St James Place's new fee structure. What has changed?
- Noel Watson CFPᵀᴹ - Chartered Wealth Manager
- 18 hours ago
- 7 min read
Updated: 14 minutes ago
Introduction
Today (26th August 2025) marks the day when St James Place's (SJP) new fee structure goes live. SJP says the new fee structure will be simple to understand and change the perception that it is expensive. We previously covered the old SJP charging structure (and performance) and the questions to ask if you were considering becoming a client. In this article, we focus on comparing old vs new fee structures. Before we start, it's worth noting that the new charging structure applies to:
New clients.
Existing clients who make new contributions.
Existing investments in ISAs and unit trusts.
Existing investments in pensions and investment bonds remain on the old structure until exit fees have expired.
The high-level changes
Change One: Ongoing fees are split into advice, product and fund charges.
The previous SJP structure bundled ongoing advice, product and fund charges into one fee, which could sometimes make it challenging for clients to understand exactly where the fees they were paying were going. The new model addresses this directly.
Change Two: Exit fees for pension and bond products are removed
Clients investing money in pensions or investment bonds under the previous fee structure paid no explicit initial fee (although the adviser still received 3% which SJP subsidised), but were liable for an exit fee of up to 6% if they left within six years.
Change Three: Some fees are now tiered
Previously, someone with £1,000,000 invested paid the same ongoing annual fee in percentage terms as someone who had £100,000 invested. This has changed in two areas:
Initial fees
Initial fees are now the same across all products (previous ISAs and unit trusts had a standard initial fee of 5% versus 0% for pensions and investment bonds, as mentioned above) and are tiered as the amount invested increases.
Product charges
Ongoing product fees are also tiered.
Worked examples
Example Client One: The average SJP client with £190,000 invested
There are several nuances in the new pricing structure to be aware of, which we will cover with some worked examples. Our first example client has £190,000 invested, which represents the average amount clients invest with SJP. This is split across their pensions (£140,000) and ISAs (£50,000). This split broadly reflects the breakdown of the existing SJP client holdings, with investment bonds (£39bn) and pensions (£102bn) grouped as they shared the same charging structure in the old model.
£5,000 is contributed annually to their ISA and pensions as summarised below.
For ongoing fees, we will use an average of the five growth portfolios as shown below.
We will exclude transaction costs, and investment returns are assumed to be 5% gross per annum. The analysis will be run over 10 years.
At a high level, the typical client on the new charging structure is better off by around 0.07% a year (1.86% vs 1.93% per annum).
Note that the fees to SJP are negative in the first year in the existing pricing model, as SJP effectively subsidise the adviser's initial fee (3%) for the pension investments.
In our previous SJP fee analysis, we identified three challenges with the pricing model:
1. Providing a full financial planning service to the average client.
2. The adviser is incentivised to find new business rather than looking after existing clients.
3. It did not (officially) discount for larger clients.
Under the previous fee structure, the adviser was paid 0.5% of the funds under management. For the average client with £190,000 invested, in the absence of new business and investment growth, the adviser was paid less than £1,000 (0.5% of £190,000) a year to look after the client. Some may question how much genuine financial planning (which typically is time-intensive) can be offered at that price point. The new pricing model, with the adviser receiving 0.8%, appears to address that. However, 0.25% of this now goes to SJP, which means the adviser is only slightly better off (0.55% vs 0.5%), receiving £16,489 vs £15,034 in the old model over the 10 years.
Regarding challenge #2, in the old pricing model, the SJP adviser was paid 6 times as much (3% vs 0.5%) to find new business versus looking after clients with invested money. This differential has been much reduced, with the adviser receiving a maximum of 2% of the initial money invested (2/3 of the total initial fee) versus 0.55% for invested money.
We will now examine a client with a bigger pot of investments to evaluate the impact of discounting in the new model.
Example client two: £1m invested
Our second client has £750,000 in pensions and £250,000 in ISAs. They invest £20,000 into their pensions and £10,000 into their ISAs each year.
