St James’s Place value assessment report finds it could do (a lot) better

St James’s Place, one of Britain’s largest wealth management groups, has released its annual value assessment report. The results of which have raised eyebrows, and questions, about the value that the firm provides to investors.

St James’s Place has admitted to failing to offer value for money in 36 out of 45 of its funds. This is a significant admission from a company that manages the investments of approximately one million affluent UK investors.

The most serious failings can be found in fund performance. However, there were also setbacks in other categories, including fund charges, quality of service, and how the funds performed compared to those of its competitors.

Was this value assessment a voluntary process? No, this is not a voluntary process. Since 2019, fund managers operating in Britain have been required to perform an annual assessment of the value provided for each of their funds.

This value assessment process forms part of the FCA’s rules designed to ensure better outcomes for investors.

According to Tom Beal, St James’s Place’s group investment director, there has been an improvement over the last 12 months during which, the proportion of funds that delivered value increased from 60% in 2023, to 70% in 2024.

Has St James’s Place been criticised for poor performance before?

Yes, the company was recently named in Bestinvest’s “Spot the Dog” report as having some of the consistently worst-performing funds in the UK.

It’s a significant wealth manager and as of July this year, St James’s Place reported net new client inflows of £1.9 billion, which took their total assets under management or AUM to £181.9 billion.

The company uses a sales force of more than 4,000 self-employed financial advisers, to sell its funds, which are exclusively marketed to its in-house clients.

According to Sheila Nicoll, who chairs the St James’s Place unit trust group, which oversees the value assessment process, the company has taken remedial action such as changing fund managers and implementing fee reductions.

However, she noted that these changes take time to show results, and there are “no fast fixes” in the areas that have been highlighted as providing insufficient value.

What does all this mean for investors and the wider wealth management industry?

This situation highlights the importance of transparency and accountability in the financial services industry. It serves as a reminder for investors to regularly review the performance and value of their investments.

And for the wider wealth management industry, it underscores the challenges that even large, established firms can face in consistently delivering value to their clients.

Investors should regularly review their investment performance and fees. If they are concerned, then they should discuss these issues with their financial advisor.

It’s also a good idea for investors and savers to compare their fund’s performance, with similar funds in the market, especially if they offer lower management and admin fees.

Of course, past performance doesn’t guarantee future results.

However, consistent underperformance and high charges are red flags that shouldn’t be ignored.

Poor performance, coupled with high fees is never a good look for a money manager.

The fact that these issues are ongoing likely leaves the wealth manager between “a rock and a hard place”, as far as the FCA’s consumer duty obligations are concerned.

Something that surely can’t go unaddressed, by either the firm’s clients or its regulators.