Direct-to-consumer
An area to consider in the future, as people gain more access to their pension pots, is direct-to-consumer Sipps.
Ms Trott says Sipps are generally complex products – especially with regards to all the options now available at retirement. “If you take the retirement benefits out of the equation, there are some restricted investment offerings that are more suited towards the DIY investor. Sipps are not all about the investments and clients should always be sure they understand the contract they are signing up to, and the charges they will be expected to pay.”
“Large numbers of deals or an increasing fund value could see clients paying more than they expect in a so-called low-cost Sipp because they aren’t using it as intended by the provider.”
Ms Turtle says that, although there are still lots of clients who wish to go directly to Sipp providers, rules that are being put in place are there to protect the clients. “There are various times when clients do need advice and should seek advice especially now with the new pension freedoms. Certain investments like property do tend to have clients dealing direct with providers.”
But Martin Tilley, director of pensions technical at Dentons, believes it is still possible for a provider to accept a client direct, without an adviser, but this is based on being able to caveat exactly what services the provider is offering.
He says, “The client needs to accept responsibility for their actions when they have come to a Sipp provider directly, and not hide behind claims management firms and the Ombudsman if things go wrong. In this respect, client’s accountability needs to be stepped up and enforced if direct client business is to continue.”
The year ahead
The next 12 months look set to be interesting for the Sipp industry, as providers prepare for the capital adequacy deadline. Jeff Steedman, head of business development at Xafinity, predicts the Sipp and small self-administered scheme (Ssas) markets will undergo some mergers and acquisitions in the build up to September, and there is definitely a space for the bespoke providers. “This may include the sale of part of a Sipp provider’s client bank, so there will be acquisition opportunities – but only if the valuation of the business is realistic and the risks within the business are manageable.”
There is still a way to go before September, but full impact of the pensions freedoms on Sipps is already being noted (particularly by the rise in number of Sipps being closed over the past 12 months). And whether or not the talk of mergers and acquisitions that has been suggested within the past few years will come to fruition remains to be seen.
