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

Johndonuts

What's the difference between an SJP advisor and a leech?
After you die, a leech stops sucking your blood.

Johndonuts

Why won't sharks attack SJP advisors?
Professional courtesy.

Johndonuts

How many SJP advisers does it take to screw in a lightbulb?
One to hire a lightbulb installer to do it and charge you 5% of your assets each year.


I'll stop there. ;-)

ivormonee

I see I've stumbled on the St. James' joke page!


I don't know much about St. James' Place other than it rings an (alarm) bell! But I'd be interested to ask, and this may help the OP, myself and others, what funds do they have and how does the risk-adjusted performance compare to their peers.


For example, if they have, say a mixed asset portfolio type fund, such as an 80% equity-based fund, then how would that compare (after all charges taken account of) to something similar in their peer group, for example Vanguard LS 80? Looking at five consecutive discrete years, or annualised performance over at least that timeframe, is there a consistent pattern in under/ over performance. It's this sort of information that, for me at least, would indicate whether the charges (which at first glance do sound rather extortionate) are justified.


It boils down to the usual notion: most people, or so I understand, would be happy to pay a (hypothetically) 5% annual charge for a net return of 5% (10% - 5% charges) rather than a 1% charge for a 2% return (3% - 1% charges) where the level of risk is at the same level.



Addendum: the trouble is, the more you look, the more you can't find this scenario playing out on a consistent basis - just about everyone/ thing reverts to the mean in the long run.

Johndonuts

The fund we have stands at around £300,000 currently, maybe a bit more. The hope is to make around 7% per annum, but this can fluctuate. It is medium risk. Some of it was explained to us last year, but there are bits I am not clear on. And as I was not invited to the last meeting with the all new fund manager, I only got a few minutes on the phone. I will have to have a conversation with him at some point to ask questions. Although when asking questions by email he seems to gloss over stuff, this company does not fill me with confidence. This new fund manager went straight to family members after my email to him and asked for information I had not asked him for, which is ridiculous behaviour.
Anyway I would not invest in this company, I'm a bit annoyed about charges and the sharing of information...even if they are good at what they do.

Malthusian

ivormonee wrote: »

It boils down to the usual notion: most people, or so I understand, would be happy to pay a (hypothetically) 5% annual charge for a net return of 5% (10% - 5% charges) rather than a 1% charge for a 2% return (3% - 1% charges) where the level of risk is at the same level.

We're past the event horizon of hypotheses there, where the laws of physics have become so warped that no useful information can emerge. Non-hypothetically, we all know that anyone who told you they charge 5% per annum because they're capable of outperforming the market by 7% per annum is scamming you. That level of outperformance is simply impossible except by dumb luck.

On the other hand it is possible to charge 0.75% per annum and outperform by 0.75% per annum, at least in certain sectors, so somewhere in between those two numbers there must be a point where annual fund management charges become blatantly unreasonable.

There is no evidence at all that SJP's charges of (typically) 2 - 2.5% per annum are compensated for by outperformance. SJP's funds are dogs.

ivormonee

Yes, that's right, a point I highlighted in my original post.

BritishInvestor

Credit-Crunched wrote: »

I would check this, from what I have seen, it is either a 4% upfront fee or charges for the 6% exit? Not both.

It's 5% initial for ISA type products with no early exit fee, and 0% and 6% sliding scale for pensions etc, IIRC

BritishInvestor

Malthusian wrote: »

The idea that the early surrender penalty "isn't really a cost because I have no mention of selling" ignores the fact that the majority of SJP clients find out how eye-watering the charges are within six years, move their funds to DIY or an IFA, and take the hit of the exit charge. So in most cases it is an explicit cost.

If you somehow manage to not notice how high the charges are and keep funds with SJP for more than six years then you pay via the inflated annual charges instead. They literally have you coming or going.

Not sure how true this is. I believe their average client stays for 14 years. Also not sure how much more expensive they are than a typical IFA when comparing apples with apples.
I've seen average advice IFA charge between 80 and 90 bps from more than one source. Funds are around 60bps and platform 30bps giving 1.8% all in. Are SJP that much more expensive? (of course you can argue they should be cheaper due to their restricted nature)

BritishInvestor

ivormonee wrote: »

I see I've stumbled on the St. James' joke page!


I don't know much about St. James' Place other than it rings an (alarm) bell! But I'd be interested to ask, and this may help the OP, myself and others, what funds do they have and how does the risk-adjusted performance compare to their peers.


For example, if they have, say a mixed asset portfolio type fund, such as an 80% equity-based fund, then how would that compare (after all charges taken account of) to something similar in their peer group, for example Vanguard LS 80? Looking at five consecutive discrete years, or annualised performance over at least that timeframe, is there a consistent pattern in under/ over performance. It's this sort of information that, for me at least, would indicate whether the charges (which at first glance do sound rather extortionate) are justified.


It boils down to the usual notion: most people, or so I understand, would be happy to pay a (hypothetically) 5% annual charge for a net return of 5% (10% - 5% charges) rather than a 1% charge for a 2% return (3% - 1% charges) where the level of risk is at the same level.



Addendum: the trouble is, the more you look, the more you can't find this scenario playing out on a consistent basis - just about everyone/ thing reverts to the mean in the long run.

It's very tough to do, SJP benchmark their portfolios against ARC, but the ARC volatility bands are pretty wide, so it's not easy to compare risk adjusted returns. Furthermore, my understanding is that the portfolios do not automatically rebalance, so a typical investor may not see these exact returns.


Going slightly off topic, a lot of "next gen" financial planners believe the "value add" they provide is not the investment management (which is effectively commoditised) but the comprehensive planning they do with clients. They therefore tend to construct a globally diversified portfolio containing a mix of inexpensive funds such as Vanguard and Dimensional. Unfortunately, these planning firms lack the marketing clout of the big boys, so message gets across one client at a time.