Recent company results show just how much the FTSE-100 listed company has flourished in the new regulatory climate. In the first half of this year, new business grew by more than 20% from £379.9m to £447.9m, while funds under management reached £47.6bn – this is up from £39.9bn 12 months previously.
To put this into context, deVere Group, which has 80,000 clients in over 100 different countries has $10bn (£6bn) in funds under management.
According to SJP managing director Ian Gascoigne, there are a number of significant reasons why the company has managed to attract such large amounts of business, particularly during a time when some advisers are finding it hard to balance regulatory obligations with serving the needs of their clients.
One reason is because the more onerous rules of the RDR have made joining a larger organisation, such as SJP, an attractive option for advisers.
Advisers who do join, join what SJP calls its partnership programme – so-called because the adviser will “work in partnership with the client”.
But perhaps at the heart of SJP’s success is its “advice guarantee” and unique approach to investment management.
Gascoigne explains that, under the guarantee, “as long as the advice provided is within the company’s corporate guidelines and is within the products offered by the company, if something goes wrong, SJP will rectify the situation with the client”. The advice is essentially supported and backed by the company.
The approach taken by SJP to how client assets are managed is also attractive to both advisers and investors alike.
Select the best managers
Under the guidance of its investment committee, led by chief investment officer Chris Ralph, and with the assistance of external consultancy Stamford Associates, SJP selects external mangers to run mandates on their clients’ behalf. And, because the company now has such substantial assets under advice, it is able to select from some of the most capable managers in the world.
One example is Neil Woodford who manages the company’s £1.4bn UK High Income Fund. Woodford was an early buy-in for SJP, having now managed the fund since 2001 and the latest factsheet available at the time of going to press shows five year cumulative performance of almost 80%.
Aside from the attraction for clients of having relatively low-cost access to fund managers of this pedigree, advisers, particularly since the implementation of RDR, are drawn to the fact that the investment guidance is, to some extent, taken out of their hands.
“SJP’s approach to investment has been a big attraction to a lot of advisers as it effectively ‘de-risks’ the process for them,” explains Gascoigne.
“Through our global investment management approach, we select monitor and change fund managers, utilising the Stamford Associates consultancy, and now offer 52 fund managers, 13 of which are exclusively available to the UK through us. We offer a series of portfolios, which allows the adviser peace of mind to give advice.”
Gascoigne explains SJP’s model wasn’t born of a self-interest in protecting its advisers or business, but rather because SJP has “client outcomes” at the centre of its philosophy.
“We put that at the heart of all decision making, that is trying to deliver an approach to investment management that will deliver high-quality performance,” he says.
“And if the training, accreditation and supervision processes, working with partners, is all aimed at making sure [the advisers] provide high level-client outcomes in terms of service and relationship – I think they are the two key elements – that level of focus has meant we have clients who seem fairly satisfied.”
Opportunities outside the UK
Despite the marked success the business has enjoyed since it was founded in 1991, the decision to test SJP’s model outside the UK was not taken lightly or made overnight.
Gascoigne explains that SJP identified The Henley Group as a business which was “right” more than two years ago, having already earmarked the Far East as a region in which it wanted to expand.
“We had been looking for opportunities outside of the UK – if we felt the model was right and the culture and values of business were right. We identified the Far East as a good opportunity, as a lot of UK expats are based there, about 80,000 expats in total.
“We came across Henley as an IFA business and had been talking to them for a couple of years. We saw an opportunity to almost form a bridgehead into the three jurisdictions of Singapore, Hong Kong and Shanghai.
“So we now have an existing IFA business, with three offices and about 50 advisers. We felt the jurisdictions, the business opportunity and the business was a good match.”
Before the company made the acquisition, the two businesses came together in June last year to launch a joint venture in the UK called THG Wealth Management.
Broaden range
Based in Bristol and headed by Stephen Brooks, a former senior consultant for The Henley Group in Singapore, the stated aim of the business is to “broaden the range of services [SJP] is able to offer clients who live in more than one country”.
Essentially it means clients traveling between Asia and the UK have one point of contact for their advisory needs.
It was a full year after THG launched until SJP completed its acquisition of The Henley Group.
It is an interesting and, perhaps prescient, time for a business like SJP to move into the Far East. So far this year alone, advisers in Hong Kong have been told they face a ban on indemnity commission on investment linked assurance schemes, while in Singapore advisers are preparing to adapt to a new regime under which commission will be paid over a period of six years.
“We see regulatory change as an opportunity and we would like to think we are part of contemporising the products and advice available to expats,” says Gascoigne. “Regulators have been forced into a position where they are making quite serious changes to the operating environment because of what has happened in the past.
“Our product range, we are hoping, will fit into the regulatory environment and we think it seems a little ahead of the game here.”
The change will not come immediately though for those either working for or being advised by The Henley Group, but rather it will be a gradual process which Gascoigne predicts to be completed by “the middle of next year”.
While, not necessarily every aspect of the SJP model will be in place by then, Gascoigne says it is the intention that advisers will all be offering investment products selected by its investment committee, as in the UK.
“There will be gradual change as they are integrated into the SJP way of doing things,” he explains.
“At the moment Henley remains as an IFA and slowly, subject to regulatory licensing, we will be putting SJP products on the shelf and we hope by mid-next year the three offices will be fully integrated SJP offices, selling SJP products.
“There will be scope to use other products to start with and, the same way in the UK we have a panel of third party products which are licensed to go on the SJP panel, we will have a very similar model in the Far East.”
More generally, Gascoigne believes there is a real need for change in the region where he feels British expatriates have been “very badly serviced”.
“They have had very high charging, lots of contractual savings plans, poor value products and high turnover of advisers,” he says. “We have an opportunity now, with a more contemporary product range and international approach to investment management, to offer really good products to clients via the SJP brand.”
Is this the start of a wider international campaign for SJP?
“We are very happy with this acquisition and we are working very hard to make it successful,” Gascoigne bats back. “We’ve got a blueprint we think’s going to work, let’s just leave it with that for now.”
Gascoigne did however give a clear indication the UAE is firmly on the company’s radar – click here to read more
