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

MancJonny

dunstonh wrote: »

Companies that refer to themselves as a wealth management company tend to be restricted and expensive.

The choice is either to DIY or use an IFA. Other options should be eliminated.

Most local IFAs will be fine. Main issue is really costs rather than quality. Some can be greedy. Others reasonable. So, phone a few and find out the costs.

The OP will be in no doubt that the advisers on these forums really do not like SJP. Whether that is justified or not, I don't feel qualified to comment. But the last 3 posts on this thread I came across gives a different perspective:
https://www.pistonheads.com/gassing/topic.asp?h=0&f=92&t=1748556&i=20

All I would add is that, for the majority of people with money to invest, DIY is never really a practical possibility; at some point, a financial advisor / partner / agent / whatever is just going to have to be trusted. Because, let's face it, how would the average punter know when he had found a "good" "independent" financial advisor? If the customer had the kind of knowledge to be able to make that judgement, he wouldn't need an adviser in the first place; he'd be doing the DIY option. And the number of average people who do have that knowledge - or have the time or inclination to acquire it - is, I think, far fewer than is suggested by critics of SJP, Hargreaves Lansdown, and similar outfits.

ColdIron

It's not just a DIY/advised argument. Within the advised space there are a wide range of solutions. Most IFAs would wipe the floor with SJP on charges alone and there is nothing special about their funds. You can access most of them through the funds that the managers run as their day job. Heinz Baked Beans for Harrods prices

MancJonny

ColdIron wrote: »

It's not just a DIY/advised argument. Within the advised space there are a wide range of solutions. Most IFAs would wipe the floor with SJP on charges alone and there is nothing special about their funds. You can access most of them through the funds that the managers run as their day job. Heinz Baked Beans for Harrods prices

Thanks, ColdIron, and no disrespect - but that's not the point that I was making.

dunstonh

The OP will be in no doubt that the advisers on these forums really do not like SJP.

I don't think any of the regulars like SJP. It isnt an adviser issue but a common sense one.

Because, let's face it, how would the average punter know when he had found a "good" "independent" financial advisor?

They won't. However, statistically, the IFA channel has tiny levels of consumer complaints and is generally regarded as reliable.

It isnt just SJP. Single tied and panel based adviser should be disregarded. You should either DIY if you know what you are doing or use an IFA if you do not.

MancJonny

Thank you dunstonh.

From the same forums as above for anyone who is interested in digging a little deeper into this:
https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1022176
https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=937346&i=0
https://www.pistonheads.com/gassing/topic.asp?h=0&f=206&t=1690833&i=0

dunstonh

You need to be wary of some of those threads. They contain a lot of out of date info and a lot of wrong info. The indsustry went through a big change in 2013. The commission was banned (although SJP still work almost like it wasn't. Vertically integrated firms found loop holes that allow them to still mask charges and give totals rather than breakdowns). Lots of IFAs/FAs gave up in 2013 and since then, a number of IFAs have gone FA (restricted) as they failed to meet the new definition of IFA (which also changed in 2013). You can often spot these as they refer to themselves as Wealth management firms. This is an ongoing trend and not yet completed.

We recently took on a new investor. SJP initial fee was £25,000 compared to our £2,500. The SJP sales rep quoted AMC as the annual charge and not OCF and TC to try and make theirs appear cheaper annually. (AMC should not be used on investments apart from life funds and pension funds).

On another case, we transferred an SJP pension out to an alternative and it saved over £330,000 in charges over the term.

A recent trend noticed by a number of IFAs is that SJP are using investment bonds more and placing them in trust when there is no real reason to use a trust. This method makes it very hard, often impossible, for an IFA to get the money out and leaves the person stuck with SJP.

SJP will beat an IFA on quality of the material. They have slick printed brochures for everything. Whereas an IFA will be using their office printer and stapling it together. IFAs cannot have glossy material because of the different providers/products that are in use.

People who use SJP tend to be very loyal to SJP. Often coming across brainwashed. One of our compliance officers worked for a short while for SJP at their head office and he said it was cult like and everyone is fed info to make SJP look good. That is not uncommon with single company salesforces. They get spoon fed and trained how to sell and if they spend too long there, they are effectively brainwashed. It often leaks onto their clients.

MancJonny

Thanks again, dunstonh.

The point I was making is the over-estimation (in my view) by the financially savvy, of the ability of what you might call "the average punter" to go DIY successfully, or to recognise good financial advice if / when he received it from an IFA (or anyone else, for that matter).

Looking through the threads on these forums, I can see that this is a perennial topic of discussion. So it does not come as a surprise to see that exactly the same point that I made above was made by cogito on this thread:
https://forums.moneysavingexpert.com/discussion/comment/75775568#Comment_75775568

“Two questions at once here:

Should you pay an IFA or DIY. An endless debate on this forum and only you can decide. Even if you have an IFA it is still good to become well informed about things financial and reading this forum is one way to improve your knowledge and help your decision making process."
Originally posted by Albermarle

To which cogito replied:

”That depends on whether or not you are able to distinguish between those who know what they are talking about and those who don’t."

This is what makes reading things such as John Kay's The Long & the Short of It so annoying. He constantly bangs on about investment DIY, making it sound so simple, as if anyone with a modicum of intelligence can pretty much ditch the need for financial advice and instead go-it-alone, raking in annual returns (pre-inflation) of 7-8% (I wish!) on their investments. You do wonder what planet the man lives on.

I'm sure that Kay, as a leading economist and investor (and author), knows what he is talking about; but, as I said earlier in this thread, for many people investment DIY is simply not a practical possibility, so that means taking advice - and for most people that will mean, at some point, taking a "leap of faith" in a financial adviser, when in fact the client probably would not know - and could not really be expected to know - if the advice proffered was bad, or, if good, could be bettered. It's a bit Catch-22, isn't it?

Some level of risk in all of this is, of course, inevitable. But, reading the advice that those-in-the-know trot out to joe average, I do believe that all really savvy advisers and people with financial and investment know-how overestimate to a quite horrible degree the capability and willingness of the rest of us to either go DIY or even (beyond the absolute basics) to distinguish clearly between good advice and bad.

There is no doubt in my mind that this goes a very large way to explaining the success of forums such as this one, as Albermarle stated above. Long may it continue!

lpgm

@MancJonny - Do you invest? How do you do it?

fred246

Anyone that has studied for a degree should quite easily acquire enough investment knowledge to not need an IFA. I would say the knowledge needed would be equivalent to studying for an A level.

bowlhead99

fred246 wrote: »

Anyone that has studied for a degree should quite easily acquire enough investment knowledge to not need an IFA. I would say the knowledge needed would be equivalent to studying for an A level.

The average person with a degree only has three or fewer A levels and did not achieve an A grade in all of those A levels despite them being the subjects for which they had the greatest aptitude or level of interest.

I know many people who have a degree in one subject but would probably not get a top grade GCSE in another if it was an area they didn't enjoy, let alone an A level, let alone having the spare time to study for one.