Which? magazine has published the findings of an undercover investigation into one of the UK's most prominent wealth managers.

The chief executive of UK wealth manager St James's Place has attempted to defend the group's reputation after an undercover investigation unveiled alleged malpractice among some of its advisors. 

Which? magazine attended 12 undercover meetings with advisors from SJP. 

The publication found that one of the UK's largest financial services providers had failed to comply with transparency rules on the disclosure of charges, and as a result misled customers about the nature of their services.

But David Bellamy, SJP's chief executive, has defended the firm's position, assuring it offers value-for-money services. 

He said: “St James's Place offers high-quality, face-to-face financial advice, evidenced by 98 per cent of clients who said our services represent reasonable, good or excellent value for money, with 81 per cent [reporting] 'good or excellent' [quality of serivce]. Our advisors are committed to putting clients' interests first and we will continue to provide the excellent service to clients that has underpinned our growth over the past 25 years.”

SJP is a FTSE 100 company. Its 570,000 clients have some £75.3 billion ($98.1 billion) invested through the business. Its 3,400-strong network of advisors accounts for one-in-eight professional advisors in the UK, according to the Association of Professional Financial Advisors. 

SJP, which operates a so-called “umbrella” business model enabling advisors to use its brand and services in exchange for a cut of their profits, attributes its success to strong customer satisfaction and a “unique proposition”. 

But Which? claims SJP is “extremely expensive”.

As part of its probe, the magazine sent a team of undercover researchers to speak to 12 SJP advisors under the guise they were seeking advice on around £100,000 of investible assets. All were offered free introductory meetings.

Which? said it was mainly interested in two issues: how advisors disclosed charges; and how clear they were about the fact they are not technically independent financial advisors, meaning they would only recommend products they are paid commission on – even if cheaper, better-suited options are available. 

“When our investigators met SJP’s advisors, we found that most were relatively forthcoming with information about their fees – but four of the 12 failed to talk in detail about the likely costs at all,” Which? said in its article. 

It continued: “This is directly against the FCA’s guidelines for advisors, which state that they are supposed to tell clients both verbally and in writing about the cost of their services.”

When advisors did provide information, there were discrepancies, Which? said. Some disclosed initial charges of 4.5 per cent of the money invested, while others put the up-front cost at 5 per cent.

Additionally, SJP levies annual fees, which pay for advice and the costs of investments it recommends. But according to Which?, only seven of the 12 advisors mentioned these, and their estimates ranged from 1.25 per cent to 2.3 per cent – a £525 difference a year on a £50,000 investment. 

Some advisors also made questionable claims, Which? added. One reportedly described SJP's charge structure by saying: “They're no charges, they're no fees. The only thing is, if you do anything, that's when I would get paid.”

Which? touted this as “nonsense”, as fees will always leave a client's pocket once they onboard with SJP. 

“In our view, these inconsistent explanations aren’t acceptable,” Which? said. “If a customer asks about investment costs, they should expect to be told all of them by default.”

To tackle issues surrounding transparency and fee disclosure, the UK's financial services watchdog has published a wide-reaching report on the back of a two-year investigation into the nation's asset management sector. To read more about this, click here.