St James’s Place cuts fees for loyal customers ahead of crackdown
Tens of thousands of St James’s Place customers will see fees drop next month after Britain’s biggest wealth manager reviewed its charges in the face of tighter regulation.
In half-year results published today, St James’s Place announced it is capping annual management charges on bond and pension contributions for clients who have been invested for over ten years.
It comes as new rules from the City watchdog will require all financial service companies to deliver fair value to customers from July 31.
St James’s Place also revealed it has seen a rise in complaints from a “small minority” of clients via a claims management company for ongoing advice they had received in the past.
The wealth manager has over 900,000 clients and nearly 4,800 advisers. The cap on charges will cost the business an estimated £859m and immediately cut fees for 65,000 clients.
Once the new fees arrive in August, St James’s Place customers who have been with the advice firm for 10 years or more will see their annual management charge will drop from 1pc per year to 0.85pc, excluding ongoing advice fees.
It means a client with a £500,000 pension would see the amount they pay in annual product fees go down from £5,000 to £4,250 – saving them £3,750 over five years.
The firm has not extended the charges cap to its unit trusts and Individual Savings Accounts (Isas).
The FTSE 100 company saw its share price dive 14pc this morning as the firm revealed a slowdown in new business.
The wealth manager said that it had “engaged proactively” with the Financial Conduct Authority’s new regulatory initiative, testing clients’ understanding of product information and enhancing its record-keeping processes in order to better assess the value it delivers to clients.
Andrew Croft, chief executive of St James’s Place, said: “As a business focused on driving good client outcomes, we have welcomed the opportunity to further strengthen our commitment to clients and enhance the value we deliver to them.”
Mike Barrett, of financial services consultancy the Lang Cat, added: “In the advice sector I’ve already seen some evidence of planning firms altering their fee structure to cap fees for wealthy clients and/or those investing for the long term. I would expect more firms to follow this trend.”
