St James Place charges

thestens

We have been talking to an advisor from STP. Following the answers to my previous post, I asked for an exact breakdown of charges, which are 1.94% for one fund and 2% for the other. These are annual management charges. He says he expects the funds to make in excess of 5% on top of that, which correlates with what the fund I have had for the last 10 years fro STP had achieved on average over that time.
My question is, would it be a lot cheaper to use an IFA and would I expect to make more than 5%? If not, I am inclined to go withSTP, maybe better the devil you know? I will be investing a hefty lump, though, so I suppose the percentage cost will be against me, a set charge may be better? Sorry to sound ignorant but this is a steep learning curve and I'd just appreciate some opinions.

TheTracker

Don't so much ask yourself 'would an IFA be as good' as 'what is about this SJP guy that allows him to make 1% more returns than the IFA?'

Devil. Right word.

PeacefulWaters

Future are guesswork.

I'd make no assumption that SJP would outperform IFA recommended funds or the other way around.

But giving away 1% more of your returns than you need to for 20+ years and its compounding effect doesn't make much sense to me.

bigadaj

Are you sure those are the only charges, they are high but not massively excessive depending on the type of investment to be be made.

I seem to recall there was talk of sjp charging hefty initial fees as well, which I haven't paid in twenty years of diy investing, be sure you have full details and breakdown of all fees and charges before you commit to the investment.

thestens

I asked about initial fees and was told the percentage fee is the only one. So we would be paying about 1% more with SJP? How do IFA s calculate their fees and how do you work out its 1%? Certainly sounds like a better deal, especially over time.

DrSyn

I do not use an IFA myself, so cannot tell you about their costs.

I cannot see into the future so cannot tell you what you will be getting in future returns.

The fund charges do however sound to me as being high.

1% compounded over a long time on a large initial sum, will work out to a large amount of money. This comes out of your pocket. Only you know if it is worth it to you.

I came across the information below. I hope they will be of interest to you. Read the first one at least.

http://www.7im.co.uk/media/455228/fifth_rule_of_investing.pdf

http://www.comparefundplatforms.com/

https://www.citizensadvice.org.uk/debt-and-money/getting-financial-advice/#h-how-much-will-the-advice-cost

ashleypride

thestens wrote: »

I asked about initial fees and was told the percentage fee is the only one. So we would be paying about 1% more with SJP? How do IFA s calculate their fees and how do you work out its 1%? Certainly sounds like a better deal, especially over time.

They normally have a 5% entry charge.

http://www1.sjp.co.uk/funds/unit-trust-group-funds/charges-and-costs-disclosure

Personally, If I was going to pay for advice, I'd ensure the advice I was getting was from an independent advisor.

bigadaj

ashleypride wrote: »

They normally have a 5% entry charge.

http://www1.sjp.co.uk/funds/unit-trust-group-funds/charges-and-costs-disclosure

Personally, If I was going to pay for advice, I'd ensure the advice I was getting was from an independent advisor.

Agreed.

I wonder whether if they are retailing their own funds then the initial charges might be hidden with the fund charges themselves?

oldfella

they might mean there are no other charges we apply.
obscuring the fact there are charges applied by the fund manager

bigadaj

oldfella wrote: »

they might mean there are no other charges we apply.
obscuring the fact there are charges applied by the fund manager

When the fund manager might be st James place.

dunstonh

As mentioned, the SJP funds have a 5% initial charge. 5% is massive. Although context is needed. i.e. £500 fee on £10k is 5%. That is not a massive fee and quite reasonable. Whereas £5000 on £100k is where is 5% but getting way above what you would expect.

The FSA, before it became the FCA, recorded average initial charges on actual sales and it was about 1.8%.

My question is, would it be a lot cheaper to use an IFA and would I expect to make more than 5%? If not, I am inclined to go withSTP, maybe better the devil you know? I

SJP hold the record for providing the biggest cost saving on any pension transfer I have done with over £300,000 saved in the effect of charges over the term by moving away from SJP. The last SJP transfer I did had a £204,000 saving over the term. I couldnt promise that the returns would be better on what I did or that the returns would be better on SJP. Returns are always unknown.

Bottom line is that SJP are one of the most expensive distribution channels. They are usually very slick on professional. However, you are paying for it big time. The funds SJP offer have comparable funds via IFAs.