James ConeySep 18 2019

SJP makes steps towards transparency

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How do you judge the value of financial advice?

It is a question that came up again and again during the recent Sunday Times investigation in to St James’s Place, which led to the company overhauling its so-called ‘cufflinks and cruises’ adviser perks.

How you assess value and quality is a good question because it is one of those things you can never truly judge until the end of your journey.

Transparency is crucial, which is why I always plead with advisers to put their charges on their website

It is only when you retire that you can really say whether the returns, and the lifestyle, you have achieved matched up with what you paid and the expectations you began with.

For clients searching for an adviser, this means they have to make a few gut judgements about the adviser.

They, of course, have to look at the fees and the qualifications, and they may have also taken a recommendation from a friend.

But they are also going to look at more superficial things, such as what an adviser’s office looks like, and what they make of the adviser’s appearance.

This is, after all, someone who they are trusting their money to. Of course, image is what SJP seems to play on more than anything else.

But transparency is crucial too, which is why I always plead with advisers to put their charges on their website.

And this is why I was never really happy with the SJP business model and have always felt that it was important to know what was going on behind the scenes at the company.

I have never been comfortable with the culture and clarity.

Its perks were a relic of a bygone era. Financial advisers should be prudent, analytical and pragmatic.

That was not the image being portrayed by the SJP annual jollies all paid for by profits made from customers, who largely did not know they were paying for them.

Then there are the fees.

They look high: a £1m investment can cost a client £1m in charges over 20 years. But not only that, they sit awkwardly.

For example, I have still not had it explained to me how SJP can justify charging an early withdrawal charge on a pension when exit penalties are banned by the Financial Conduct Authority.

I have also never liked that SJP is not whole-of-market.

Its fund range may boast of being run by world-leading managers, but the returns across many are thoroughly mediocre. Do clients know what they are missing out on?

Advisers should learn a lesson from SJP. Transparency and openness should be at the heart of any business. 

I have always wanted them to axe the perks and cut the fees. We have got half of that.

This is, after all, clients’ profits that are being deducted to run the business. And that is something for all financial advisers to remember too.

Minister problems

It was pensions awareness week last week, so what did you do to celebrate? A party? A cake? Did you send a card?

The Department for Work and Pensions did its own unique celebration by welcoming another secretary of state to run the department. Thérèse Coffey was appointed following the resignation of Amber Rudd.

It really is no surprise that our pensions policy is such a mess, and ordinary people have such little regard for lifetime saving when the government minister in charge of it changes so routinely.

The DWP is not the only department to suffer from this revolving door affliction.

Housing too has had numerous ministers in charge – but at least policy in that department is not a total mess. Oh, hang on...

Fund reports 

The tale of two interim reports from two so-called stars.

The Woodford Equity Income fund and Fundsmith Equity fund half-yearly accounts dropped within days of each other. One is full of contrition, tinkering and excuses. The other is full of confidence. 

While Neil Woodford was busy trading his way to the straight and narrow, Terry Smith only sold off two stocks in six months.

Mr Smith has a loyal, almost cultish, following and it is easy to see why from his annual report.

He minced no words in his assessment of one stock he sold (Colgate Palmolive), and was frank in his assessment of global markets.

And there was even time to have a veiled pop at his rival. You can always trust Mr Smith to make fund management interesting.

James Coney is money editor of the Sunday Times

@jimconey