Breaking up is notoriously hard to do – that can include when you decide to call time on a relationship with your wealth manager.
That’s because switching pensions and investments isn’t quite as simple as, say, changing your current account provider. These are more complex matters likely to be involved in ending what can be a highly personal relationship over many years – and could cost you a pretty penny.
Clients of Britain’s biggest wealth manager, St James’s Place, might be keen to leave behind the high charges associated with the brand and move their money elsewhere.
They’re charged up to 4.5pc as an initial fee and 0.5pc for ongoing advice. St James’s Place has always maintained that it is not overly expensive compared to its rivals.
Fees matter because every penny you pay towards fees eats into your future investment returns. Plus, the impact of costs compounds over time.
Following the arrival of new “consumer duty” rules, which took effect last summer, firms are required to offer fair value for their investors. St James’s Place – a FTSE 100 company with more than 950,000 clients – will have a new pricing structure in 2025 with capped advice and fund charges.
As part of the restructure, it will also scrap exit fees currently charged on bond investments and pensions of as much as 6pc, known as early withdrawal fees.
Separately, earlier this year St James’s Place admitted that £426m has been put aside for clients who had previously been overcharged for financial advice.
The continued spotlight on fees may have prompted some clients to question if they should jump ship.
St James’s Place could not provide figures on how many clients had done so, but said client retention rates are “high at 95pc”.
What does it cost to leave St James’s Place?
If you want to take your money out of a pension or any bond investments, it could cost you, as there are penalties if you want to move your money for the six years after it was set up.
The charge is on a sliding scale – 6pc in year one reducing to 1pc in year six – of the value of the pension or bond investment.
So to move a £500,000 pension pot in its third year of being run by your St James’s Place partner would cost up to £15,000 in fees.
A spokesman for St James’s Place said this was to “cover the cost of advice and product charges”.
As described above, after coming under regulatory pressure St James’s Place agreed to remove these early withdrawal charges. But this won’t take effect for new and existing clients until mid-2025. Until then the six-year rule is in place for new and existing clients.
If you’re transferring unit trusts in Isas or general investments held outside an Isa to another firm then you won’t pay any charges to do so.
How to leave St James’s Place
All clients have a “partner” who looks after them. You’ll need to first have the conversation with this individual to explain you want to move any kind of investment product you hold there.
A crucial part of the move is having the details ready of the new provider as they will work together when it comes to the all-important transfer.
If you are moving to another wealth manager and taking advice, your new adviser would need to register a letter of authority and then gather any information they might need to support their advice before making a recommendation for a transfer.
Since St James’s Place offers its own investment products – fund packages that are used in pensions and investments – you would need to sell out of those as part of a transfer elsewhere and get advice on where to invest next.
Alternatively, if you decide to go down the DIY investment route you can instruct the Isa or pension to be moved to a stockbrokers platform such as AJ Bell or Hargreaves Lansdown. You can see details of the cheapest and most expensive platforms here.
Wherever you move your money to, you will need to contact St James’s Place’s “administration centre”.
One option is to transfer it to another wealth manager and there are plenty to choose from. Among the largest and most established brands are Rathbones, Evelyn Partners, RBC Brewin Dolphin and Cazenove Capital.
There will be minimum account sizes to bear in mind when making your selection. At Rathbones it’s £100,000 but at Cazenove you will need £1m of investable assets.
You might prefer to go with a smaller, independent firm, however. They might be more flexible about minimum amounts to have invested. Check out findawealthmanager.co.uk to help with your search. It only lists firms that have been in business for at least five years and manage at least £500m in assets.
You should meet with more than one manager before making a decision. Most wealth managers offer an initial consultation free of charge, so it can be worth meeting with several firms of various shapes, sizes and types, and selecting the one you feel most comfortable and confident working with.
The first meeting will be an introduction, where you can assess whether you have the right chemistry to work together. There should be no obligation to sign then and there.
To give you confidence that the firm you’re talking to has something special to offer, ask them what sets them aside from other firms.
Ideally you want to find an adviser who undertakes rigorous tailored research on your behalf – and nothing less than a five-star service which offers best value. As with any service, be careful to meet with the person who will actually manage your money, rather than being charmed by a slick salesman.
An alternative is to run your own money which avoids paying an advice fee. Using a DIY investment platform you can manage your own Isas, pensions and general investment accounts yourself.
Most will have an app that allows you to keep track of everything and make changes where necessary. To find the best value platform compareandinvest.co.uk can help with your research.
Read more here about Britain’s largest wealth managers, including how much money they manage, charges and minimum fund requirements.
