SJP: Lloyds will not sell its stake

Anyone want to buy a bond?

One has to admire the marketing ability of SJP, as much as one abhors the sausage factory that continually shifts clients money from ISAs, Cash, anywhere really into an IHT planning device that results in the main aim of flogging someone a high charge investment bond built around a ludicrously old-fashioned investment proposition.

I have four clients all considering claims for mis-selling by SJP, all of whom were impressed by the IHT Seminar sales process they were inveigled into.

Anyone else have the same concerns?

Ian Coley

Partner

Medical Investment Services

Well said Ian, I have several clients who have 'fallen foul' of the SJP 'IHT' seminar ploy. I feel it is the same old story - commission based sales men making money from frightening people instead of planning for them. No wonder Lloyds like them so much! You have to admire SJP for their drive and determination - well done on that front. However, (in my view) this will generally mean more poor clients being shoe horned into completely innappropriate IHT products. Can the FSA not see what is going on?

I completely agree with Ian and often say the same thing - you have to admire them for their marketing, but the so called advice and products stink.

I have come across numerous clients with SJP pensions and the high charging structures are so complex that no client could ever hope to understand them. The products themselves meanwhile are desgined to trap the individual in the plan, with such high punitive charges on transfer out that they are left stuck between a rock and a hard place.

Unfortunately this will be many people's experience of the 'advice' process and it tarnishes us all, as few clients distinguish the difference between SJPs salesmen and true IFAs.

History has a habit of repeating it'self. I remember Lloyds buying 50% of Abbey Life in 1995 and swearing on their Bible that it was good for the company. They took up the option of the remaining 50% 5 years later and began the process of assett stripping the business.

Beware SJP the malignance is still there.

Good Luck

I leave my name anonymous as I have a compliance team to answer to as a partner and of course I, like the rest of my colleagues take compliance very seriously. Let us not tarnish all with the same negative brush and remember people in glass houses. I am currently advising a client whom was poorly advised on a school fees plan to gear up and borrow on his home to invest in traded endowments. All of which has gone horribly wrong and the advisers(Independent) have retired and the company they introduced my client to is in liquidation. Another client lost a large amount in Arch Cru, where was the due diligence in researching and recommending such products and funds as IFAs should that not be part of the process. It seems not for some, but again clearly not all operate in this manner, so I will not throw any stones today.

1) Ian Coley: What's a "ludicrously old-fashioned investment proposition"? Does everyone have to be fashionable these days?!

2) How useful are investment bonds (i.e. those that allow you to extract 5% of your initial investment every year) in a high inflation environment? Over a 20 year time period, the value of the, so called income, is tiny if inflation is high. Do either IFAs or SJP salesmen understand this and explain it to their clients?

I think Lloyds and SJP make excellent bed fellows - putting shareholder value before all else, especially advice that is in the clients' best interest as evidenced by the fines that have been heaped upon Lloyds for misselling.

Will the introduction of RDR mean that SJP stop telling their clients that they are "virtually the same as IFAs"? I suspect not.

Lets put this into context

SJP is a very highly polished version of our dear friend Allied Dunbar..nothing else.

They now recuit dissatisfied brokers as the tied agent side is vertually dead.

So..thier super growth is down to the new recruits churning their business under the SJP promise of investment stratergy,and backing the promise that the client will not be at a loss if the advice is .....err.....crap...ask Primrose clients what they think of this promise.

They have no reall contracts...withdrawing from the International market and even distibution bonds.

They only work on switching funds

.

As a former employee of St. James's Place I feel somewhat disheartened to hear its distinctive approach to investment management being described as "ludicrously old-fashioned." True, there is no clever risk-profiling tool in place currently (although I believe that this is being worked on at this very minute!), yet there is an independent firm of analysts who carry out incredibly detailed due diligence on the investment managers who look after SJP clients' money. This in part explains why the charges on SJP funds are not the most competitive in the industry.

I will not be transferring my pension away from SJP any time soon, not because of the complex high charging structures alluded to by James Junior which leave me between a rock and a hard place. Instead, I prefer to know about the strategies employed by the fund managers who look after my money and because I take heart from the knowledge that if those fund managers aren't doing their job properly, the SJP Investment Committee, aided by Stamford Associates, will replace them with someone who will.

Now that sounds to me like good old fashioned common sense!

In September 1999 (when he was Lloyds chairman) Sir Brian Pitman gave a similar assurance about their majority stake in Abbey Life.

