they are incurring for investing with us.             

Research has shown that SJP has competitive fees when compared to other fully advised wealth management services in the UK.

These comparisons are importantly done on a like-for-like basis rather than selecting certain parts of the value chain and comparing fund charges or platform charges against our total charges, which includes advice, administration, portfolio construction and investment management.

Ultimately, however, charges are only one side of the value for money equation. It is value for money that is most important for clients and we fervently believe in the value that advice provides to clients – both in financial terms and in non-financial terms, be it through an SJP partner or another adviser in the industry. We need to do more to promote and articulate the clear value that advice can offer.

FTA: How has RDR shaped the market around you, in terms of the types and sizes of firms you now compete with?

ACJ: Among the more noticeable themes we have seen in the marketplace is the growth of multi-adviser practices and firms building much more extensive back office operations through the addition of further support staff within their businesses.

The biggest impact though goes back to the earlier point about the number of advisers.

While RDR may have reduced the supply of advisers across the industry, the demand for advice continues to be there.

This is driven by a number of factors, most notably an increased responsibility for individuals to fund their own retirement, the demise in the availability of defined benefit pensions, the choices clients face at retirement and the complexities arising from the tax-treatment of pensions (in respect of annual or lifetime allowances).

Added to this will be the growing need for advice around intergenerational wealth transfers due to take place over the coming years. Access to the profession and the provision of quality financial advice has arguably never been more important.

FTA: What effect will the consumer duty have on the market you operate in?

ACJ: The vast majority of advice firms will continue to deliver good client outcomes and we know that good advice – whether from SJP or another regulated adviser – adds a tremendous amount of value to clients, both financially and emotionally.

The key change for firms will be a heightened focus on evidencing the good outcomes delivered and the intrinsic value that sound financial advice provides to the client.

FTAdviser is running an event later this month, exploring how advisers can build on the experience of the past 10 years of RDR to succession-proof their businesses for the next 10 years. Find out more and sign up HERE.

carmen.reichman@ft.com