St James’s Place opinions?

UncleK

I suspect people don't appreciate the compound effect of the management charges that people like SJP apply. However, SJP et al will claim the whole active/passive performance debate is in their favour and of course the huge difference in charges is worth paying - and people will indeed fall for that.
I just did the maths using Fisher's numbers (a similar bandit) and if you start with £1 million and assumed 5% growth - and ignore inflation to keep it simple - and see what it looked like after 25 years. And compared that with a Vanguard passive tracker.
With Fisher, you'd have £1,626,969 and Fisher would have taken £999,529 in charges from you
With Vanguard, you'd have £3,222,576 and Vanguard would have taken £103,686 in charges from you
Okay 5% is maybe too weak, let's try 8%

With Fisher, you'd have £3,431,444 and Fisher would have taken £1,467,912 in charges from you
With Vanguard, you'd have £6,526,242 and Vanguard would have taken £162,166 in charges from you

The numbers with SJP will be similar - it is truly shocking. You'd have DOUBLE the money with someone like Vanguard (assuming you accept the argument that passive investment is equivalent to active investment over the long term - you'll need to do some more reading for that!). But also just look at the fees - that is one of the things that eats into your money not growing - it's funding SJP's or in this case, Fisher's yachts.

aroominyork

Very interesting, UncleK. If you show your workings (doesn't that take you back...?) you will get extra marks.

Cus

 

UncleK said:

I suspect people don't appreciate the compound effect of the management charges that people like SJP apply. However, SJP et al will claim the whole active/passive performance debate is in their favour and of course the huge difference in charges is worth paying - and people will indeed fall for that.
I just did the maths using Fisher's numbers (a similar bandit) and if you start with £1 million and assumed 5% growth - and ignore inflation to keep it simple - and see what it looked like after 25 years. And compared that with a Vanguard passive tracker.
With Fisher, you'd have £1,626,969 and Fisher would have taken £999,529 in charges from you
With Vanguard, you'd have £3,222,576 and Vanguard would have taken £103,686 in charges from you
Okay 5% is maybe too weak, let's try 8%

With Fisher, you'd have £3,431,444 and Fisher would have taken £1,467,912 in charges from you
With Vanguard, you'd have £6,526,242 and Vanguard would have taken £162,166 in charges from you

The numbers with SJP will be similar - it is truly shocking. You'd have DOUBLE the money with someone like Vanguard (assuming you accept the argument that passive investment is equivalent to active investment over the long term - you'll need to do some more reading for that!). But also just look at the fees - that is one of the things that eats into your money not growing - it's funding SJP's or in this case, Fisher's yachts.

Vanguard take over £100k for nothing! They don't even check on your risk profile every year and ensure you have suitable investments. They just take your money.

Eyeful

Yet by them just taking £100k and doing nothing, you still end up with over £3,000,000 extra money at the end!

Yet by them taking over £100k for doing nothing, you end up with over £3,000,000 extra in your pocket!
How is an FA expected to feed their family and afford very expensive things, if you actually get to keep most  of your money for taking all of the risk!

IvanOpinion

zagfles said:

artyboy said:

LHW99 said:

And at least, invested with SJP should reduce the likelihood of their customers being taken in by scammers.

There are, after all,  plenty of people who prefer Waitrose to Aldi / Lidl. They may not be getting any better nutrition as a result, but they like the experience.

To the best of my knowledge, Waitrose (which I do have a fondness for with some items) doesn't charge me if I want to shop in other stores as well.

Nice analogy otherwise though...

Shouldn't be using either Waitrose or Aldi, they both offer a restricted range of groceries. What you need is an IGA (independent groceries advisor) who can look at the whole market.

After all Tesco own brand cornflakes might be the best choice cornflakes for you whereas Waitrose tea might suit your palate better. And there might be some obscure baked beans only obtainable from Uzbekistan which are perfect for you so why restrict yourself to any UK supermarket?  

First time a thread about SJP has made me peckish 

UncleK

aroominyork said:

Very interesting, UncleK. If you show your workings (doesn't that take you back...?) you will get extra marks.

Happy to share my Excel - is it best if you drop me a pm with your email address? And happy to be corrected if my workings are not up to scratch!

aroominyork

UncleK said:

aroominyork said:

Very interesting, UncleK. If you show your workings (doesn't that take you back...?) you will get extra marks.

Happy to share my Excel - is it best if you drop me a pm with your email address? And happy to be corrected if my workings are not up to scratch!

I thought the forum might like to see it - I'm not marking homework at the moment.

UncleK

Cus said:

 Vanguard take over £100k for nothing! They don't even check on your risk profile every year and ensure you have suitable investments. They just take your money.

There is some work to be done in administering a passive fund, but indeed, Vanguard are not offering you any advice. Whether the advice Fisher or SJP is worth the money they charge is a decision for each person to make.

zagfles

aroominyork said:

UncleK said:

aroominyork said:

Very interesting, UncleK. If you show your workings (doesn't that take you back...?) you will get extra marks.

Happy to share my Excel - is it best if you drop me a pm with your email address? And happy to be corrected if my workings are not up to scratch!

I thought the forum might like to see it - I'm not marking homework at the moment.

You don't need a spreadsheet, if the PP just tells us what the charges are good old fashioned maths is simple enough in this example. 

The Vanguard one is easy enough to reverse engineer and seems be assuming a 0.208% total annual charge and no initial or other charges. So the net growth at 5% is 

1,000,000 * 1.04792^25 = 3,222,576

and at 8% is 

1,000,000 * 1.07792^25 = 6,526,243

The Fisher one seems to have initial and/or flat charges so can't work that one out. Well I probably could but the maths is doing my head in so if the PP just tells us what the charges are it'll be easier. 

UncleK

Sure. The Fisher initial charges are:

Initial Adviser Charge of £825

Initial Funding Amount of 2.25% on first £300,000 plus 1.5% on next £200,000 and the 1% on remaining £500,000 giving total of £14,750

Fisher ongoing charges are:

1.51% on their Fisher OEIC B shares (they waive the entry charge)

Annual management fee is 1.5% up to £500,000, 1.25% for £500,001 to £1,000,000 and 1.125% above that.

Custodian fee of £1,400 per year (estimate by me - they say 0.1% to 0.2% and "it depends").

Financial Planning request requiring written advice costs £420 each time (which I assumed zero in my calcs) as I assumed that would be "special" as opposed to regular stuff - but not sure - gave then the benefit of the doubt. Small beer in the scheme of things.

Transaction costs would be extra but also not included.