St. James’s Place to Review Lavish Perks as Sales Incentives

(Bloomberg) -- Financial advisers working for St. James’s Place Plc may be about to lose rewards including cruises, lavish holidays and watches as the firm plans to review its incentives.

The firm is conducting an internal review of its incentives and recognition structure, according to an internal memo sent to employees by Chief Executive Officer Andrew Croft on Friday. The Telegraph reported on the contents of the memo earlier.

“We need to make sure that it reflects our culture and is fit-for-purpose in the fast-changing industry we operate within and is driving the outcomes that we, and our clients, value most,” Croft said in the memo.

The statement was sent to staff just days before The Sunday Times published a report by a former St. James’s Place partner who revealed the lavish rewards employees were given for bringing in new money, as well as a fee structure he said wasn’t understood by most clients. Perks, he said, included Montblanc pens, Mulberry bags and diamond-encrusted cufflinks for senior partners.

The wealth manager also hosted annual, week-long overseas conferences in locations including South Africa, Zambia, Egypt, Japan and California for successful advisers, the partner said in the report.

High Fees

St. James’s Place has come under fire for other issues in recent months, such as fees. Investors who invest large sums of money could see almost half their profits eroded by the company’s charges over 20 years, according to a separate Times’ report in July. The newspaper said that someone who deposited 1 million pounds ($1.2 million) would lose almost the same amount in fees over that time.

The internal memo made no mention of fees.

“The internal review relates to our incentives and recognition structure,” a spokesman said in a statement on Monday. “On fees, we regularly assess how our charges compare against the marketplace via independent research carried out by Grant Thornton. This shows that St. James’s Place has competitive fees compared to other fully advised wealth management services in the U.K.”

The asset management industry is in a state of self-reflection amid an investor exodus from funds charging high fees in exchange for mediocre returns. St. James’s Place found itself at the center of a crisis in June when former star picker Neil Woodford suspended redemptions from his flagship fund. The wealth manager was one of his long-time backers even after a long period of under performance and severed its links only after he froze the fund.

“This internal review will include all our incentives and events, including overseas partners’ business meetings,’’ according to Croft’s internal memo. “We firmly believe in celebrating and recognizing the success partners deliver for clients and the value these events provide the partnership to maintain the highest standards of professional development. However, we should question ourselves on whether they fully meet our needs or appropriately reflect the culture of our business and we will be discussing that with you over the next few months.”

To contact the reporter on this story: Suzy Waite in London at swaite8@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Sree Vidya Bhaktavatsalam

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