St. James’s Place Plc said it’s revamping its fee structure after coming under pressure to review the way it’s been charging clients over the years. It added that the move will reduce its underlying cash.
(Bloomberg) — St. James’s Place Plc said it’s revamping its fee structure after coming under pressure to review the way it’s been charging clients over the years. It added that the move will reduce its underlying cash.
Announcing the changes, it said the revision will cover the vast majority of new investment bonds and pensions, according to a statement released alongside its trading update on Tuesday. In addition, wrappers that have been historically disclosed on an all-inclusive basis will be broken into components and will be tiered for larger investments, it said.
“Having completed an internal evaluation of our charging structures, and concluded on these changes for the future, we are ensuring we continue to have a sustainable and competitive charging platform for the long-term,” the London-based asset manager said in the statement.
St. James’s Place, which has about a million clients and manages £158.6 billion ($193 billion) in assets, has been criticized intensely over the years for having a convoluted fee structure and charging too much for its services.
It’s also come under scrutiny for its exit fees. It charges 6% of the total value of an investment if a client wants to withdraw in the first year, dropping to 1% by the sixth year, according to the company’s website.
The Financial Times reported last week that the adviser was under pressure from regulators to overhaul its fees and reduce what it charges investors.
“The changes announced today are about positioning our business for continued success,” outgoing Chief Executive Officer Andrew Croft said in the statement. Incoming CEO Mark FitzPatrick will now face the challenge of dealing with the fallout from the revamp.
Shares reversed losses after dropping as much as 5.2% in early London trading on Tuesday. The stock tumbled 22% on Oct. 13, the most since 1993, after the company said it had undertaken a review.
What Bloomberg Intelligence Says
News that St. James’s Place will scrap exit fees on bonds and pensions in 2025 and introduce a more transparent charging structure should buy the company time in the face of regulatory scrutiny. Fund charges for new and some existing investments will change in 2024. St. James’s Place has said the impact across the company’s fund range is anticipated to be broadly neutral, which should ease fears about the pace of margin erosion.
Charles Graham, BI analyst
Separately, the asset manager said net inflows in the third quarter plunged 58% from a year ago to £910 million, missing the £1.7 billion estimated by analysts.
The changes to the fees will include:
- New business in investment, bonds and pensions will no longer include an early withdrawal charge. There will be an initial charge as well as ongoing charges, which will be applicable from the outset for all components of the service
- Existing investment bond and pension products will continue to operate with the early withdrawal charge structure until the end of the applicable six-year period
- Charges will be separated into component parts (advice charges, fund charges, and product charges) to help clients consider the value they are receiving from each part of the service and compare SJP’s charges across the marketplace
- For all products, initial product charges will be removed, and ongoing product charges will be reduced and tiered for large investments
- In 2024 the firm will introduce a more consistent approach to fund charges that reflects the value. Some charges may decrease while others may increase
(Updates with shares in eighth paragraph and details of fee changes.)
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