UK newspaper The Sunday Times has put global wealth management firm St James’s Place firmly in its crosshairs again after lifting the lid on some of the ways it incentivises advisers to sell products.
SJP advisers, also referred to as partners, reportedly receive a credit for ever £1 of money brought into the business.
If they manage to get around 150,000 credits – approximately £150,000 ($185,554, €168,322) – they qualify for a week-long luxury holiday or ‘business trip’ with their spouse at the wealth manager’s expenses, a former SJP adviser revealed to the British newspaper.
They would be able to fly business class; and, the more credits brought in, the more people advisers would be able to take on the trip.
“These trips were portrayed as business conferences, but really they were just all-expenses-paid holidays,” the adviser told the newspaper.
The 8 September story is not the first time The Sunday Times has targeted the firm, with a 2017 article revealing advisers were paid using an ‘airmiles’ type system which rewarded them for bringing in high levels of client investments.
Sale vs advice
According to the unnamed adviser, SJP partners are pushed to only sell the firm’s funds.
Partners are also encouraged to hit sales targets, by churning any existing clients into SJP funds.
The unnamed adviser said that the wealth manager takes its fees from its customers’ savings, such as a 5% charge for each investment made outside their pension and a 2% annual fee.
Clients can even be hit by penalties if they move their money away from SJP.
“Over time, because of the compounding effect of these charges, we could take almost half their profits,” he revealed to The Sunday Times.
On top of luxury cruises, top performing partners can even get 18-carat white gold, diamond encrusted cufflinks – worth around £1,200 – Montblanc pens and Mulberry bags.
Part of the business
A spokesperson for SJP said: “Delivering great client outcomes sits at the heart of St James’s Place’s culture and underpins all parts of our business including our remuneration policies and recognition schemes.
“Our partners take great pride in their professionalism and dedication to serve clients, who value the high standards of advice and service they receive, and this is reflected in market leading client satisfaction and suitability levels.
“With over 2,400 partner practices across the UK, operating as independent businesses under the SJP umbrella, our remuneration policies understandably reflect this structure while also maintaining excellent professional standards with a ‘Quality Gateway’ embedded into our remuneration framework.
“We value the success partners achieve on behalf of clients and it would be wrong to imply our recognition schemes are predicated on anything other than the quality of advice provided, with ongoing client servicing, quality measures, chartered financial planner status and other factors sitting alongside new business.
“We continue to review and evolve such schemes appropriately over time.”
Keeping up with the times
But all this could come to an end soon, according to a memo sent to advisers by SJP chief executive Andrew Croft, seen by International Adviser.
“We must continue to modernise how we do things for our clients through the technology and solutions we offer, our brand and our social contribution,” it said.
“All in all, it is about the way we do things as a business overall and with that in mind, we have decided to launch an internal review into our incentives and recognition structure.
“We need to make sure that it reflects our culture and is fit-for-purpose in the fast-changing industry we operate within and is driving the outcomes that we, and our clients, value most.
“This internal review will include all our incentives and events, including overseas partners’ business meetings.
“In December we set out changes to the levels partners need to achieve to attend these events. We firmly believe in celebrating and recognising the success partners deliver for clients and the value these events provide the partnership to maintain the highest standards of professional development.
“However, we should question ourselves on whether they fully meet our needs or appropriately reflect the culture of our business and we will be discussing that with you over the next few months.”