Abbey Life was closed for business within weeks after Lloyds tried (and failed) to find a buyer.

Anonymous 2

"Ludicrously old fashioned investment approach"

Yes. I'm referring to this concept of trying to present the applied control of SJP over the range of investment managers as being a "unique" service as though it is an astonishingly good idea that only they have thought of.

What tosh. They apply a filter system which any IFA worth his salt can apply according to his requirements, not SJP's. Stamford Associates adds another layer of unnecessary cost and you end up with far too narrow a range of funds. SJP have a captive relationship with investment managers (good for SJP not the client).

Check it out!

http://streamline.perivan.co.uk/data/client_16/cust_386/stock/item_3579.pdf

An approach of benefit to no-one but SJP and their compliance department.

Completely agree on the bond issue, the inevitable home for the equally inevitable Gift and Loan Trust money.

How man of your clients think they are moving meaningful amounts of money out of their estate by this method?

personally I think the FSA should launch a specific investigation into SJP and other firms, some IFAs regrettably who mass market this scandalous planning idea.

Ian Coley

Partner

Medical Investment Services

These "expensive products" and "high charge investment bonds"....will RDR not make them all rather more transparent? If so, some IFAs currently against RDR, may be rather more positive after all!

SJP UK High Income: Manager N Woodford 10 yr CAGR 7.38%

Invesco Perpetual High Income: Manager N Woodford 10 yr CAGR 9.12%

SJP Corporate Bond (Causer and Read) 10yr CAGR 4.26%

Invesco Perpetual Corporate Bond (Causer and Read) 10yr CAGR 6.13%

Source: Financial Express Analytics

I agree that the benefits of "managing the managers" should not be overlooked and that it valuable and reassuring to a client that a replacement of a manager happens at the same time for each and every client (without cost to the client or any tax implications).

SJP do not and have never claimed to have a unique approach to investment management - but it is distinct, and proven.

Just for the record neither Woodford or Causer/Read have managed SJP client funds for 10 years - the latter having been in place for just over 2.

Paul de Raney

Not sure what your point is here. I know SJP do offer funds which use some good managers, but the bottom line is this

They only offer 54 funds.

They do not cover all sectors.

they have criteria for selection that do not match my criteria.

Advisers and clients have no option to override the choices Stamford Associates and SJP agree to be the chosen ones.

Anonymus 5

Just about every client report I've seen produced by SJP does two things

1 Fits the client situation and objectives to suit the conclusions reached by the SJP salesman

and

2 Talks about the enormous advantages of SJP's unique investment proposition.

IO don;t want to rattle on about this ad nauseum, but there is a good reason why I am so opposed to SJP.

Ian Coley

Partner

Medical Investment Services

I've recently taken on 2 new clients whose former IFA had become a SJP tied agent.

They contacted me because they were suspicious of his reasons for moving their perfectly sound ISA and OEIC portfolios, held respectively under the Skandia and Fundsnetwork Platforms, to SJP funds.

Reasons given, not in writing, included. in no particular order:

'The future of Skandia is uncertain'

'Fidelity is a US group and may pull out of UK'

'Both of their administration systems are poor and he (the Adviser) can no longer obtain information from them.'

'Both Companies were unhappy that he had joined a competitor and as a result were refusing to deal with him'

'SJPs funds were better performing than those he could access through Skandia and FNW'

Now clearly, this chap had accepted SJPs terms because they were giving him a better deal financially, and no doubt part of this was the expectation that he would be able to bring all his client value with him.

But it's shocking that, having done a reasonable deal for the clients in the first place he anf SJP should collude in stuffing the client with a whole new set of (higher) charges.

As has been commented, it will be interesting to see how this shower can change to meet RDR.

One other point, WHY oh WHY do journalists continue to spout the Company line that SJP are 'Up Market' advisers?

THEY ARE NOT!

They are, as another contributer said, just a slicker version of Allied Dunbar/Abbey Life/Albany Life/International Life Etc Etc.

The Bernie Cornfeld model is still alive and well, but not for much longer!

For those too young to recall, it went (and probably still goes) something like:

'Do you really sincerely want to be rich?

Then here's how you rip off the largest possible number of people in the shortest possible period of time'

We all have met clients who have had less than excellent experiences with all walks of advisor, IFA, Tied, Multi-tied, bank advisors and the like. To pick on one firm in this fashion is a little unfair. I know people who still hold investments with SJP and are more than happy with the level of service they receive from the advisor, the performance return and the nature in which they are dealt with as clients.

