Large sum to invest, but querying if SJP is good value

Grafik

Hi there.  I am due to retire at the end of the year and in addition to pensions etc. I have a large lump sum I wish to invest.

Current situation

• I am 53 and will have no income from the end of the year
• House is owned outright with no mortgage or debt
• I have apx £1.1m in cash deposits
• I have a further £200k spread in fixed term savings (1/2/3 yrs) to provide income until pension drawdown is possible
• Personal pension investments of apx £1.2m
• Premium bonds £100k (wife and myself)
• ISAs £40k

Proposal

• My pension is invested with SJP and I have been happy with the service/performance
• I intend to invest apx £750k of the cash deposits to provide capital growth and income
• SJP proposed a split of £250k in each of 3 products : a Unit Trust, an Onshore bond and an Offshore bond.  
• I follow the logic of the split and the three products
• My issue is with the growth projections and the impact of fees:-

1. The initial investment fee is 1.67% (not sure if that is low or high?)
2. The ongoing management fees vary by product but are significant ~1.8%pa.
3. The 'intermediate' growth rate used in their illustrations for Polaris 2 is 4.5%, but after fees etc. the annual growth rate is 2.7%

Question

I'm not naive - I realise there are fees attached to these things and that the growth rates used in projections are somewhat governed by the FCA..but on the face of it, I am incurring investment risk & fees for minimal returns (I could get much more than 2.7% growth in deposit accounts without risk).

Is this a relatively normal scenario?  The total fees across 3 products over 10 years are ~£200k!  I have been happy with my SJP pension investment, but I am wondering if I should evaluate other options here.

Isthisforreal99

I doubt you will find many endorsements for SJP around these parts. You would be literally throwing money away on fees.

TadleyBaggie

As above, last company I would consider using.

MeteredOut

Search for SJP on these boards. The only positive feedback I've read is from those already invested, and, to me, the posters in those cases are suffering for an investors version of Stokholm Syndrome.

Their Polaris fund has been mentioned here before too. It seems that the "better than the market" graphs they put in front of their hostages customers are, at best, disingenous.

As you say, is 2.7% growth worth it, for all that risk?

Rather than ask if you should invest new funds with SJP, I think you should be asking whether you can move your pension away from them.

You might want to top up your Cash ISAs whilst the allowance is £20K too.

dunstonh

Large sum to invest, but querying if SJP is good value

You mean, one of the most expensive distribution channels in the UK?

My pension is invested with SJP and I have been happy with the service/performance

Have you compared the performance?   

SJP proposed a split of £250k in each of 3 products : a Unit Trust, an Onshore bond and an Offshore bond.  

No pension or ISA?

1. The initial investment fee is 1.67% (not sure if that is low or high?)

on £750k that is £12,525.   About 2-3 times more than what you should be aiming for.

1. The ongoing management fees vary by product but are significant ~1.8%pa.

More than double you should be aiming for (with an adviser).  

1. The 'intermediate' growth rate used in their illustrations for Polaris 2 is 4.5%, but after fees etc. the annual growth rate is 2.7%

Illustrations do not reflect reality.  The FCA sets the projection rates on illustrations (by their underlying assets).    

Polaris 2 has only been running for 2 years and is 60% equities.  It's performance in that time is virtually identical to Vanguard Lifestrategy 60, which costs 0.22% (add on 0.15% for platform and a typical adviser charge of 0.50% on that value, and you have 0.87%).  It has also underperformed many of the IFA Model portfolios (e.g. Aberdeen Index MPS3 and Timeline Tracker 60 - both of which are cheaper than Vanguard and that was me just picking two popular ones with similar underlying passives).

I'm not naive - I realise there are fees attached to these things and that the growth rates used in projections are somewhat governed by the FCA..but on the face of it, I am incurring investment risk & fees for minimal returns (I could get much more than 2.7% growth in deposit accounts without risk).

Not somewhat governed.  The FCA mandates what should be used.  They are designed to be pessimistic. In two years, Polaris 2 has grown 31.56%.  (Timeline 35.93% and Aberdeen 33.05%, VLS60, 31.38%).    What savings account has done that?     How does that tie in with the 2.7% projection?

Is this a relatively normal scenario?  The total fees across 3 products over 10 years are ~£200k!  

illustrations don't adjust the charges over the years for inflation and the fees are not that figure.    The fees are lower than those as illustrations show the impact of fees.  i.e. if none of the fees were taken and invested at x%, then the amount would be circa £200k.

SJP are expensive and you can get half that pretty easily with an IFA but everything has fees.  Ironically, savings accounts are likely to be equally as expensive.   The net interest margin on savings as almost the same as SJP fees.   The difference with savings is you are not told what the charge is.   With savings, the charge is implicit (hidden).  With investments, it is explicit (disclosed).   

The NIM drops as interest rates lower and increases as they get higher.  Here is the FCA data:

Savings net interest margins (NIMs) of our sample of firms increased rapidly between October 2021 (0.58%) and March 2023 (1.78%), before flattening and then declining slightly between July and September 2023 to 1.56%. This was echoed by increases in overall firm NIMs, which grew from 2.07% in 2021 to 2.76% in 2023.

I have been happy with my SJP pension investment, but I am wondering if I should evaluate other options here.

