St James’s Place under scrutiny: what do its customers say?

Last year, Matthew decided to put half his pension into an annuity provided by the wealth manager St James’s Place. But, after the transaction went through, it looked like a chunk of money had just disappeared.

“When I had all the figures, they simply did not add up,” he says. “There was about £4,500 missing.”

Several months later, Matthew, 70, from Oxfordshire, who — like all of the SJP clients in this piece — asked the FT not to use his real name, discovered the lost money was an income tax charge, which neither he, nor his financial adviser, had been expecting. “That is when I threw my toys out of the pram,” he says.

Although he had been happy with the service SJP had previously provided, he said the fact that he and his adviser were surprised by the extra charge was not acceptable.

“I paid SJP quite a lot of money, directly and indirectly, and what I expect for that is really competent advice.”

He was also disappointed with the firm’s reaction which, instead of a giving him a refund, was to send him an unwanted hamper from Fortnum & Mason. 

Before he withdrew his money recently, Matthew was among the nearly one million people whose savings and investments are managed by St James’s Place, the UK’s largest wealth manager. The company, founded in 1991, prospered through the 1990s and 2000s, gaining clients and assets and eventually joined the FTSE 100.

But in the past year the wealth management sector has started to undergo a big shift. New regulations introduced last summer, called the Consumer Duty, shone a light on so-called “client outcomes”, forcing firms to act in good faith towards customers, avoid causing foreseeable harm, and enable customers to pursue their financial objectives.

The impact of this has already been seen as the regulator has begun to “flex its muscles”, says Ben Bathurst, an analyst at RBC Capital Markets.

These regulations have had a major impact on SJP, which was warned by the Financial Conduct Authority last year that the adjustments it made ahead of the Consumer Duty being introduced — a fee cut for around 65,000 clients — did not go far enough. The company then announced an overhaul of its entire fee structure, including the removal of much-maligned exit charges for some products. 

SJP was subsequently forced to set aside £426mn for potential client refunds over claims that some customers did not receive the ongoing services they had paid for, such as annual reviews.

The company’s share price plunged, dropping 60 per cent in 12 months. This month, it was relegated from the FTSE 100.

Now, after a year of tumult, including management changes, regulatory intervention, changes to the network of advisers and with questions increasingly asked about the value of high-fee intermediary advisers, FT Money decided to take a close look at what the firm’s clients think about the service they receive.

We asked readers to share their experiences of the wealth manager. After receiving scores of responses, we’ve spoken to more than a dozen clients and advisers at SJP about the firm and the issues that have surrounded it, and have seen detailed correspondence between clients and the wealth manager over the issues raised.

While many clients had positive experiences with the group, others have been disappointed with the level of service they received. For instance, one former client told Money she felt rushed in her meetings with her adviser, some of which she had to chase them for, and never felt the fees were explained to her properly.

It is clear that Mark FitzPatrick, SJP chief executive, who joined the group late last year, has work to do to sharpen up the company’s treatment of clients.

SJP may be the biggest in its sector, but the mixed experiences of its clients will throw up instructive questions for other firms with room to improve customer satisfaction. 

As a client, it can be hard to know what level of service to expect, and where to start if you believe your wealth manager has not fulfilled what you require of them.

The first action for any customer of a wealth manager who does not think they’ve received the service they paid for is to complain to the company.

If you find yourself in such a position, it is important to keep written and email correspondence to document what happened to put it to the company and the Financial Ombudsman Service if you choose to escalate the complaint. Part of the reason SJP had to put so much money aside for client refunds is that, due to its legacy IT system, it was unable to prove whether or not customers had received services such as annual reviews.

Those thinking about making complaints should be aware that claims management companies have been heavily advertising their services to aggrieved clients of SJP. The FCA has warned against using these firms, as they can charge up to half of compensation received.

If a customer does not feel their complaint has been adequately dealt with internally, they can lodge a complaint with the FOS, a free dispute resolution service which can order firms to pay compensation.

Not all SJP’s clients we spoke to reported negative experiences. When Robert and his wife were looking to return to the UK for their retirement after living in Brussels, they wanted some help managing their savings.

A former civil servant and director-general for the European Commission, Robert wanted someone to manage a portfolio of money in an Isa as well as trusts for tax-planning purposes, but wasn’t sure who to ask until they attended a an SJP seminar. “We went along and were impressed,” he says. “That was in 1996 and we’ve been with them ever since.”

Robert and his wife have £2.2mn with SJP across trusts and Isas and are happy with the level of service they receive. 

“Their attitude was not ‘give us your money and we will make you a quick fortune’. They were longer-term people, they were highly respectable,” he says.

