Alistair Hardie: Absolutely. We are all aware of what the Budget has done to the very top end of the Sipp market, but I think if you step back and look at the fundamentals of the Sipp and what it can deliver for a customer, it comes back to the main benefits of choice, flexibility and control in terms of where you invest your money and how you take it out. None of that has been lost; the fundamentals are still there.
Dennis Hall: It is taking that step first: are pensions still the right vehicle for everybody? If they are, then the Sipp is still in a very strong position for a good segment of the marketplace. We find there is a lot of interest in them; we are using them for our client bank. It is probably the pension vehicle of choice.
Petronella West: In the wealth management market, I would agree with that totally, for the right client. The only thing that concerns me about Sipps is where they are used in the wrong environment, hence the Financial Services Authority’s (FSA’s) pension switching review, because it would appear they have been advised incorrectly. That is detrimental to all of us in the industry, which is a shame, but for the right clients and the right portfolio sizes, they still represent the right investment choice.
Ian Porter: I would agree very much with what Petronella was saying. I do not think about things from a product-centric view; I try to think about how my clients are treated. Do we still have clients who want things that Sipps can deliver? Absolutely. There is growing awareness. Our experience is that on the back of the market downturn, people are more than ever looking for an investment strategy that underpins their long-term savings. If they want, for example, discretionary fund management for their pension fund or they want to adopt some form of platform-based investment strategy that most high net worth advisers now offer, then Sipps are an obvious thing to be discussing with clients.
John Moret: We are at quite an interesting point in the development of the Sipp market, because if you look at the figures in the latest survey from Pensions Management, it has confirmed that the growth is still there: around 20% over the past 12 months or so, but if you drill down into those figures, you will see that the main growth is coming in the collective Sipp or platform-type proposition, rather than at the top end. That is where it can get confusing. When we talk about Sipps, we perhaps have to be a bit clearer about what we are talking about. Are we talking about the original Sipp model, which was a basic do-anything type proposition, or are we looking at something that is effectively what used to be a personal pension and is now just called a Sipp?
Walker: Do you think that is still an issue in the industry: confusion over what is a Sipp and what is a personal pension?
Moret: There are people, the FSA included, who are concerned about lack of clarity and concerned as to whether investors who have a Sipp fully understand what they have, what the choices are, etc. How big an issue it is, I am not so sure. You could take the view that if you are a provider of Sipps, it is extremely good news, because it means the Sipp market is going to get bigger and bigger, but I think what we will find is that the nature and activities of Sipp providers will maybe change over time.
West: Some of the offerings in the market, in particular from Axa, are Sipps but they are simply offering a more platform-based approach to buying a pension, so you would have to ask if you really need a Sipp? It comes back to cost in the end – are you paying that extra £500-a-year annnal Sipp fee to buy a platform; an unfettered personal pension that you could buy cheaper? We see the same money going round; you do not see a lot of new net inflows of cash going into pensions. The money is just transferring from older-style pensions to more modern-style pensions. My concern is the advice that is given to those clients is the right advice for moving that money, and that they are not moving from one product to another simply because there is a fee or a trail commission involved. There is a lot of clever marketing with Sipps – since pensions have become unattractive, Sipps may prove to be a more popular route as they appear to be more upmarket, sophisticated and a better product.
