Stockbroker Tilney & Co is taking its first steps into the pension market with the introduction of its self-invested personal pension. Our panel review the Sipp by first commenting on how it fits into the market.
Laird describes the plan as a niche product.
Oliver says: "The Sipp market for income withdrawal and phased retirement is bound to increase as annuity rates stay low. The plan is designed with the £500,000-£750,000 fund in mind. Private fund managers are available to the clients with 150 years of stockbroking experience. The Sipp is an ideal vehicle for this type of organisation."
But Wilkins is sceptical, saying: "This plan does not fit into the market very well, especially if Tilney is looking for a minimum of £100,000 in its balanced managed fund. Other Sipp providers ask for far less to be deposited in their own funds."
Flowers says: "If one assumes that the market is Tilney's own private clients, then it is fine. If not, it does not have enough to distinguish itself."
Cowell says the product is suitable for high-net-worth individuals who have already accrued pension benefits elsewhere that could be transferred into the Sipp.
Wilkins says: "This is probably for someone with a large existing pension and who does not mind leaving £100,000 in Tilney's funds."
Oliver highlights people in the 50-plus age range and early retirees who want to keep their fund invested but want hands- on involvement.
Most of the panel agree that the plan does not present any marketing opportunities.
Laird says: "Tilney is not a strong enough name."
Wilkins says: "I am sure that Tilney is a very nice company. However, I can't see any possible reason as to why its plan should be used instead of one of the more established companies."
The main useful features identified by the panel are the charging structure and the link with James Hay.
Wilkins says: "There is a lowish annual management charge in the balanced managed fund, simplicity of charges and the backing of James Hay."
Commenting further on James Hay, Flowers says: "It is top-notch. It is to Sipps what Rob Andrew was to England – a safe pair of hands."
Laird says: "It is not the cheapest but one of the better firms."
Oliver says: "James Hay has an excellent reputation for administering this type of plan and it is no surprise to see Tilney using it."
Wilkins is equally impressed. He says: "James Hay has an excellent reputation which is becoming bigger by the day and it is established as an expert in the self-investment field."
Laird is pleased with the flexibility offered, especially for bigger investments, but Flowers believes the flexibility is pretty standard.
Oliver says: "For clients who are 50-plus but want to make their own investment decisions up until age 75, the Tilney Sipp offers the ideal vehicle as long as the downside, such as a market fall, is appreciated."
Commenting on the range of investment options available, Wilkins says: "They are terrible. A client with £100,000 invested has the option of only one fund."
Flowers says: "A Sipp provides an unending range of options. However, this scheme is aimed at Tilney's own investment management. One would not buy its unit trusts on track record so the only option is really the discretionary or advisory service."
Oliver says: "Tilney does offer its own funds but the attraction of commercial property, unit trusts and equities in the UK and overseas are what will attract the client who wants to use this type of plan."
Most of the panel share the view that Tilney's past performance record is disappointing.
Flowers says: "The unit trusts are below average over the last 12 months."
Laird says: "It is very average. I note that investments worth under £100,000 would normally be made via the Tilney balanced managed fund. This fund was launched in June 1995 and the performance according to Tilney has been top-decile compared with other managed pension funds. However, £100,000 is a lot of eggs in one basket."
Turning to Tilney's reputation in the market, Oliver says: "I was unaware of Tilney until I was asked to look at this product but my conversations with the company this week have impressed me. It has a long pedigree and seems to be looking to break new ground where its established skills will benefit it."
Laird says: "Tilney is reasonably well known within the industry but I doubt that many clients will have heard of it. Most would prefer to use a local stockbroker."
Flowers thinks that the plan's main disadvantage is that monthly contributions are not allowed. Cowell believes the fund range is restrictive and notes that there is no facility to contract out of Serps.
Laird says: "There is a lack of name awareness and the initial set-up and annual administration fees are higher than most."
Analysing the charges in more detail, Cowell says these are reasonable for bigger sums.
Oliver says: "As long as the plan is used for the right target market, for example, £500,000 to £750,000, the charges are fair. For people with smaller pots, the charges could look expensive but Tilney indicates that, to get value out of its plan, a £500,000 fund is preferable."
Differing views are expressed on the commission rate. Cowell thinks the rate is fair although he and Laird note that no renewal commission is payable.
Cowell says: "If the IFA is going to offer ongoing advice, then renewal commission is the best way of providing remuneration."
Laird says: "There does not appear to be a renewal commission facility essential for this type of contract."
Laird describes the product literature as confusing and Cowell reckons it could have been presented as one brochure instead of five or six.
Summing up, Wilkins says: "I am sure Tilney is a very friendly company but I cannot see this plan competing with any of the major players."
David Flowers, senior partner, The Investment Practice,
Adrian Wilkins, associate, Redcliffe Associates,
Mark Cowell, independent financial adviser, Maunby Investment Management,
Steve Laird, assistant regional director, R J Temple,
Mark Oliver, financial planner, Meridan Group.