Simplicity, from a client usage perspective, is also key. Many providers now offer a client-view online-only facility providing basic valuation information and literature requests, and here the key will be simplicity of use, clarity of information and general user-friendly thought in web portal design and presentation.
This concept should extend to all client-ending communications, be they annual statements, valuations or transactional literature, making or switching investments or changing address or death beneficiaries; in fact, at any point where the client might have cause to contact the Sipp provider.
Safe and sound
An increasing concern to be accommodated is the security of your client’s funds. A trust-based Sipp provider holds no client monies and therefore client funds are individually ring-fenced in the event of the provider’s failure.
An insured Sipp, however, includes both the provider and client investment in a single entity. Provider failure here, although covered by the FSCS, might take considerable time to reconcile and place the client back in funds. A trust-based Sipp offers no FSCS protection for the Sipp itself, but would cover any regulated assets individually held within it.
Worth noting is the FSA’s recent consultation on capital adequacy, which if implemented in accordance with the initial proposals will require most Sipp providers to significantly increase their capital base. For those that are able to achieve this new benchmark, any wind-up of the business should occur in an organised way.
However, several providers may struggle, resulting in possible consolidation and sales of Sipp business books in coming years.
A strong financial model and a track record of profitability are therefore required to give your client the greatest reassurance possible.
Fees cannot be ignored; they should be transparent and easy to understand. Providers vary hugely in the pricing models they adopt. An itemised list of costs is clearly straightforward, but in some cases it is more appropriate to charge on a time-cost basis.
Where variable time-related administration is involved, such as property purchase, there is risk of cross-subsidy between simple and complex cases if a flat-rate fee is charged.
For clients who have more detailed needs, it is important to assess the charging model and ensure that they are happy with it and you are satisfied that the customer is being treated fairly.
Best of all
For an adviser, the costs of a Sipp provider are primarily considered in the context of being able to justify them in terms of the features and services offered.
