Consolidation in the Sipp market continues, with the rate only likely to increase. This means that, sooner or later, an adviser will more than likely have a client whose Sipp operator is acquired. What five things should you be thinking about?
1. Why was the Sipp provider acquired?
Quite simply, is this a commercial acquisition or something more distressed? If the former, then it should be business as usual. If the latter, especially if the acquisition was from special administration, the immediate options may be limited.
2. What is the financial state of the new Sipp provider?
A high level due diligence check should be sufficient to determine if this acquisition is out of the frying pan and into the fire. If it feels like the latter then do not hesitate to move your client.
Record keeping at failed or poorly run Sipp providers is likely to be patchy at best, and you do not want details to be lost during the transition that later delay a transfer away.
3. What is the business model of the new Sipp provider?
Different providers have different motivations for buying a Sipp book or another operator. There are those which also provide financial advice and in-house investment solutions, and you may be uncomfortable with the risk they will sell directly to your client.
4. What are the new Sipp provider’s plans?
Are they going to continue to run the existing scheme and products as before, or will the Sipp be transferred to a different product with the new provider? The latter may cause some delays but could be beneficial for the client. This would trigger further questions, such as whether the charges will remain the same or change.
5. Can I work with the new Sipp provider?
This is perhaps the most practical question to address. If the Sipp is transferring, are new online registration details required? Do they recognise the adviser’s authority for the correct plans? Are there new terms of business that need to be signed? Can the adviser charging still be collected and paid?
The responses to some of these questions will provide advisers with the first update for their clients as things progress. The sale of a client’s pension provider can be a disturbing event, entering administration even more so. With quick action and effective communication, advisers can provide appropriate reassurance for their clients in the crucial early days.
Greg Kingston is group communications director at Curtis Banks