Another group will be the finance directors of those firms for whom SIPPs are not part of their core operations, particularly wealth management firms. If they can offload the administration and capital resources needed to run a small book yet keep the clients and assets with them then there are signs that they will look to do so.
In short, consolidation of providers seems inevitable – how many firms will have the resources to meet the new requirements? So while all of this will be painful for providers, it will result in a more manageable SIPP market with far fewer yet stronger, better capitalised SIPP providers representing a lower risk to the end investor.
It must sound like a broken record now – the due diligence that advisers need to do must be thorough and regular. It goes without saying that no adviser would want to recommended a SIPP for their clients that subsequently ceases to operate or is moved to or bought by another provider – the reputational damage would be great.
Clients could well be stuck in limbo during this process, with the adviser losing control over the situation. The adviser certainly will not want to expend valuable time dealing with something that they can neither exert significant influence over nor recoup any income for their time. A rearrangement of investments within a SIPP after this year may also result in trail commission ceasing.
To protect their pension business and that of their clients advisers need to make sure that the SIPP provider they recommend is everything they say they are, and everything they need to be to meet the new regulatory demands. They need to be sure for all new and current clients too – making the right decision now will make an immeasurable difference in the future.
Greg Kingston is head of marketing at Suffolk Life
