The first time we heard of St James’s Place (SJP) was whilst running Rebel Finance School. Someone popped up in the chat asking whether they were a good place to invest your money. We googled them, discovered high fees and actively managed funds and immediately said “Avoid! Avoid! Avoid!”.

High fees alone are enough to send us running for the hills. Fees are the only statistically significant predictor of long term performance. i.e. the more you pay the worse you will do.

We knew this as we had exactly the same experience when Katie invested through The Penny Group when she first started investing. You can read about the impact of fees on investing here.

Over the years of running Rebel Finance School, St James’s Place kept coming up and people asked us to review their numbers. We were shocked at how badly they performed compared to a global index fund. We had the proof but we never quite got around to pulling it together into an article showing the data.

At Rebel Finance School we endlessly talk about doing the maths, knowing the numbers and the results. Don’t believe the hype, do the maths for yourself. Whether it is knowing what the actual return on equity is for your investment property or the performance of your expensive wealth manager over time or some other decision you’re making.

Finally an awesome couple came forward willing to share their numbers publicly. They were shocked at what SJP cost them and what it would have meant for their finances in the coming years.

Please meet Mark who is going to tell you all about his experience with St James’s Place and the real numbers behind his investments. Don’t believe the hype. Believe the numbers and the maths.

A cautionary tale: The dangers of high fee platforms and funds!

My name is Mark and I have had an SJP problem.

A bit of background, I’m in my late fifties and have been working in the technology industry (in data and analytics) for 40 years. I’ve been very lucky in that each of my employers have provided an employer contribution pension over that time (and the first took the time to explain the benefits of saving for my retirement).

Rewind 8 years or so from today, I’d had an Independent Financial Advisor and he’d consolidated all my pensions into a single pot, but he’d pass on and I was currently IFA-less. I was in a high/medium risk investment strategy, reasonably diverse but including some gilts and bonds, some cash and for all I knew some of Alan’s favourite fruit too! (sorry, RFS in-joke).

I was a bit concerned that my retirement pot wasn’t working for the future as well as it could, I worked out that it was averaging about 4.5% growth, and I wasn’t sure that that was great, then someone I know introduced me to a St James’s Place (SJP) advisor.

She (the SJP advisor) seemed to know what she was talking about and did explain that they charged higher fees than the platform/funds that I was currently in but believed that they could do better for me and so I got sucked in, I didn’t know any better and I even got my wife to move her pension over too.

Back to today, my wife found Rebel Finance School (RFS) over Christmas/New Year and said these guys really don’t like SJP, you need to check this out. So, we binge watched the 2024 course to avoid the end of January take-down date (now extended by popular demand, thank you Alan & Katie). Anyway, I was horrified by their take on SJP! Passive Index Funds, why have I never heard of these? Is this too good to be true? Google, help me out, what it all this Financial Independence (FI) business, is it real? A bit of homework, trying out what I was learning on the course, OK, I’m on-board!

Now I warned you earlier that I was in data and analytics, so guess what, I did some sums, created a spreadsheet and some charts (I think Katie will approve!).

The first chart shows what I estimate would have happened if I’d bumbled along and not moved to SJP, staying in my original funds as I thought I’d need a baseline to compare against, here’s the results:

I then compared that to the performance over the same period that I had achieved with SJP. I initially planned to repeat the previous graph with the SJP growth difference on top… until I saw what actually happened!

To be honest I was starting to get a bad taste in my mouth, there’s hardly a difference between the blue bar (my old pension) and the orange SJP line (the 2018 initial drop in value comes from the hefty SJP set-up fee!). So, over six years of paying some frankly quite obscene fees, all for the privilege of about £15k more growth than if I’d never heard of SJP and just left it alone.

RFS has taught me about Passive Index Funds and to “do the numbers”, but I was also getting nervous about what I was uncovering. The next, as it turns out, very painful step was to discover what could my money have done if, instead of going with SJP, I’d opened a Vanguard FTSE Global All Cap (Accumulating) fund? Well…

My first reaction was “…those thieving <expletive deleted>, they’ve stolen nearly £250k from me!” (the difference between the £903k in an index fund and the £661k with SJP). Well, no they haven’t, actually “past me” didn’t know any better and so missed the opportunity to be about £250k better off, but what was done was done, no point beating myself up about it (see Alan & Katie, I paid attention to the course!), just get on and do something about it!

