IFAs anticipate boost in SIPP business

Almost 40% of IFAs expect an increase in SIPP business over the next year, and there is growing interest in schemes linked to platforms and discretionary managers, according to a report from Defaqto.

Of those who expect an increase in business, around 80% say the rise could be over 10%.

Defaqto’s 2010 SIPP Report surveyed 140 IFAs, of whom 71% are general practitioners and 11% specialise in the pensions market.

It found that fees are a prime factor in advisers’ selection of SIPPs to recommend to clients.
Analysis of IFAs’ use of search tool Defaqto Engage shows that set-up fees, administration fees and transfer fees are top concerns when selecting pure SIPPs.

A total of 40% of advisers also prefer plans with structured investment choices rather than a fully flexible plan. The report says there is strong interest from advisers in plans with fund supermarket links and “growing interest” in plans permitting ties to discretionary fund managers.

The report reads: “Overall, it appears that there continues to be a demand for SIPPs in their fullest format. However, there is now a strong interest in simplified schemes with investment in a limited range of styles such as discretionary management or through fund supermarkets.

“Given good administration and service, the SIPP product has a good future and will soon reach maturity.”

Case sizes of SIPPs have decreased slightly since 2009 and more transactions now fall into the £50,000 to £100,000 bracket, rather than the £200,000 plus range.

Defaqto has also published a free guide to SIPPs, which gives IFAs guidance on factors that should be considered when recommending the products to clients. It can be downloaded from:
www.defaqto.com/adviser/ifa/guides

To what extent do you think your SIPP business will increase over the next 12 months?