Transparency matters
To allow advisers to compare and select the right Sipp for their clients, price transparency is key. Here, transparency in terms of platform or product charging is only one aspect. For true transparency the three key elements of charges associated with a Sipp – product or platform charge, investment charge and adviser charge – must be kept completely independent of each other.
From an investment charge perspective, clean share class funds are the obvious method of achieving transparency – not just within the funds sector, but across investments as a whole. The RDR means advisers need to consider different asset classes such as investment trusts and ETFs; if all investments have a simple, clean price, this is more transparent and better for the adviser, who can quickly compare on cost. In many cases, moving to clean share class funds can result in improving fund terms by up to 0.25 per cent.
Saving clients’ money by selecting the Sipp with the most appropriate charging structure is only one way that advisers can support clients and illustrate the value of their services. The RDR has brought the cost of financial advice into the spotlight but the reality is that, for many, the cost of not receiving advice can be far higher.
Clients who have been receiving financial advice in recent years will be far less likely to have been impacted by changes to the lifetime and annual allowances, with advisers ensuring that, if appropriate, clients have applied for protection.
Equally, advisers can advocate both their value and indeed the tax efficiency of pension saving by advising clients on how to reclaim valuable personal allowances or reducing the tax charge on child benefit payments. With another protection regime and cuts to the annual allowance on the horizon, the need for financial advice on retirement planning has never been stronger.
By choosing the right Sipp for their client and guiding them through the potential complexities (and benefits) of Sipps and pensions in general, the adviser could make a significant impact on the pension fund value at retirement.
And with life expectancy on the increase and more people expected to live beyond 100, every penny counts.
Brian Davidson is platform proposition manager at Alliance Trust Savings