Well, thanks to RFS, “current me” knows better, so onto the next piece of analysis… If I dump SJP and switch to a low-cost platform buying into the Vanguard FTSE Global All Cap (Accumulating) fund, what could happen to my current-day pot over the next 10 years (based on past SJP and Vanguard average performance figures and allowing for their relative fees and my current levels of personal and employer contributions):

Wow! If I don’t do something now, “future me” could miss out on a million quid over the next ten years without even accounting for future contribution growth!! That’s an eye opener, the impact of high platform charges coupled with an active fund that has high fees cripples compounding when compared to low platform costs and a passive fund with a low fee! The penny drops…

I jumped on the RFS Facebook group and asked some questions, anonymously I’m now ashamed to say, but I was embarrassed regarding the whole SJP thing.

I didn’t know my options, could I use the popular Vanguard platform coupled with a SIPP? It needs to accept active employer contributions; can a SIPP do that? I didn’t know!

One of the Facebook group moderators quickly responded to let me know that Vanguard platform doesn’t except employer contributions, this was a Vanguard limitation, as opposed to a restriction of SIPPs in general. He suggested that I investigate Interactive Investor (ii), as be believed that they could accept the contributions from my employer.

He was quickly followed by Richard who explained that he’d been in a very similar situation with SJP and had transferred to ii and very kindly helped me through the process, after I’d done some homework to satisfy myself with the platform fee structure and costs.

So, it’s underway, I opened a SIPP on ii and kicked off a funds transfer, my SJP investments will soon be no more. No soon enough in my mind!

A massive “thank you” to Alan & Katie for opening my eyes to the FI possibilities and the Facebook mods and Richard for helping me along the road to ditching SJP. It’s been a very cathartic experience!

So, if you are with SJP or a similar high-fee platform that has confusing fee structures (we dug out the SJP fee explanation sheet; 4 pages of self-referencing, complex and confusing definitions with no worked examples!) and active funds – do the sums and take the appropriate action based on your findings, I can take a good guess at what they’ll be!

Good luck, Mark

Thank you Mark for writing this story, it is phenomenally well explained and we loved the charts you built! Wow.

Working out the sums for yourself can be tough, but it is possible. If you’d be interested in an article explaining how to do it for yourself, tell us in the comments!

A few key things to highlight:

1. There are three elements at play with Mark’s investments: Platform Fees, Advisor Fees and Performance. It is nearly impossible to isolate the impact of each of these elements after the fact as some of the fees are buried in the funds and the high fees slow down compounding growth so impact performance. They are all linked to each other.
2. Actively managed funds nearly always underperform a simple tracker fund. There are a few that outperform but those few change every year! If you pay more to have an advisor / actively managed fund on average they will perform worse than a low cost passive index fund.
3. Community: Mark used the community and, helped by two of the Rebel Ninjas in the group, got comfortable with changing provider and worked out how to move his money. I am constantly inspired and amazed by the Rebel Finance Facebook Support Group and the energy within it. Thank you for everyone who engages, answers questions and supports.
4. Doing the maths. One of the things people shy away from is looking at the data, doing the sums and working through the problem. The key is to look at the real numbers, break out a spreadsheet and do the sums. If you are allergic to Spreadsheets then Katie did a whole Beginners Guide Course to Excel to help you get going. Embrace the maths, learn the numbers and let’s make decisions based on facts!

Is it fair to compare SJP’s funds to a global index fund? We had a lot of push back from one Financial Advisor (FA) who read this original article and said that it most definitely is not fair because SJP have multi-asset classes in their funds (meaning not just stocks and shares).

The FA assumed that Mark was not 100% stocks and shares with SJP and therefore this was not a direct and fair comparison. He said we were comparing pineapples with bananas. We have added this section to address that!

We’re all about facts here and making sure we tell the whole story so we went back to Mark and asked him what his asset split was with SJP. Turns out it was about as close to 100% stocks and shares as you can get (and it was actually Mark’s intention to be fully in stocks and shares). Mark dug out his latest SJP annual statement and it shows:

• 3% cash
• 0.2% fixed interest (aka bonds)
• 96.8% stocks and shares

Is it a fair comparison based on this I would say yes!

