Guest blog: Are you being served?


Guest Blog Dentons 150pxIn his latest guest blog for Investment Sense, Martin Tilley, Director of Technical Services at Dentons looks at the growing issue of poor service from SIPP providers:

Those of us that are advancing in years will remember the 1970/80s situation comedy set in the fictitious Grace Brothers store where the likes of Mr Humphries and Mrs Slocombe would fawn around their customers providing the age old traditional British customer service.

Martin Tilley, Director of Technical Services at Dentons

Martin Tilley

Contact Martin Tilley:

01483 521 521

Views have been expressed by advisers that such service from SIPP (Self-Invested Personal Pension) providers no longer exists. It is frustrating to note the regularity that some SIPP providers are portrayed in the industry press as failing to deliver service to a standard considered acceptable.

Now I will admit that the life of an adviser is not an easy one and clients can be demanding but the adviser will know that the service chain they deliver is only as strong as their weakest link.

Sadly, there is some evidence to back up the service criticisms aimed at the bespoke SIPP market. The Financial Times publication FT Adviser run annual service awards and those published in November of 2013 saw only one bespoke SIPP provider appearing in the highest 5* award category.

Breaking it down, a SIPP is a financial product, the boundaries of which are set by HMRC rules and tax legislation. Thus the only way of differentiating between different providers is:This is disappointing, given that SIPPs are in theory and historically at least about a more tailored and individual approach to retirement savings. It seems counter intuitive that providers specialising in this area are not focussed in delivering this most important of outcomes.

Flexibility on accepted assets

Whilst HMRC permit any investment to be held, those causing taxable outcomes are inappropriate and thus not accepted by any reputable SIPP provider. It seems those that have been “too flexible” in the past may now be suffering the consequences of their flexibility. I suspect that in the future (as near as June and the thematic review findings release) we may see the FCA restricting permissions for some firms so the market may be split between those than can offer flexibility and those that can’t. There is also a lot of support for a “permitted investment list” which will remove the “flexibility” that some have provided to leave a defined “acceptable investment” playing field.

If this is taken out of the equation, SIPPs compete on just two things service and price.

To state the obvious you don’t get the former without the latter, but some firms think you can have the latter without the former. These firms are seeing business walk out the back door quicker than it comes in the front and thus are forced to lower fees or incentivise transfers at a loss, which if the back door isn’t closed, is the start of a downward spiral.

Service is absolutely key in the bespoke market and key to that is the staff. The number of staff, the attitude of staff and the experience and training of staff.

A sustainable SIPP business model must have service levels at the top of the agenda.