Another reader, in her 70s, wrote that, over the past 14 years, she had very positive experiences with the wealth manager. “My portfolio has grown, which is satisfying — but it is the relationship with my St James’s [Place] partner and the trust we have in him which is more satisfying.”

Mary, who is from London, had a less positive story to tell, however. She says a friend introduced to her to an SJP adviser.

“She came to my house and explained that she had a young son and said if my pension did not make money, she did not make money and he didn’t get to go to school.”

Mary was quite happy to work with this adviser, and felt some camaraderie: “a little bit of female power and all that”.

However, the relationship deteriorated. Mary needed to start chasing her adviser for some meetings.

“Each review was . . . rushed and I was blinded by the speed and lack of explanation,” she says. “[The] fees were never explained to me. But I thought they were working for me, so I trusted them.”

But after talking to an independent financial adviser, who explained how her pension worked “in very simple terms”, she became uncomfortable with the level of fees she was paying SJP.

She decided to move her pension, but was sent conflicting messages about whether she would incur early withdrawal fees and it took months for her pension to be moved out of the company’s funds.

“I would never have signed anything [over to SJP] if I had known it was not flexible.”

Some of SJP’s issues are not limited to clients. Mark, who recently left his advisory practice after nearly a decade, said SJP has largely been a positive experience and helped him train in the profession.

But he said he came under pressure from the company over the loan scheme, which SJP would give partners in order to buy clients from retiring advisers, and the need to win clients to make it economical. 

When advisers in SJP’s network retire, they typically sell their client books to other SJP advisers, who use loans facilitated by SJP in order to do this. The wealth manager guarantees some of these loans, which are drawn from a consortium of external banks.

Rising interest rates contributed to a doubling last year in the total value of underperforming loans extended by SJP to its advisers.

“When I started, you’d agreed to this debt, with no real network of people as clients,” says Mark. “We were tied into this loan and [were] not getting quality leads, which would help us pay back the loan. If you don’t make any money, you see your loan increase. Any money you make pays off that previous month’s fees.”

He said this resulted in some questionable practices around the fees that clients were charged, as advisers sought to make as much money as possible to help repay their loans.

“To get the most from the fees, we would have to shift investments around to make them cheaper,” he said. “It wasn’t about putting clients into dead funds, but there were cheaper funds, which meant we kept more of the fees.”

This meant that their diversification was reduced, “sometimes from seven funds to two or three funds”, he says.

SJP said in a statement: “We take our commitment to client satisfaction very seriously and always strive to do the right thing through the services and support we provide. The anonymous nature of the comments means we are unable to investigate what took place in these individual cases.

“We regularly seek feedback from clients and surveyed over 61,000 of them earlier this year. This feedback showed high satisfaction levels of 82 per cent, and 79 per cent said they would recommend SJP. We also have an ongoing dialogue with over 3,000 clients through our client community, helping us to better understand how they are feeling and their evolving needs.”

Five years ago, SJP was forced to overhaul its “pay and perks” after criticism of the luxury cruises and expensive cufflinks given to advisers who hit certain revenue targets. The company is also known for wining and dining clients, who are taken to Ascot and sent champagne.

Frank — an adviser who has worked for SJP for eight years and describes it as a “very caring place, like a big family” — tells FT Money he has been frustrated by the negative coverage of the rewards.

“A lot of my clients are in banking. When they get their bonuses, we help manage them. As we’re technically self-employed, we don’t get bonuses, but if we made a certain production level [of sales] then SJP would acknowledge the work you put in and you might get awarded a set of Mont Blanc cufflinks, which were about £200,” he says.

“So I’ve got clients who make six-figure bonuses and yet we get criticism for going out of our way to service our clients.”

For John, 70, from London, the changes SJP has already enacted have been positive. He has been with the manager for more than a decade and has been happy with the service he has received from the three advisers he has had in that time.

“I approve of the fact that SJP has reacted to pressure . . . to be more transparent.”

As the UK population ages and the transfer of wealth between the boomer generation and their children gathers pace, the number of people looking for financial advice is expected to rise. This, combined with a growing interest among savers in investing their money, is a “cause for optimism” among wealth managers, says Chris Kroeger, head of asset and wealth management in the UK for consultancy Alpha FMC.

It is vital for those seeking financial advice for the first time that they understand how they are being charged and what services are being provided — and most importantly what they should expect from their adviser in the future.

Meanwhile, if SJP is to take advantage of the growing number of people wanting advice, it must adapt to the new regulatory environment. It has already begun to do this with the fee overhaul due to come into effect next year. But more is likely to come.

This article has been amended to correct that Ben Bathurst is an analyst at RBC Capital Markets