Jeff PrestridgeMar 6 2019

How to beat big advisers

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How to beat big advisers
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Whenever I am invited to either a financial services party or dinner, and the wine begins to flow like the river Thames, one name always invariably rears its ugly head: St James’s Place.

“Big, bad SJP” – and before SJP lawyers start reaching for their iPads, it is not me describing them as that – just financial planners who have overindulged a little on the Merlot, and who incidentally are not backward in coming forward with their views on the quality of financial journalism or lack of it.

There is no doubt that SJP is seen as the big, bad wolf by many financial advisers.  

Not because of over-charging (a source of much press comment in recent months), but because the wealth manager is hugely successful. As slick as an oil slick. A hoover far more effective than anything Dyson has ever designed.

It is easy to be churlish about this new venture. After all, it is only seven years ago that Lloyds Bank abandoned the provision of mass financial advice through its branch network.

Sucking up people’s long-term savings on an industrial scale. A gatherer of wealth and then pretty successful at hanging onto it – through thick and thin. A result of excellent customer service.

Operating in the same space as financial planners and often competing for the same clients, it is usually the wolf that wins the spoils.

No wonder it is despised, even though I know of many financial advisers who – having polished off the Merlot and moved on to the Armagnac – concede they have been tempted on many an occasion to join the SJP pack.

Some indeed have walked the plank and joined the Cirencester-based wealth management group.

The latest results for the wealth manager tell you everything you need to know about SJP: Gross inflows of funds last year of £15.7bn – 8 per cent up on the year before; a 96 per cent retention of clients and a pack comprising nearly 4,000 advisers – all relentlessly searching for more wealth to manage; and close on £100bn of assets under management.

An impressive set of numbers whichever way you dissect and analyse them. Indeed, mightily, so given the difficult and challenging 2018 backdrop – stock markets treading water and continued market uncertainty.

Yet I am sure SJP will not be the only bête noire that will feature in the dinner table conversation of advisers at future industry soirées and gatherings.

It will soon be joined by another big, bad wolf in the shape of Schroders Personal Wealth, a new financial planning business that is aiming to be alive and kicking before the year is up.

Established by Schroders and Lloyds Banking Group, its aim is to offer financial planning services to ‘affluent’ UK customers.

First, to Lloyds Bank Private Banking and Bank of Scotland Private Banking customers. Then, unleashed on the country as a whole, with James Rainbow, chief executive, determined that Schroders Personal Wealth will play a “role in helping address the need for financial planning with a clear and transparent service”.

It is easy to be churlish about this new venture. After all, it is only seven years ago that Lloyds Bank abandoned the provision of mass financial advice through its branch network.

At the time, it left the advice market with its tail firmly between its legs and for good measure with a couple of black eyes after the Financial Conduct Authority hit it with a record £28m fine.

The charge sheet shamed the bank with staff pressured into selling investment and protection products when they were not always suitable. Failure to hit sales targets meant demotion and in some cases the bullet.

Even though Schroders Personal Wealth is still in formation mode, the critics are already out in force.

One comment I saw online was to the point. Any potential client, they said, “would be well advised to steer clear of this operation”. They added: “I imagine the costs will be excessive, the service will be sub-standard, the performance will be bang average, but it will all go under the radar of the regulator.”

Maybe this person will be right, but nobody really knows – not even Mr Rainbow – how Schroders Personal Wealth is going to perform. It might surprise us and be as slick as SJP, or it might prove an unprofitable flop that Lloyds soon gets bored with. We just do not know.

Is its formation good news? I think it is.

It will focus many people’s minds on the need for wealth management and that has to be good news for all wealth managers – be they the SJPs of the world, financial adviser networks or good local financial planners.

In this ever changing financial world – one dominated by greater personal financial responsibility, opportunities and bear traps – we need a vibrant wealth management industry. One serving the financial needs of this fine country’s citizens.

As financial planners, it is for you to rise above both SJP and Schroders Personal Wealth and demonstrate that when it comes to the personal touch, you are untouchable. Unrivalled. Crème de la crème. Now for a glass of Merlot.

Jeff Prestridge is personal finance editor of the Mail on Sunday