St James Place International Investment Bond

Cintrapark

Hi

I've been recommended to take out the an International Investment Bond with St James Place. I am a UK citizen but am currently living abroad. There are a couple of things that concern me:

1) Is now a good time to be investing in stocks and shares;
2) is St James a reputable body; and
3) I've been quoted a tiered exit fee:
0 – 1 plan years 7% exit charge
1 - 2 years 7%
2 - 3 years 5.25%
3 - 4 years 3.5%
4 - 5 years 1.75%
5 years or more 0%

Does anyone have any advice? The funder manager comes highly recommended.

Many thanks

bigadaj

Cintrapark wrote: »

Hi

I've been recommended to take out the an International Investment Bond with St James Place. I am a UK citizen but am currently living abroad. There are a couple of things that concern me:

1) Is now a good time to be investing in stocks and shares;
2) is St James a reputable body; and
3) I've been quoted a tiered exit fee:
0 – 1 plan years 7% exit charge
1 - 2 years 7%
2 - 3 years 5.25%
3 - 4 years 3.5%
4 - 5 years 1.75%
5 years or more 0%

Does anyone have any advice? The funder manager comes highly recommended.

Many thanks

Just double check this is the wealth manager, many unregulated firms just happen to have very similar names to legit outfits.

If so they are a big outfit, reputable but from some reports potentially more interested in earning their fees than increasing the wealth of their clients.

Aegis

Cintrapark wrote: »

Hi

I've been recommended to take out the an International Investment Bond with St James Place. I am a UK citizen but am currently living abroad. There are a couple of things that concern me:

1) Is now a good time to be investing in stocks and shares;

An excellent question and one I'm sure a lot of people would dearly love certainty on. I generally believe that if your investment timescale is long enough then most time periods are good times to invest, though clearly some are far better than others. However, trying to time the market to find the optimum entry point is a game that a lot of people have tried to play in the past with little success. You could feasibly find yourself five years down the line wondering where your opportunity went.

In short, the answer will depend entirely on your personal circumstances.

2) is St James a reputable body; and

In my honest view, no. They're a highly restricted salesforce. They have one proposition for all investment wrappers available to sell you. They have a very limited range of investments to put into those wrappers which come with high fees and exit penalties on pretty much everything. I've seen one of their reports recently where they didn't even state the cost of advice, which is extremely dishonest when actually offering advice to a potential client.

They do have a reputation for excellent marketing and very high fees earned for their "partners", though that's probably not what you wanted to hear.

3) I've been quoted a tiered exit fee:
0 – 1 plan years 7% exit charge
1 - 2 years 7%
2 - 3 years 5.25%
3 - 4 years 3.5%
4 - 5 years 1.75%
5 years or more 0%

This is atrocious. There's no excuse for a 7% exit penalty these days. This should be enough to make you walk away. It's your money they're investing, why should you have to pay such a huge penalty to take it back if you need it?

Does anyone have any advice? The funder manager comes highly recommended.

Find an IFA rather than a tied salesman. The IFA will almost certainly be able to get the same manager for you in the same type of wrapper (if appropriate) for a much lower cost.

ColdIron

SJP are a big and reputable Wealth Manager. A good friend has used them for over 10 years and swears by them, his 'partner' has provided valuable non-core info to him many times. When I met them I was less impressed, my prospective partner was, while not pushy' quite firm and didn't explain things to my satisfaction. Lots of flash graphics on his iPad, thin on facts

After checking them out further I came to the conclusion - average product, quite pricey so I bailed

I have continued to watch their products, which are run by some of the best Fund Managers in the business, and they do perform quite well. I met them a couple of years ago, pre RDR, so their pricing structure must have changed but I very much doubt they are any cheaper. That said, it is possible you get what you pay for, perhaps they are the HL of the Wealth Manager business

I've met my friends partner and continue to be impressed, and I think that's the secret of it. If you get a good one and establish a good relationship it could work well for you but it's a lottery

lesstoinvest

Have St James explained what annual fee they will be taking?

Cintrapark

Thanks so much for all your advice - will sit and digest it today.

The annual fee is as follows:

There is an annual management charge of 2.25% of the value of your investment for the first five years of any investment and 0.75% thereafter.

marathonic

Regarding the argument about there being no need for exit fee's in today's investment world, I disagree completely.

It all depends on the product. A lot of investment products require forex transactions and, in the case of some bonds (especially those where capital is protected), the trading of options is also required.

For example, there are products available where your initial capital is protected for 3 years and, should it rise, you get a return of a certain percentage of a stock market index over that three years.

If such a product were purchased for the S&P 500, the company will typically put enough of your initial investment into a fixed term deposit account so that, including interest, your initial capital is returned at the end of the fixed term (of course, you lose to inflation). The remaining funds are typically used to purchase enough Options to gain the required exposure to the stock market - with the remaining going towards fees for the company.

How can a company that sets up the above possibly agree to no exit costs if the investor decides to pull out in a few months time? They'd lose both trading costs and interest on the deposits as well as forex costs on the portion they had to exchange to US dollars.

dunstonh

1) Is now a good time to be investing in stocks and shares;

Depends on your timescale and what your crystal ball says. Timing is futile in most cases. What if its lower in 6 months? What if it is higher? After the crash in the early part of the millenium we had 5 years of near continuous growth. You would have just kept waiting.

Plus, its unlikely you would invest 100% in equities. That would be very high risk and way above the norm. The investment recommendation would almost certainly include other assets.

2) is St James a reputable body; and

One of the most expensive distribution channels in the UK. Very restricted in terms of offering. Very slick and professional typically but you are paying for that big time.

3) I've been quoted a tiered exit fee:
0 – 1 plan years 7% exit charge
1 - 2 years 7%
2 - 3 years 5.25%
3 - 4 years 3.5%
4 - 5 years 1.75%
5 years or more 0%

This suggests it is a commission sale. Exit charges exit to pay the commission. A 7% year one exit charge would suggest a 7% commission is being paid. The UK is commission free now.

There is an annual management charge of 2.25% of the value of your investment for the first five years of any investment and 0.75% thereafter.

A typical provider that operated that model would see a difference of around 0.5% to cover their costs of set up. Any more would normally be to cover the cost of commission.

Most investment bonds are clean charged now. No exit penalties existing (caveat to exclude some where it is needed for the type of investment)

Cintrapark

if you believe this to be costly, can you recommend any other service providers who offer the same as SJP? It has to be a wealth manager that allows me to invest living outside of the UK.

Many thanks

dunstonh

if you believe this to be costly, can you recommend any other service providers who offer the same as SJP?

No. That is a regulated activity and it would be a breach of FCA regulation to do so. Plus, the board rules don't like regulated activity, such as investment recommendations, taking place on the site as it could put the site at risk as well. Also, it isnt practical to so in reality either as IFAs have to give best advice. There is no one best provider. It will vary depending on how you want to invest (or how you should invest rather), timescale, amounts involved etc. SJP is a tied provider. It doesnt have to consider any of that.

It has to be a wealth manager that allows me to invest living outside of the UK.

That is irrelevant. Wealth managers is just a marketing term. Look up IFAs that deal with ex pats.

ColdIron

It's worth noting that you can get most SJP product equivalents by looking for the Fund Managers 'day job' funds and buying them elsewhere. For instance their UK High Income fund is near identical to Neil Woodford's Invesco Perpetual High Income