There has been a great deal of debate, discussion and conjecture about St James’s Place’s fee structure as the Consumer Duty beds in.
On Friday, the Financial Times reported that regulators are putting pressure on the firm to overhaul its fee structure.
It reported that: “St James’s Place is under pressure from regulators to overhaul its fee structure to ensure it complies with the UK’s new consumer duty, according to people familiar with the discussions. Shares in the UK’s largest wealth manager fell 20 per cent in the wake of the Financial Times report on Friday.”
It does seem that at the crux of the issue is that fact that SJP plans to remove early withdrawal fees from new customers from 2025 and that ‘people familiar’ say it is being asked questions about why it won’t apply to everyone.
Now the firm itself has added a little more detail. A little, not a lot, no doubt to address market concerns.
As Money Marketing reports, the firm responding to ‘recent media speculation’ said: “As disclosed in our half-year report and accounts published on 27 July 2023, we continue to build on the work completed for Consumer Duty.”
The programme includes an assessment of the firm’s fees and charging models to “ensure it operates with a simple and scalable charging platform for the long-term”.
SJP said the evaluation has not yet been completed and therefore “no decision has been made”.
Clearly these businesses run on the basis of asset gathering and asset retention. SJP’s strategy for the latter with exit fees has proved incredibly unpopular with other advisers.
There does seem to be a direct link in the eyes of the stock market between being able to bar the exit or not and the share price.
Finally while advisers are, by and large, happy with what is happening, I think eventually the regulator will get around to examining other charging models.
This is a neat little interview in Professional Adviser - From plumber to adviser - Jamie Little, newly qualified as a certified financial planner discusses transferable soft skills from his previous career.
This is a useful article from Doug Brodie discussing whether the cost of an index-linked income is worth it.
Finally this speech reported at length in FTAdviser is worthy of note.
Artificial intelligence could “transform” financial services with better customer outcomes and quicker fraud detection, but it does not come without risks, Jessica Rusu, chief data, information and intelligence officer at the regulator, has said in a speech.
For advisers mulling what to do regarding AI, she said examples of this could be by firms using ‘Large Language Models (LLMs)’ which can recognise, translate, predict, or generate text or other content from huge amounts of text.
She added: “Large Language Models (LLMs) in particular could help improve customer service or offer opportunities for those consumers currently excluded from the insurance market by creating more tailored offerings.”
One to mull.
