When people look back, in decades to come, at the history of financial advice, I really do believe they will view the last few days as a turning point.
On the face of it, the fact that St James’s Place is scrapping exit charges is hardly earth shattering. For a start, it won’t happen for another two years, and the firm has also announced an increase in its ongoing advice charges.
But what has become very clear to me in recent days is that things are finally about to change.
Where SJP leads, others will follow
Remember, SJP isn’t just any advice firm. It’s by far the the biggest in the UK, with well in excess of 900,000 clients, and more than 4,600 advisers. At the last count, it had more than £150 billion under management.
It’s certainly not the most expensive advice firm, but because of its sheer size, SJP has been exposed to far more scrutiny than any of its rivals. And where SJP leads, the UK financial advice profession is likely to follow.
More change is on the way
The exciting news is that SJP is changing. I have it on good authority that the ending of exit charges is the first of many positive developments we can expect to see in the coming months.
For example, despite being a long-time champion of active fund management, I understand that SJP will be offering a range of low-cost passive funds within the next nine months or so. There will also be a greater focus on attracting and retaining talented young advisers.
In time, I expect further cuts to fees and charges, and eventually an end to asset-based entry fees, which can surely no longer be justified with the new consumer duty.
Financial advice should be for everyone
I also hope that SJP will start to explore ways of serving a wider section of the population — not just the very wealthiest. Even relatively wealth people cannot afford to pay ongoing ad valorem advice fees, and increasingly consumers are choosing not to do so.
They’re turning instead to firms like Second Life Financial Planning, paying for a one-off plan, and then managing their investments on their own.
For those who want a financial planner to take charge of everything, including investment management, paying fixed fees to an independent advice firm like rockwealth makes far more sense than paying percentage fees — especially for those with larger portfolios.
We’re finally winning the argument
Believe me, I don’t make any of these predictions lightly. I’ve been writing about the need for financial advisers to provide better value for money for the last 12 years.
It hasn’t made me popular, especially with old-school advisers and the trade press. Six years ago I gave an address to advisers at an event sponsored by fund managers about the case for using low-cost index funds and almost had to be escorted off the premises.
It’s been a long, hard fight. And I’ll be honest, there were even times when I felt like giving up. But I am more convinced than ever that we are finally winning this argument.
It’s taken far, far longer than it should have done, but mark my words: financial advice in Britain is finally changing for the better.
WHAT THE PAPERS ARE SAYING
There are plenty of interesting articles on this subject in the weekend papers. I can particularly recommend this piece from Charlotte Gifford and James Fitzgerald in the Telegraph:
The new law threatening to derail the financial advice gravy train
“A good financial adviser is worth their weight in gold for the right client,” writes the Telegraph’s Head of Money Ben Wilkinson, “but this shake-up of the industry is long overdue”:
The party is over for money-grabbing financial advisers
In the Sunday Times, Ali Hussain, who has written extensively about St James’s Place, declares victory in his paper’s campaign to persuade the firm to cut charges. He rightly points out that other firms, including Hargreaves Lansdown, Quilter, Rathbones and RBC Brewin Dolphin could be more expensive than SJP:
Victory as SJP finally agrees to cut fees
Developments are a wake-up call for the rest of the asset management industry, writes Ali’s colleague Johanna Noble… “No more treating customers like cash cows. End unfair charges now”:
SJP is not the only ‘bad apple’ — there’s still more work to do
I myself have written two articles on St James’s Place for Money Marketing this week:
Why SJP might just pleasantly surprise us
Expect bigger changes to come at SJP
Finally, if you’re interested in the changes taking place at SJP and what they means for the financial advice profession and for consumers, you won’t want to miss the next episode of The Investing Show. In it, I’ll be interviewing the financial planner, entrepreneur and writer Jason Butler. Believe me, you won’t want to miss it. Why not subscribe to the show on YouTube and you’ll receive it as soon as we post it?
OUR STRATEGIC PARTNERS
Content such as this would not be possible without the support of our strategic partners, to whom we are very grateful.
TEBI’s principal partner in the UK is Sparrows Capital. We also have a strategic partner in Ireland — Biograph Wealth Advisors, a financial planning firm in Dublin.
We are currently seeking partnerships in North America and Australasia with firms that share our evidence-based and client-focused philosophy. If you’re interested in finding out more, do get in touch.
© The Evidence-Based Investor MMXXIII
