St James's Place  

St James's Place denies incentives in manager selection

 

St James's Place has said there is no conflict of interest or incentive for advisers to select one product over another when it comes to recommending investment portfolios to clients.

Speaking to FTAdviser deputy news editor Damian Fantato, St James's Place chief investment officer Chris Ralph said: "What we do is describe what we call example portfolios which the majority of our adviser use.

"These are appropriately diversified portfolios that access different parts of our fund range. Therefore there is no bias within those portfolios for the advisers to push towards their clients.

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"Of course if a client wants to have access to one of our managers, and they choose to make that decision themselves, then because we do not run fund of funds, they have the ability to access that single manager.

"But there is no systemic bias that is created because of the approach we have and the relationship we have with our advisers."

In its 2016 asset management paper, the FCA expressed concern about companies having commercial interests in the funds they have distributed. 

When asked how the industry could allay those concerns, Mr Ralph said: "I'm most interested in what St James's Place can do and the type of dialogue we have had with the regulator about our model, which is vertically integrated.

"I think we have a differentiated model in that we have funds we run, and then we have sub-advised managers appointed to run those funds for us. This is a model we have had for the past 25 years and therefore there is no conflict of interest as we do not employ fund managers - we delegate the responsibility to third parties.

"This means we do not have selection decisions between whether we should be allocating to our in-house managers or externally.

"I think that is the best possible model for a vertically integrated organisation and one St James's Place can put in to place because of the scale and substance of the assets under management we are fortunate enough to have."

In terms of its own fund manager selection, Mr Ralph called it a long-standing process of "select, monitor and change". He said: "What we are trying to ascertain is whether the managers we want to work with have a process and a philosophy that we believe can deliver an out-performance over the medium to long-term."

While St James's Place has a slight preference for boutiques, as their managers have a better alignment of interests to their clients' interests, Mr Ralph said the company was "agnostic". 

Although 2016 has been a difficult year, Mr Ralph said allocating assets going into 2017 would be done along the same lines as usual - in other words, to "create truly diversified portfolios for clients", across different asset classes and with a view to the long term.