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James Hay sipps the fruits of external funds

Parrott says: "This offers a very good opportunity to revisit existing PPP clients and to attract those who are not getting much from their existing providers. The plan offers full Sipp benefits at equal or even lower cost than most standard insured PPPs. Many insurance companies will need to take this on board. There is a very compelling opportunity for PPP holders paying high charges or seeing poor performance to move to this arrangement. Unusually, such a move could be done at minimal cost with maximum benefit."

Evaluating the strong points of the product, Norlund says: "James Hay has an excellent reputation in the market because of its links with mainstream life offices in the Sipp and small self administered scheme world. This adds credibility to the product concept. The marketing material speaks of offering control and flexibility and the plan certainly delivers on this promise."

Parrott says: "The strong points include the fact that it offers the opportunity to establish a Sipp at lower cost than most normal insured PPPs. There is also no bid/offer spread on select funds and no monthly plan fee. Wider, bespoke portfolios can also be incorporated on whatever terms the IFA can arrange."

Cocken says: "The product has a clear charging structure and commission options will be easier to explain to clients. There is also a clear, well-written explanation of investment restrictions, particularly on the property purchase section."

Turning to the product’s drawbacks, Parrott says: "It is very hard to see any disadvantages to this product, although there could be an element of double charging if other fund managers are used."

Cocken says: "The additional charge for not using James Hay’s solicitors does not help IFAs who are developing solicitor connections locally, as it would be difficult to justify this additional charge to the client. Many of the Sipp property purchase enquiries come from solicitors. In these cases IFAs may wish to look elsewhere."

Norlund says: "As always, the major disadvantage of Sipps is the need for assets to be formally owned by the trustees and this often puts off potential investors, because they perceive that ownership should vest in them."

Viewing the range of investment options available, Parrott says: "The James Hay select fund managers are mainly well known names with a good range of funds and markets. However, other self-investment can be used to include other managers or approved Inland Revenue assets. Admittedly these may not be as competitively charged, but the investment options overall could not be wider."

Norlund says: "Sipp legislation provides for a broad range of investment options. James Hay has acted innovatively in securing excellent terms from ten investment groups and this should satisfy the needs of many prospective investors."

Cocken adds: "The product has a peculiar anomaly, with Standard Life on the list. Although the funds listed are corporate from the company, with Standard Life marketing its own Sipp with James Hay as administrators and trustees, which route should an IFA take if he wishes to access Standard Life’s investment funds? Apart from that, the investments have little restrictions to using other funds."

Addressing James Hay’s reputation, Parrott says: "James Hay is one of the leading pension trustees and manages a large number of Sipps, either directly or through links with insurance companies. Overall the company enjoys a very good reputation. I have used James Hay and fund it very efficient at managing Sipps."


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