Mulberry bags, Montblanc pens, and 'Wolf of Wall Street' conferences - a UK wealth manager is under fire for its 'extravagant' perks, high fees, and mediocre returns

wolf of wall streetActor Leonardo DiCaprio, in his role as Jordan Belfort in the 2013 film, &quotThe Wolf of Wall Street."Paramount Pictures

  • A UK wealth manager is under fire for its lavish employee perks and culture of maximizing client fees despite underperforming its rivals.
  • St. James's Place rewarded top performers with Mulberry Bags, Montblanc pens, diamond cufflinks, overseas trips that were "extravagant beyond words," and invites to conferences that were "something out of The Wolf of Wall Street," one of the firm's former financial advisers said in an article for The Sunday Times.
  • Employees were flown out to party on a privately hired cruise liner, went on safari in South Africa and Zambia, rode camels in Egypt and Jordan, and watched sumo wrestling in Japan, the former adviser said.
  • Shortly before the article came out, St. James's Place CEO Andrew Croft informed employees in a memo that an internal review of the company's incentives and recognition structure was underway, according to The Telegraph.
  • Visit Markets Insider's homepage for more stories.

A UK wealth manager is under fire for its lavish employee perks and culture of maximizing client fees despite underperforming its rivals.

St. James's Place rewarded top performers with Mulberry Bags, Montblanc pens, diamond cufflinks, overseas trips that were "extravagant beyond words," and invites to conferences that were "something out of the Wolf of Wall Street," one of the firm's former financial advisers told The Sunday Times.

The former adviser's claims are listed below:
  • Financial advisers who brought the most money into St James's Place - by persuading their clients to park their cash in SJP funds - were rewarded with Mulberry bags, Montblanc pens, and other luxury goods.
  • Those who ascended to the level of principal partner could receive $1,500 white-gold cufflinks encrusted in diamonds.
  • Top-performing employees were invited to events hosted by TV personalities that featured speakers such as Bill Clinton, David Beckham, and Lance Armstrong - before his fall from grace.
  • One annual conference in London was like "something out of the Wolf of Wall Street" with prizes handed out on stage. Employees and their spouses were put up in five-star hotels.
  • Top Gear host Richard Hammond was the guest speaker at another annual conference at a country hotel, where he reportedly said "his supercar didn't look out of place in the car park, as there were more Bentleys and Ferraris, belonging to SJP advisers, than you'd find at a classic car show."
  • Rainmakers could earn a spot on SJP's annual overseas trips, which were "extravagant beyond words."
  • Employees went on safari in South Africa and Zambia, rode camels in Egypt and Jordan, and watched sumo wrestling in Japan.
  • They were flown out to party on a privately hired luxury cruise liner with "free-flowing" wine and cocktails and "all-you-could-drink" champagne.
  • They also traveled to California winery where they were "treated like celebrities and there were people paid to act as paparazzi photographing us."

St. James's Place appears to have offered those perks despite generating mediocre returns for clients. Over the past decade, 23 of 38 St. James's Place funds have underperformed their peers, a Morningstar analysis for The Sunday Times found.

The firm's advisers were also encouraged to maximize client fees and discourage them from leaving, the former adviser wrote in The Sunday Times. The firm levied a 5% fee for each new investment made outside of pensions, charged 2% annually, and penalized clients who withdrew money from SJP funds, he wrote.

"The beauty of all this is that customers never really understand how much they are paying," and SJP could scoop up "almost half their profits" over time, he added.

Moreover, if clients tried to arrange a meeting with him to discuss withdrawing their money from SJP funds, he made it "as difficult as possible" as the longer he delayed, "the more money SJP and I made in fees."

Shortly before The Sunday Times article's publication, SJP CEO Andrew Croft informed employees in a memo that an internal review of the company's incentives and recognition structure was underway, according to The Telegraph.

"We value the success partners achieve on behalf of clients," SJP told The Sunday Times. "It would be wrong to imply our recognition schemes are predicated on anything other than the quality of advice provided, with ongoing client servicing, quality measures and other factors sitting alongside new business."

SJP declined to comment further in an email to Markets Insider.

The Sunday Times verified the author's claims with several other former advisers and managers, as well as current and former SJP clients.

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