St James’s Place (SJP) is set to introduce three new tiers of charges for financial advice, as it moves away from its current fee model.
A presentation by the advice group showed the new plans being put forward for SJP’s tiered charges to bill clients based on the size of their pot, Citywire reported on Thursday.
According to the presentation the initial advice charge (IAC) for clients will start at 3% for the first £250,000 the company and its partners advise on, falling to 2% for the next £250,000 and then 1% for any amount above £500,000.
For example the IAC on a £300,000 pot would be 3% on the first £250,000 (£7,500) and 2% on the next £50,000 (£1,000). This amounts to £8,500 in total, equivalent to 2.83% of the whole pot.
As part of the IAC, the firm will also charge a tiered initial advice fee (IAF), which represents the part of the overall charge that goes to SJP Partner firms. At each tier, this amounts to two thirds of the IAC.
The changes introducing SJP’s tiered charges come after the advice group announced it will overhaul its fee model in October 2023, as it seeks to meet the requirements introduced by the Financial Conduct Authority’s Consumer Duty regulation.
An SJP spokesperson told Citywire: “Naturally, we’ve been engaging our partnership on all elements of this, including tiering of initial advice and ongoing product charges.
“ We are working through how tiering might look and we will continue to keep the partnership updated as we finalise this element of our charging structure ahead of implementing the full changes by the second half of 2025.’
Other changes to SJP’s model
The other changes SJP’s model signalled in the announcement include replacing its Early Withdrawal Charge with an explicit initial charge on new bond and pension investments.
It is also separating its charges into component parts, including the advice charge, the product/platform charge and the fund charge.
The firm’s chief client and reputation officer Claire Blackwell vowed in last year’s announcement that “no existing client will pay higher ongoing charges on their existing investments as a result of separating out the charges”.
“For many the charges will indeed reduce. Within this change, some components of the charge will be higher, some will be lower than today,” she added.
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
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