St James’s Place director of investments Rob Gardner says Neil Woodford wouldn’t have passed muster under the FTSE 100 wealth manager’s new ESG framework which now has “real bite”.
Gardner has been leading the charge on the firm’s modernisation push, which includes sharpening its focus on environmental, social and governance factors and making sure its costs and charges are clearly communicated. He joined the wealth manager in January 2019 from Redington, the pensions consultancy he founded in 2006.
In the year since his arrival the wealth manager has seen its reputation take a hit following a series of scandals, including its controversial cufflinks and cruises sales perks coming to light and its ties with Woodford whose fund business imploded.
Woodford would have gotten the chop under SJP’s new ESG framework
Speaking to FTfm, Gardner said SJP has been monitoring fund managers’ ESG credentials since 2014 but claimed it now has “real bite” to its efforts since pledging to yank money from any manager that refuses to sign up to the UN’s Principles for Responsible Investment by the end of the year.
He said Woodford wouldn’t have made the cut under the group’s new ESG framework, noting “he was one of the worst-rated managers” on SJP’s internal rating system.
SJP came under fire for repeatedly defending Woodford despite growing concerns around his performance and the liquidity of his funds. In late May the wealth manager said it would be sticking by Woodford, who at the time ran £3.5bn in segregated mandates, only to reverse this stance a week later after the Woodford Equity Income fund had suspended.
Gardner told FTfm that it was poor governance and not just poor stock picking that ultimately led to Woodford’s downfall.
Gardner denies SJP is being dragged into race to the bottom on charges
SJP’s newly minted director of investments also defended its charging model, which has been lambasted for being one of the most complex and costly in the industry including by one of its own non-executive directors, Helena Morrissey.
Investors are charged a 5% entry fee in addition to annual fund charges which in some cases are as high as 2.5%.
Gardner told the paper that SJP’s entry fees are amortised over time as a way of incentivising clients to invest over the long term and said total fees need to be seen in the context of the overall value they provide since they include both investment management and financial advice.
But he admitted the wealth manager wants to do a better job of breaking down its fees and explaining them to investors.
He denied that SJP was being dragged into a race on the bottom on charges following a push to expand its low-cost investment options. Last month the wealth manager announced it would be launching a range of low-carbon passive solutions in the next 12 months, developed by Gardner.
The wealth manager has been facing increased competition from new entrants like Schroders Personal Wealth and passives giant Vanguard, which announced it would be pushing into the UK advice market earlier this year.
But Gardner said the move reflects the fact that SJP is “looking to the future and making sure we have the right components to combine for younger clients”.