Is it a direct comparison? Absolutely not and that’s the whole point of this article. It could never be a direct comparison because no non-SJP funds like theirs exist. To give you an example their international equities fund has the companies Yum! Brands Inc and Lowe’s Companies Inc as two of your top holdings which are not the biggest companies in the global index!

Would you want 4.46% of your investments in Yum! Brands Inc? It is only 0.05% in the FTSE Global All Cap! Especially when you find out that it delivered about half the growth that the market did on average last year!

The fund carries 7.82% cash and 9.21% other (whatever the heck that is!). So even though Mark wanted to be fully in stocks and shares, they’re doing weird and wonderful stuff within those funds too.

In one way it is an unfair comparison because we are comparing actively managed funds (SJP) against passive funds (Vanguard). SJP as a company is worth £4.69 Billion and they employ 2,298 staff. When you work with them you are hiring (supposedly) the best of the best to manage your wealth and they promise to beat the market for you. I think in this sense it’s actually unfair to Vanguard to do this comparison because SJP have vast resources to try and beat the market.

If this isn’t the right comparison, what other comparison is there?

Our strategy is to invest in one simple global index fund and allow it to grow over time. Whilst earning money we have 100% of our investments in that one fund. This is our simple effortless investing strategy.

It makes sense to me to compare other investment strategies to this. Would I go with investment firm A, B or a global index fund? The purpose of this article is to compare them.

They might be completely different things but this is a real choice you have to make. It is a bit like going to the supermarket and comparing donuts, pineapples and ready made meals for nutritional values. They are all different things but you could eat any of them as a snack!

You have a choice of where to invest your money. Comparing the options is the only tool we really have to be able to understand how your money will perform over time. We can not predict the future but we can analyse past results and notice long term trends.

Over the long term actively managed funds always fail to out perform a simple low cost global index fund.

As part of our latest workshop on platforms, Katie and I created a piece on how wealth advisors lie to you with the goal that you can spot these lies and stay safe out there in the investing world. Data can be manipulated, stories spun and money lost. Watch this short video for more on wealth management companies.

Katie and I love sharing our experiences but we are one random British couple. We know that what we have learned is valuable and will change lives. We are so excited when you come forward and say “I have a story I want you to share too”. The impact of having real numbers, the real story of how it all played out so we can all learn from your experience is amazing.

Mark said he was embarrassed at first and posted anonymously in the Facebook group for help. I can completely understand that feeling. I lost my life savings, Katie invested with The Penny Group (we were doing the best we could) and it took us some time to accept the mistakes we had made.

Sharing our mistakes with you (as well as the triumphs) has helped us to put those mistakes behind us and to feel like other people have got value out of our mistakes too. It is great that we learned from our mistakes and now we have shared that lesson with tens of thousands of people. The cost of that mistake feels small compared to how much other people have benefitted from learning from it.

I know we are weird sharing what we learned in public but we are hoping to make it less weird. We are hoping that we can all share what we have learned, what went wrong as well as what went right so that others can learn.

If you have a story you want to share with the community please come forward and message us or tell us in the comments below!

Financial literacy is critical. If some of the stuff in this article didn’t make sense, then find a blog to read, learn from a book, come on the free course we give away Rebel Finance School and learn about the terms, ideas and concepts. Your best defence in investing is knowledge. The more financially literate you are, the harder it is for an advisor to pull the wool over your eyes.

We think this information is so important to get out into the world. SJP have 1 million customers and they are slowly destroying their financial futures. They have a huge marketing budget, sales people and ways to share their message.

We are a not for profit (loss-making in reality) couple with a blog trying to help people avoid devastating financial potholes. We can’t compete with their budgets and marketing but together, we can reach more people.

Please help by sending this article to someone who would benefit from it.

We get lots of messages from people saying I can’t get my partner / parents / friends to change provider. Our hope is that this article, Mark’s bravery in sharing his story, numbers and facts are what you and they need to make a change and improve your finances.

Thanks for reading and helping us to spread the message of good finances.

Let us know your thoughts in the comments!

Love, peace and pineapples

Katie and Alan