“Leaving the decision on how to categorise property in the hands of the provider who must then stump up the capital behind it is likely to be a decision that needs review.”
Charging
One thing that must be kept in mind when looking into which assets to invest in is charges. These remain largely unchanged over the past few years. Costs across the provider board vary hugely and depend on what the client is specifically looking to use the Sipp for and which assets they wish to invest in. Table 4 details fees for initial set up charges, annual costs, and transfers in and out, as well as transactional fees for various assets. While the Table does not change a great deal over the years, it is important to keep up-to-date with any potential changes and for frequent traders, it is key to check out transactional costs.
Every Sipp is different and every provider offers different assets. Table 5 takes a look at different types of investments allowed in each plan, from commercial property to shares to hotel rooms.
This year, a new column has been added to the Table in the run up to September 2016: Overseas commercial property. Of all respondents, 14 say they offer the asset, despite it being a non-standard asset. The Table also shows how many funds are available for each plan and whether – if investing in esoteric assets, which many Sipps are used for – there are internal or external due diligence processes in place.
Available online, Table B details further retirement options – whether there is phased retirement or whether capped, flexible and phased drawdown are available plus any charges. This Table again remains largely unchanged and through the years, the charges have increased but not dramatically. Table C describes the account provider and current account rates.
A future in D2C?
One area that could prove to be key in the next few years once pension pots become easier to access is the ability to have a direct to consumer (D2C) Sipp.
Chris Smeaton, director of marketing at James Hay Partnership says the firm does not believe there is a place for offering Sipps direct to consumers, particularly “where Sipps do not have to have all of the complexities and higher costs we have seen in the past.”
“We see a growing trend where consumers want the option to mix and match their approach to financial products with the option to take full advice, or ad hoc advice at appropriate points, for example to purchase certain assets, or at-retirement only.”
