“Direct-to-consumer Sipps will continue to grow in popularity because investors want to take control of their assets in such a volatile time,” says Paul Darvill, director of administration at Talbot and Muir, although Mr Darvill also conceded this approach is potentially risky, particularly for those who are transferring where there are no safeguarded benefits.
He says, “This could lead to further claims against providers, both ceding and receiving schemes, for losses that the investor was unaware of at the time.”
Greg Kingston, head of product and insight at Suffolk Life says, “The trend towards many Sipp operators refusing to accept certain types of pension transfers without financial advice should be a signal to direct investors not that Sipp operators are necessarily risk-adverse but that complex decisions and pension transfers really do need proper financial advice.”
Winners and losers
The number of new Sipps set-up over the past 12 months appears to have dropped dramatically when comparing data with that collated in April. Table 5 details sales and closures, and accumulates the total value of all Sipps together with the average individual Sipp value. A fall from 166,201 to 92,721 new plans looks concerning on the surface, but it is important to point out that Hargreaves Lansdown – which sold 58,590 in 12 months when the survey was conducted in April – did not disclose sales for this survey.
Interestingly, the average Sipp value has risen from £236,964 to £252,303, but this could be a result of improvements in equity markets or again, simply Hargreaves’ absence.
The total number of Sipps fell since our last survey from 953,991 to 872,189, but again the absence of Hargreaves Lansdown – which in April stated it administers more than 252,000 plans – is clouding what could well have been a sizeable increase.
Sipp providers have been merging with and acquiring each others’ businesses on a regular basis in recent months. One of the biggest buys was Curtis Banks’ acquisition of Suffolk Life from Legal & General in a deal worth £45m. Rupert Curtis, chief executive of Curtis Banks, says, “Consolidation is happening at all levels, from smaller specialist firms to larger multinationals who may also operate insured Sipps. The reality in the market is that there are few providers with proven ability to handle acquisitions, and fewer still who can accommodate acquisitions of significant scale.”
With this is mind, it appears to be only a matter of time before further activity emerges, as the larger and more resourceful providers look to swoop in and beef up assets under administration.
“Should there be increased consolidation it will be detrimental to pensions as a whole,” says Mr Darvill, who adds that consumer choice is clearly affected by a reduced number of providers. “Advisers and their clients will be the losers should this happen, with a lack of choice and possibly ending up with a provider they would have never chosen.”
