St James’s Place is finally bringing in a new pricing structure next month, which it says will be “simpler to understand”, with most clients benefiting from a lower total ongoing charge.
The UK’s largest wealth manager has long been criticised for its “opaque”, “complex” and expensive fees.
In October 2023, it said it planned to reduce its charges and make them more transparent, following the introduction of Consumer Duty rules from the financial regulator, which demand “good outcomes” for customers.
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It later told staff it would introduce the changes in May 2025. However, the plans were postponed to ensure the new IT infrastructure was ready.
St James’s Place (SJP) has now announced that the new pricing model will take effect from 26 August.
The controversial exit fee – known as the early withdrawal charge – will disappear on new investments. The 4.5% initial advice fee will move to a tiered structure of between 1% and 3%.
The firm’s ongoing fee of 0.5% – which typically pays for an annual review – will rise to 0.8%.
Mark Polson, founder of the lang cat, a pensions and investment consultancy, tells MoneyWeek that SJP was “famously opaque”, but “that now falls away. SJP has bitten the bullet and gone for clarity”.
He adds: “The new fees are relatively non-toxic. I think they’re fine. They’re ok. They’re probably a little higher than the typical independent financial adviser. But they’re certainly not the highest in the industry.”
According to Holly Mackay, chief executive of financial website Boring Money, most SJP clients will be better off with the new fees.
“The new structure brings the costs in line with the market average. To be honest, most large-brand wealth managers now cost roughly the same – they are very aware of the market norms and tend to group around an average cost,” she notes.
How do the new SJP fees stack up?
SJP is changing its initial advice fee of 4.5% to a tiered model relating to the size of the portfolio. The first £250,000 will cost 3%, the next £250,000 will have a charge of 2% and anything above £500,000 will be 1%.
There’s an upper limit of £30,000, so no clients will pay more than this for their initial fee.
Meanwhile, the new ongoing advice fee comes in at 0.8%.
SJP customers will also pay an ongoing product charge. Bonds and pensions cost 0.35% a year, decreasing gradually for larger sums down to 0.25% for any money over £3 million. ISAs and unit trusts cost 0.27%, reducing down to 0.17% on amounts over £3 million.
The charges for fund management have also been reviewed. The wealth manager says nearly 95% of SJP funds will have lower annual charges than their respective Investment Association sector averages.
The fee shake-up will happen on 26 August.
“The new fund charges will apply for all clients from this date. Existing clients will transition to the new ongoing advice and product charges either on the implementation date or once they come to the end of their early withdrawal charge period for bonds and pensions,” says SJP.
The wealth manager argues that separating out advice, product and fund charges will make them “simpler to understand and easier to compare”.
James Rainbow, chief executive officer at St. James’s Place Wealth Management, comments: “It’s a good thing for our advisers, our business and most importantly our clients, the majority of which will benefit from lower overall charges over their relationship with us.”
What does it mean for customers?
According to Mackay at Boring Money, most SJP clients will be better off under the new pricing model.
In terms of the total ongoing fee (excluding the initial charge), Mackay says it’s about 1.67% a year depending on the investments you have. This is made up of 0.8% for advice, the products and admin cost 0.35% or less, and the average investment fund is 0.52%.
The maximum initial fee of 3% is “at the pricey end but not an outlier”, she notes.
“A big problem with their previous charging structure was its complexity – it was headbangingly difficult to work out what you were paying and then compare.
“[A new average fee of] 1.67% ongoing, every year, is pretty bang on in the middle of the pack.”
However, while most clients will pay less, there will be some that pay more. If you’re an SJP client, ask your adviser to explain what you’ll be paying versus the old system.
Polson at the lang cat describes the new fees as “not awful”. He says it’s perhaps surprising that the charges aren’t lower given the size of SJP. “It feels like there should be economies of scale, as SJP is a huge machine. So, it’s definitely not the case that bigger means cheaper fees.”
He tells MoneyWeek that more changes could be in the pipeline, for example, the 0.8% ongoing fee could fall for larger portfolios if a tiered model is introduced.
In terms of the initial fee, Polson recommends that clients negotiate with their SJP adviser, as it may be possible to pay a lower charge than the ones set out in the new pricing regime.
If you are unhappy with the fees or the service you receive from your financial adviser, it’s worth considering other options.
Mackay points out that clients need to “see the value” of financial advice, and “if they are not getting the regular service and quality of input you would expect from a premium service, they should not be afraid to shop around”.
An adviser that offers a fixed fee, rather than an ongoing percentage, could work out cheaper, especially for larger portfolios.
If you don’t need full financial advice, but would like some help choosing investments, some investment platforms and robo-advisers offer ready-made portfolios. For example, Vanguard offers a managed ISA service, costing just over 0.5% a year.
Other platforms offering managed portfolios include Nutmeg, Wealthify, Moneybox and AJ Bell.