St. James's Place - can I do better?

Malthusian

Credit-Crunched wrote: »

As a matter of interest, what would you deem to be a reasonable cost for a pension of £150k per year. My parents are paying 1.2% with SJP. This includes the advisers ongoing advice, and fund costs all in. (yes, i have checked this number)

That's extremely cheap for SJP. What funds are they invested in?

1% is the very top-of-the-range for IFA advice fees. 0.5% is still the mode average, although an increasing number are charging 0.75%, with a smaller number charging 1%.

dunstonh

My parents are paying 1.2% with SJP. This includes the advisers ongoing advice, and fund costs all in. (yes, i have checked this number)

SJP still use AMC. Not OCF. IFAs use OCF.

I did an SJP pension transfer recently. SJP were quoting an annual charge of 1.25% on every fund. However, the OCF on those funds ranged from 1.7x% to over 2%.

There was absolutely no structure to the funds with SJP. It was just a handful of single sector funds and the funds had never been rebalanced or changed.

Both IFA's that came to see my parents wanted 1% just for the ongoing advice fee, which was double what SJP charges for the ongoing advice?

SJP dont have a charge for ongoing advice as such as they have a flat charge which they pay their sales reps out of. This commission method is not used by most others as the RDR was meant to get rid of these sorts of smoke and mirrors.

£150k is low end for an IFA. So, 1% is not unexpected. However, the FCA just recently confirmed that 0.5% is still the dominant figure. So, just because two firms were 1% doesnt mean others would be.

Credit-Crunched

dunstonh wrote: »

SJP still use AMC. Not OCF. IFAs use OCF.

I did an SJP pension transfer recently. SJP were quoting an annual charge of 1.25% on every fund. However, the OCF on those funds ranged from 1.7x% to over 2%.

There was absolutely no structure to the funds with SJP. It was just a handful of single sector funds and the funds had never been rebalanced or changed.



SJP dont have a charge for ongoing advice as such as they have a flat charge which they pay their sales reps out of. This commission method is not used by most others as the RDR was meant to get rid of these sorts of smoke and mirrors.

£150k is low end for an IFA. So, 1% is not unexpected. However, the FCA just recently confirmed that 0.5% is still the dominant figure. So, just because two firms were 1% doesnt mean others would be.

The illustration my parents were sent shows:

Ongoing Charge (Crystallised) per annum 0.5%
Product charge 0.7% per annum

"The advice and product charges in the first table combined are equivalent to the charges shown
below, and not in addition to them."

Credit-Crunched

Anyhow works well for my parents as they liked the chap, and he comes out twice a year to talk then through the performance and answer any questions they have.

I am more happy to DIY myself, and use AJBell. Horses for courses.

dunstonh

The illustration my parents were sent shows:

Ongoing Charge (Crystallised) per annum 0.5%
Product charge 0.7% per annum

Where is the fund charge? its product/platform, fund(s) and adviser charge when it is split into the three components

It is just strange that your parents have something that doesnt match anything any of us have seen from SJP before and doesnt match the SJP website. I know SJP can play around with the initial charge (as one recently dropped their £25k initial charge to match our £2500 - only after he found out what ours was). However, the annual charges are not normally something that can be played with.

Johndonuts

I'm not sure what my parents paid to open this trust, but if I was to invest with St James's Place, they would charge 4% upfront, and there would be a 2% annual management fee. Plus they seem to charge a little over £3 per month for the account it is set up in? I'm not sure if there are any other hidden fees? Hopefully not, but seeing as the trust was only passed to us about 2.5 years ago, until the five years is up, we would definitely incur penalty charges withdrawing the fund.
I think they are a greedy company.
I am going to try and find an independent financial advisor. So far it doesn't seem so straight forward. Looked at ones in my area, but when looking into reviews, they don't always seem so independent. But some advice from 3 of them might steer me in right direction with other investments, and pension planning etc...
Money is nice to have, but investing, and trusting someone to do the right thing by you is a stress.
Anyway, the other trustee has had another 360 and decided he no longer wants to take money out due to large fees...surprise surprise!!!!! So bank of mum stepping in I would imagine instead.

I would like to find a management compnay who don't charge the horrendous upfront fee, but unsure yet if that exists.

SeniorSam

Johndonuts, do be very careful about withdrawals from a Trust, as Trustees are fully liable for any errors in managing the Trust. Also, some Trusts do have specific rules of gifting and lending the assets, so make sure you follow the rules. If unsure, get SJP to explain matters fully to you as they set up the Trust originally. Mistakes can come back to haunt you as many Trustees have found, so do not be pressured into swift action by someone wanting money out of the Trust.
Sam

Rollinghome

The rates for IFAs seem to be substantially higher in London than the rates I see mentioned for elsewhere, as might be expected given the higher overheads and prestige of an expensive City address. When I looked for an IFA some time ago for a relative, the average ongoing fee was 0.9% for a seven figure sum even though all were small firms well out of the City.

I know little of SJP, other than I think all their advisors/partners are/were former IFAs, often having previously run their own businesses, but as it's a national company then I assume their rates to be uniform across the UK; whereas I'd expect small regional companies to charge local rates with quite a spectrum of fee levels and value. I'd expect SJP to appear reasonably competitive in high cost areas but less so in lower cost areas. They wouldn't be the successful business they are if they didn't. Someone likes them.

Just as with many national businesses, such as chain restaurants, they may be considered reasonable in expensive areas but less so compared to small local firms in lower cost areas. Additionally, many people will be willing to pay a premium for a bit of gloss and the reasurance of a well-known name (hence the success of HL).

Getting financial advice is expensive, exspecially over the long term, so buyers need to spend at least as much time researching prices, quality, and what they need and what they'll get both now and in the future, as they would before buying any other very expensive item - as well as being sure the company will be in business for a very long time. (The office of one I checked out is now a funeral parlour. There's a joke there somewhere. )

grey_gym_sock

Rollinghome wrote: »

There's a joke there somewhere.

2 SJP advisors walked into a bar. the doorman took 5% of the cash in their wallets.

Rollinghome

grey_gym_sock wrote: »

2 SJP advisors walked into a bar. the doorman took 5% of the cash in their wallets.

And the rest in certain specialist Soho establishments - or so I'm told.