The smoke and mirrors of the UK’s largest “independent” wealth managers

May 23, 2018 | Tony Byrne's View

Two of the most successful wealth managers in recent years, both FTSE 100 Share Index companies, are in fact not independent and neither can they be truly described as wealth managers as such. The two companies I am talking about are of course Hargreaves Lansdown and St James’ Place.

Succession Group, a successful consolidator of Independent Financial Adviser firms, is now the largest independent wealth manager in the UK even though the funds under management of the other two companies currently dwarf Succession Group’s funds.

Hargreaves Lansdown has been a highly successful company for the last 40 years or so historically based on successful marketing through direct mail, low charges, good research and good service. Its market has been primarily the self-investor. However, since the departure of the founders, Stephen Lansdown and Peter Hargreaves, I feel the company is losing its way. It is no longer independent as it has become a Restricted Adviser firm, its platform Vantage only offers 2,500 funds rather than the whole market of 8,000 funds and it has increased its charges making it much less competitive than previously. It is still an excellent company but today it has more of the hallmarks of a large stockbroker firm than anything else.

St James’ Place has been masquerading itself for the last 25 years as an independent wealth manager but it is nothing of the sort. It is in fact an insurance company. Plain and simple. It is certainly not independent as it has Restricted Adviser status. It has a lot of so-called Partners which are nothing other than individuals or firms who are appointed representatives of St James’ Place. They are not partners in the strict legal sense.

St James’ Place does trouble me. A lot. I have been approached by them on several occasions to sell out to them with the promise of riches. The problem is it would be at the expense of our clients which I find disturbing. I’ve known for years that St James’ Place’s charges are high and its fund performance poor. Its so-called partners also appear to be wealthy well at least the ones I have personally met. Someone has to pay for this and it is of course the clients .

There was a highly critical report on St James’ Place carried out by Which? Money in July last year based on under cover meetings with 12 St James’ Place advisers. Not only did it highlight very poor practice by the advisers, misleading advice and non-disclosure of information to clients but it also showed just how high are their charges including high initial fees, high annual management fees and high exit penalties and how poor is their investment performance. None of this surprised me in the least. In my experience it is the worst company imaginable for obtaining information from them on their existing clients where we have been instructed by a client to carry out a review of their James’ Place Investments.

One thing I cannot deny is that St James’ Place’s marketing is excellent and their advisers, partners I should say, do appear to offer a good service to their clients.

Then there is Succession Group. The company offers two main services to advisers – a membership service or an acquisition service if you wish to sell your Independent Financial Adviser business to them. We joined Succession as a member in January this year so we are not owned by them.

The company has its own investment platform with £3.5b of funds under management. Its acquired firms have a further £8b invested elsewhere.

Unlike St James’ Place and Hargreaves Lansdown, Succession Group is truly an independent wealth manager and currently the largest one in the UK.

So if you are considering investing your money with an independent wealth manager why not invest it with us rather than Hargreaves Lansdown or St James’ Place? You know it makes sense.

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