A secret diary published in the Sunday Times by a former employee, reveals SJP advisers earn £250,000 a year before bonuses when managing about £70m for 700 clients from which the firm makes £1m a year in fees.
If sales targets were met, advisers received huge rewards, ranging from Montblanc pens and Mulberry bags to all-expenses-paid holidays which were disguised as the company’s annual, week-long overseas conferences where the firm would charter planes and take its people out to an entire luxury cruise liner.
A tiered system of cufflinks for men and broaches for women represented a status symbol among the firm with principal partners having the most elaborate, diamond-encrusted accouterments.
The anonymous adviser described its annual fees of 2% plus initial charges of 5% for any investment outside a pension. “Of course, we presented everything to [our clients] — but I never really believed they knew the full impact.”
The adviser said they had left the wealth manager with mutual agreement following a customer complaint.
“Despite the rewards, I grew to hate the job. I found I couldn’t keep pretending to customers that they were getting the best value. I felt we were not advisers; we were sales people, and I felt I was not acting in their best interests.”
‘Commission by another name’
CWC Research founder Clive Waller said the revelations embarrass both SJP and the Financial Conduct Authority and its predecessor.
Waller said: “It really exposes the utter incompetence of the FSA in allowing a commission model to survive post RDR especially for SJP. It makes a mockery of the regulations. The FCA is equally culpable in allowing this to continue.”
The culture is “straight out of Abbey/Allied Dunbar”, where SJP’s founders came from, and is “nothing to do with proper advice”, he said. “The interesting aspect for me is contingent charging, which the FCA want to ban – and rightly so…Contingent charging is a fee payable to the salesperson in the event of a sale and only then. It is commission by another name.”
The FCA did not respond to requests for a response.
SJP boss pledges to review incentives
SJP has contacted partners of the firm and launched an internal review of its recognition structure, a spokesperson said when contacted about the Sunday Times article.
In an email to the partnership, seen by Portfolio Adviser, chief executive Andrew Croft said the firm would be examining existing incentives structures, including its overseas events.
“Over the past couple of years, the structure of these events has changed significantly and they play an important role both in building connectivity across the firm and in promoting best practice, developing business owners and sharing client solutions.” But Croft said he would be discussing the events with partners over the coming months.
Last month, The Sunday Times reported it had seen a “secret dossier” that suggested SJP advisers are encouraged to downplay the impact charges can have on returns.