St James’s Place (SJP) has been criticised for referring back to its client satisfaction rate as it hits back at a number of complaints about its high charges.
The Sunday Times included a case study of a couple seeking to exit the FTSE 100 manager due to its high fees.
Mark Everett, 62, and his wife Judith, 63, told the paper that they are willing to pay over £11,000 to take their £509,000 in pension savings elsewhere.
An SJP spokesperson said: “When investing with the objective of building wealth it’s important to remember that this is a medium to long-term commitment. Mr and Mrs Everett’s investments grew by nearly £45,000 – around 10% – after charges during six years with SJP, despite over half of the total amount being invested for less than two years.
“They received regular contact and advice from their partner over this period. All charges, including early withdrawal charges, were set out very clearly in the suitability letters provided to the clients prior to investing, as is our standard practice, and were confirmed again last year on several occasions before the investments were moved. All pension transfer requests were actioned promptly – within a maximum of five working days – and in line with instructions, with the final payment and all relevant paperwork being sent to their Sipp provider in April.”
Client satisfaction surveys don’t prove much
The SJP spokesperson added that “the fact that 89% of our clients say they are satisfied or very satisfied with their relationship with SJP is a powerful endorsement of our model”.
However GBI2 managing director Graham Bentley said: “Value can only be assessed by a customer if they have a sense of the comparative, eg costs across the advice industry, financial planning’s lack of a need for a product to be provided rather than advice per se, and the whole of market alternatives that independent advisers are required to research.
“An independent survey of SJP clients after they’re familiarised with the wider opportunity set available might deliver different results.”
Secret dossier
The Sunday Times also claimed to have seen a “secret dossier” that suggests its advisers are encouraged to downplay the impact charges can have on returns.
A document leaked to the paper revealed an illustrated guide with nine graphics outlining how SJP advisers are shown to answer concerns about the firm’s fees. A further two illustrations represent how they appear to be just a small piece of the overall investment.
Another document outlined the commissions SJP advisers can receive for selling investments and the costs they can incur if they fail to sell enough in a year.
An SJP spokesperson said it is “categorically wrong to say or imply in any way” that the firm tries to underplay how it communicates charges.
“We believe in the value we add and in communicating the cost of investment clearly for every client and that clients should understand the total fees they will pay prior to investing. The ‘Setting out our charges and costs’ document is clearly not how we disclose to a client the individual charges a client will pay. It is instead simply an aide memoir introducing how SJP’s charges work that partners can use should they wish to.”
SJP’s business model came under the microscope last month after it received allegations of forgery and mis-selling by an adviser at the firm, which it denied.
Last month, SJP also came under fire last month after the newspaper revealed its high fees could see clients paying almost £1m in fees to look after £1m worth of savings over a 20-year period.
While an analysis by Portfolio Adviser found that SJP is not alone in wiping off vast sums of client’s savings, the adviser has continued to receive complaints from its clients.