The choice should be between DIY or IFA.   Not an expensive tied salesforce.  

kermchem

So the OP has been investing their pension for several years with SJP and paying for advice, and they have £40k total in ISAs (not clear if that is OP or OP plus OH). More in premium bonds than ISAs.  Says it all really. 

ColdIron

Historically I understand that SJP onshore/offshore bonds are difficult or costly to exit. You might read the paperwork

The Polaris funds are a welcome new, though belated, addition, they have had to bend to the inevitable. Nothing special but an improvement

In short: good advice, average or mid level products and expensive

Grafik

MeteredOut said:

Search for SJP on these boards. The only positive feedback I've read is from those already invested, and, to me, the posters in those cases are suffering for an investors version of Stokholm Syndrome.

Their Polaris fund has been mentioned here before too. It seems that the "better than the market" graphs they put in front of their hostages customers are, at best, disingenous.

As you say, is 2.7% growth worth it, for all that risk?

Rather than ask if you should invest new funds with SJP, I think you should be asking whether you can move your pension away from them.

You might want to top up your Cash ISAs whilst the allowance is £20K too.

Thanks - already have full ISA allowances for this financial year.

Grafik

dunstonh said:

Large sum to invest, but querying if SJP is good value

You mean, one of the most expensive distribution channels in the UK?

My pension is invested with SJP and I have been happy with the service/performance

Have you compared the performance?   

SJP proposed a split of £250k in each of 3 products : a Unit Trust, an Onshore bond and an Offshore bond.  

No pension or ISA?

1. The initial investment fee is 1.67% (not sure if that is low or high?)

on £750k that is £12,525.   About 2-3 times more than what you should be aiming for.

1. The ongoing management fees vary by product but are significant ~1.8%pa.

More than double you should be aiming for (with an adviser).  

1. The 'intermediate' growth rate used in their illustrations for Polaris 2 is 4.5%, but after fees etc. the annual growth rate is 2.7%

Illustrations do not reflect reality.  The FCA sets the projection rates on illustrations (by their underlying assets).    

Polaris 2 has only been running for 2 years and is 60% equities.  It's performance in that time is virtually identical to Vanguard Lifestrategy 60, which costs 0.22% (add on 0.15% for platform and a typical adviser charge of 0.50% on that value, and you have 0.87%).  It has also underperformed many of the IFA Model portfolios (e.g. Aberdeen Index MPS3 and Timeline Tracker 60 - both of which are cheaper than Vanguard and that was me just picking two popular ones with similar underlying passives).

I'm not naive - I realise there are fees attached to these things and that the growth rates used in projections are somewhat governed by the FCA..but on the face of it, I am incurring investment risk & fees for minimal returns (I could get much more than 2.7% growth in deposit accounts without risk).

Not somewhat governed.  The FCA mandates what should be used.  They are designed to be pessimistic. In two years, Polaris 2 has grown 31.56%.  (Timeline 35.93% and Aberdeen 33.05%, VLS60, 31.38%).    What savings account has done that?     How does that tie in with the 2.7% projection?

Is this a relatively normal scenario?  The total fees across 3 products over 10 years are ~£200k!  

illustrations don't adjust the charges over the years for inflation and the fees are not that figure.    The fees are lower than those as illustrations show the impact of fees.  i.e. if none of the fees were taken and invested at x%, then the amount would be circa £200k.

SJP are expensive and you can get half that pretty easily with an IFA but everything has fees.  Ironically, savings accounts are likely to be equally as expensive.   The net interest margin on savings as almost the same as SJP fees.   The difference with savings is you are not told what the charge is.   With savings, the charge is implicit (hidden).  With investments, it is explicit (disclosed).   

The NIM drops as interest rates lower and increases as they get higher.  Here is the FCA data:

Savings net interest margins (NIMs) of our sample of firms increased rapidly between October 2021 (0.58%) and March 2023 (1.78%), before flattening and then declining slightly between July and September 2023 to 1.56%. This was echoed by increases in overall firm NIMs, which grew from 2.07% in 2021 to 2.76% in 2023.

I have been happy with my SJP pension investment, but I am wondering if I should evaluate other options here.

The choice should be between DIY or IFA.   Not an expensive tied salesforce.  

Thankyou for the very full response.  I already have a personal pension of more than £1.2M and full ISA allowances for the current year have been used.  I plan to self-invest in ISA's moving forwards from my own remaining cash deposits.

Grafik

kermchem said:

So the OP has been investing their pension for several years with SJP and paying for advice, and they have £40k total in ISAs (not clear if that is OP or OP plus OH). More in premium bonds than ISAs.  Says it all really. 

I appreciate your perspective, but there is lots of background info which is relevant.  My SJP pension has had no ongoing investment over the past few years - it is just the accumulated pot of various previous workplace pensions...I have an existing pension which my employer contributes to with Aviva.  (given my earnings and total pension pot, there is almost no point in me contributing personally to my pension).

It was only a few months ago that the sale of my company meant that I could pay off my mortgage (and retire) and generate the large cash lump sum....before that, there was not a huge amount of discretionary savings each month (and any spare cash was used to reduce the mortgage).  The ISAs & premium bonds were taken out as soon as I received the cash lump sum...so in other words, I couldn't do it sooner as there was no spare cash...and any above spending was used to reduce mortgage.

MEM62

Is SJP good value? In short - no.