The impact of discounting can be seen here, with the client paying 0.19% per annum less over the 10 years (1.89% vs 1.70%).
As mentioned previously, the discounting is implemented in two areas:
Initial fees: Whereas example client one paid an initial fee of 3% on their initial investment of £190,000, example client two pays 1.75% on their £1,000,000 initial investment, broken down as follows:
First £250,000 @3% = £7,500
Second £250,000 @2% = £5,000
Remaining £500,000 @1% = £5,000
Total initial fee: £17,500
Adviser receives 2/3: £11,667
It's worth noting that regular contributions are not discounted. Example client two, who is contributing £30,000 a year (£20,000 to the pension, £10,000 to the ISA), will pay 3% on the contribution (£9,000 assuming no discounting) rather than the discounted 1.75% that the initial contribution received.
One potential challenge we see for potential clients in the new world is the possible increase in initial fees for those with larger pensions. Previously, the pension incurred a 0% explicit fee, so the only initial fee was £12,500 for the £250,000 ISA in our example, versus £17,500 in the new world. This assumes full 5% initial fees are charged on the ISA. According to a Citywire article, 97% of transactions were undertaken at a 3% initial advice fee, bringing the previous initial fee down to £7,500, and we would expect discounting with the new pricing structure as well for clients with this amount to invest.
Product fees:
The product discounts have less of an impact on overall fees than on the initial fee discounts. For example, in year five, example client two is saving around 0.05% a year versus client one (1.55% on a balance of circa £1.36m vs 1.6% on a balance of around £280,000).
We will next examine the client with £2m invested, to further investigate discounting and the breakdown between adviser and SJP fees.
Example client three: £2m invested
Our final example covers clients with £1,500,000 in pensions and £500,000 in ISAs. They are contributing £50,000 per annum to their pensions and £40,000 to their ISAs.
As with example client two, the effects of discounting can be seen, with annual savings of 0.24% per annum (1.67% vs 1.91%) versus the old model.
As with example client two, initial fees are increased from £25,000 (5% on the £500,000 ISA) to £27,500 in the new model (£6,875 on the ISA and £20,625 on the pension), although in both pricing models, we would expect very few to pay headline rates.
While there is a reasonable overall cost saving of almost £70,000 over the 10 years analysed (£526,162 vs £595.381), there is no escaping the fact that around 60% (£18,667 out of a total of £526,162) of the overall fee doesn't go to the adviser, who, in our opinion, is providing the vast majority of the value in the relationship. As we mentioned in our previous research, for a client with this amount invested, we would suggest that the non-adviser, commoditised part of the overall package (investment funds and platform) can be offered for less than £10,000 a year, saving over £20,000 per annum for this example.
Conclusion
For the typical SJP potential client, these changes are positive:
Overall fees in general have reduced, making them even more competitive for the typical client with £190,000 invested versus other wealth managers.
Product (ISA, pension, etc) pricing has been aligned.
Exit charges have been eliminated.
The adviser is paid slightly more on an ongoing basis, enabling them to offer a better service.
As described above, we feel there is still some room for improvement, including:
Greater discounting for clients with bigger pots, offering reduced headline fees, meaning and reducing pressure for advisers to discount.
Clients are still getting charged for top-ups, and these top-ups aren't eligible for initial fee discounting.
We would prefer the adviser to be paid a larger portion of the ongoing fee.
Exit fees are still in place for existing clients, meaning that some may feel trapped until the 6-year window is up.
However, no fee model is perfect!
Next steps
If you want help understanding the fees you are currently paying or feel that you don't have a robust retirement plan in place, please contact us for a no-obligation discussion.
About us
The team at Pyrford Financial Planning are highly qualified Independent Financial Advisers based in Weybridge, Surrey. We specialise in retirement planning and provide pension advice, investment advice and inheritance tax advice.
Our office telephone number is 01932 645150.
Our address is No. 5 The Heights, Weybridge, KT13 0NY.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Although best efforts are made to ensure all information is accurate, you should not rely on this blog for your personal situation or planning.
The value of your investment can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
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