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St James’s Place, the UK’s largest wealth manager, is rolling out cheaper investments after a shake-up of its charging structure over the summer, following pressure from the financial regulator.
The Gloucestershire-based firm, which works with a network of 5,000 financial advisers, will unveil a new range of Polaris Multi-Index portfolios at the end of the month that invest in low-cost index funds, with a charge of 0.2 per cent a year.
The move comes after SJP, which manages £198.5bn, made sweeping changes to its fee structure in August by separating advice charges, product costs and other fees so that customers could more clearly see how much they were paying.
The overhaul followed the introduction of the UK’s Consumer Duty, new rules brought in by the Financial Conduct Authority aimed at ensuring customers receive a fair deal from financial services firms.
The wealth manager had been criticised for its complicated charging structure. As part of the changes, SJP dropped its controversial “exit” fee or early withdrawal charge, which was applied to investment bonds and pensions.
“Customers have been paying too much for their services for too long . . . Let’s hope this is the beginning of a more transparent era for SJP, which focuses on ensuring its customers are receiving fair value,” said James Daley, founder of consumer group Fairer Finance.
The new range of four Polaris portfolios will be managed by SJP’s investment team, led by chief investment officer Justin Onuekwusi, who will oversee asset allocation.
The portfolios, which will be rated according to investors’ risk appetite, will invest through low-cost index trackers designed by State Street, one of the world’s largest asset managers.
The launch will build on SJP’s existing £80bn Polaris range, unveiled three years ago, which invests in a mix of stockpicker-run funds as well as index trackers.
Onuekwusi said that SJP’s investment team will take a medium-term investment view over three to five years when considering the funds’ asset allocation, combining this “with the efficiency of index tracking”.
He added that the partnership with State Street enables the firm to create tailored investments, rather than “picking off the shelf”, so that SJP has 14 bespoke “building blocks” from which to choose.
SJP’s move comes as competition in the market for low-cost multi-asset funds heats up, with the likes of Vanguard offering cheap portfolios with its £50bn LifeStrategy range.
The advisory firm is known for backing stockpicker-led funds, but its latest focus on passives reflects a broader shift among investors towards low-cost index trackers over the past decade.
Tom Beal, group investment director at SJP, said that the group was “committed to active management still, [but] this is about giving choice”.
“For many, cost is also a key factor, and index trackers provide a lower-cost alternative,” he added.
Analysts said that under SJP’s new fee model a typical client will pay total annual costs of about 1.9 per cent compared with a range of 1.6-2.1 per cent charged by SJP’s closest rivals.