It would appear that the 'high, complicated charges' which leave clients between a 'rock and a hard place' mean that as an IFA this can't be moved into this into something else?

I believe that the seminar selling days of any company are numbered (if not already dead) as probably most of the UK has been invited to one sort or another. An IFA in my region has been running them every month for years, beating a similiar drum to SJP...If his profits have risen significantly shall we brow beat him also??

My view is that if SJP are so bad then why is everyone so scared of what they do? If this is such a sham of a business model then how did they win the Wealth Manager of the Year Award 2009 for the Investors Chronical (voted for by readers of the magazine?)...Let me guess they paid someone in a dark cloak and mysterious guise to rig the voting?? Or maybe clients are happy with what they receive.

If they do what everyone fears that they do and go bust, fail to sell, be outted as rogue salesmen then most of the above can do what it would appear that they do best and say I told you so...

Yes we have seen some really great examples of advice eg

FSAVC as a mortgage repayment policy for a docter before tax free cash was allowed. Compensation paid.

Whole of life policy as a childs short term savings plan. Compensation paid

A Unique thing called a bond that allowed a client to invest several million to gain access to so many unique features. The expert was worth every penny of the hundreds of thousands of indemnity commission paid for putting this special arrangement together! Said the clients accountant!

One client was told not to question the natuure of the arrangements that had been put in place or the unaffordable escalating premiums as the adviser knew was they needed and that was what they had. Yes, another complaint.

I am sure they will have people who could be good advisers. They just happen to operate as very little more than an aggresive selling operation. Very nice offices and very nice sandwitches but a thinly veiled sales operation as one client reported.

I think it is key to remember that there are some bad advisors out there, in every walk of life. If you took every IFA complaint that has been made in the last 18 months and looked into what had happened and why I am sure that we could have the same discussion about them...

The difference is that when a company in this country does well (60% up) then we all stick the boot in. There are smaller outfits that class themselves as IFA and kid themselves that they are worth the fees they charge who get away with murder.

I am sure we all have had new clients come to us due to bad experiences in all manner of circumstances from all types of advisors. I just think that forums like this make it a witch hunt for those that are clearly doing well as a company.

Ian Coley

My point, admitedly badly made, was that as SJP own their funds and they can charge what they want.

if they :

1) negotiate lower charges with the manager

2) decide to increase the amc on the fund

3) both

this can add to their own (already hefty) margins and they are under no obligation to pass any efficiencies on to the client, and therefore perfomance may suffer.

It is only this type of vertically integrated product manufaturer who will generate these margins (at the clients' expense) and be able to afford to offer 8x renewal for any new "partners" joining.

Apologies for my previous statistics, but their intention was to add weight to the argument that SJP exists for the benefit of the advisers and shareholders to the detriment of the clients.

Me thinks thou doth protest too much. Beware dear ifa that if thou sups too deeply from the cup of sour grapes, then thou may transformeth into an embittered old hag. oops me thinks its too late your business model is witthering as we speak.

If SJP were offering 8x renewal on joining as a 'partner' then surely everyone would join? I think that the numbers quoted need to be checked before spouted...

Yes as a former IFA and SJP Partner of 2 years I can confirm that the 8X trail to join is poppycock. And to Paul De Raney - you are slighly short of the mark here.

A main reason for my joining SJP was that I believed (and have since proven) that I would be able to look after my clients better than I could in my employed IFA position. And they agree because they tell me so.

That was my starting point - doing a better job for the clients, and continuing to act with honesty and integrity. And yes for me it has paid off; my income has increased as I'm not paying for the "hangers on"; I enjoy my work so much more because I do not have to deal with the corporate bulldung and the egos that go with it; and SJP make profits which allows them to invest in the business and provide returns for shareholders.

It seems to meet that some posters on here think that businesses should not make profits. As an IFA, if you are lucky to have them, where do your profits come from - either directly or indirectly from clients by way of fees or comission. Nothing wrong with either as long as you are doing a good honest job and the client is happy.

Remember that a business that does not make money is a hobby.

WOW SJP does well and IFAs start whinging - what a shocker!!

I am genuinely surprised that a company such as SJP with a such a successful track record in managing clients financial affairs diligently and effectively should attract such disdane from their supposed peers in the wealth management industry.

Hopefully, in 2012 they will find themselves in healthy competition with diligent advisers who meet the regulatory requirements and not those who feel spending a few hours blogging' will serve their clients best interests

ps. SJP RULES