The well-known investment provider St James’s Place (SJP) has been through the wringer in the press over the past few weeks about their transparency regarding fees.
The issue is not so much to do with the amount of fees they were charging but more to do with the fact that information on their fee structure was difficult to obtain and details of the penalties and fees applied were not clearly disclosed.
It was reported that a customer was forced to involve The Sunday Times’s “Money” publication in order to finally establish SJP’s exact fees over the six years he was a client. Whilst we understand that it is difficult to calculate fees precisely when dealing with the fluctuations of investments, it should be possible to provide close approximations that would satisfy customers. In fact, if they had simply disclosed all fees at the outset, then this situation could have been avoided!
This is not the first time that SJP has come under scrutiny for lack of clarity when disclosing their fees. At the end of 2015, acting on concerns raised by customers, the Financial Conduct Authority launched an investigation into the transparency of the company’s charging policies. They discovered that SJP were the only one out of the UK’s ten largest fund providers NOT to provide their charging structure online and up front. This does pose the question: what do they have to hide?
Another, and possibly the most shocking, revelation is that SJP impose a six-year penalty on all contributions! Six years! That is a long time to have your money locked away with no guarantee of returns! This penalty applies when you try to withdraw or transfer your investments and you have not paid an up-front fee. One customer, not aware of this penalty and unhappy with his investment performance, tried to transfer to another provider. He was told that to do so would incur fees of £20,000. The customer had to decide if it was worth £20,000 in fees just to go elsewhere for better performance. Many people would consider this to be not worth it, remaining trapped for the six year period with a company they do not respect and in an investment environment they are unhappy with. Not ideal, I am sure you would agree.
SJP advisers are “restricted” in their advice – in other words, they can only recommend SJP funds as this is where they make the most money. They are paid a commission for every penny invested with them. So, whilst they may follow the rules and send you the small print about fees and charges, perhaps they are unlikely to be as candid about the penalties and charges if they feel this might discourage you from investing.
Our view on this, and one we put into practice, is that it is better for our clients (and for us) to disclose all fees up front. In this way there is no uncertainty further down the line and our clients feel they are being treated fairly. Our advice is independent and considers the entire marketplace, so we invest in the best funds for our clients and not in the ones that will pay us the most. If you have friends or family members in need of financial advice, please pass the message along and save them a lot of aggravation – and possibly a lot of money – in the future.