A new chief executive at St James’s Place gives the firm the opportunity for “radical change” including a revamp of its fee structure and a switch to more passive funds, according to an analyst.
David McCann, from Numis Securities, suggested that SJP should switch to providing 80 per cent passive funds - currently the firm offers solely active funds.
It also proposed switching up the fees SJP charges which would see overall client fees drop as well as a slight fall in adviser remuneration.
Numis said for advisers this would mean they receive all the upfront fee (0-3 per cent) for the first £50,000, 0.55 per cent on the next £200,000, 0.45 per cnet on the next £250,000, 0.35 on the next £500,000 and 0.25 per cent after this.
This compares to the current model of 4.5 per cent upfront and 0.5 per cent ongoing.
For clients Numis suggests the fees should be 3 per cent on the first £50,000 invested, 2 per cent on the next £200,000, 1 per cent on the next £250,000, 0.5 per cent on the next £500,000 and nothing thereafter.
Ongoing fees, it suggests, should be 1.65 per cent on the first £50,000 of assets, 1.45 per cent on the next £200,000, 1.25 per cent on the next £250,000, 1.05 per cent on the next £500,000 and 0.75 per cent thereafter.
The existing model is a charge of 1.95 per cent a year over 15 years for Isas and pensions.
The note reads: “Given ongoing consumer duty, an opportunity for more radical change under the new CEO and to keep the business scalable and competitive in the future, we present a proposal for a new fee structure and an investment management model of the future.
“We think our proposals would result in net better outcomes for all key stakeholders (clients, advisers, shareholders, regulators) and would allow SJP to further embed its market leadership position.
“Our proposal includes a simpler (no more gestation rebates), lower (both upfront and ongoing) and tiered (charges fall with FuM / inflow size) fee structure, and a c.80 per cent passive / c.20 per cent highly active investment management model.”
SJP did not wish to comment on the proposals.
tara.o'connor@ft.com
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