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Make hay while the sun shines

James Hay has introduced Flexi-Sipp, a self-invested personal pension


which can be linked to funds from Aberdeen Asset Managers, Williams de Broe


and Prudential-Bache.


The panel agree that the product fits well into the market. Shaw says:


“These plans have become popular since drawdown became available and it


fits in well.”


Flowers says: “Given the way pensions are being driven by the Government


at the moment, this plan is very well designed to pick up on the profitable


end of the market.”


Briggs says: “Sipp providers are quite numerous but James Hay has an


enviable reputation for service and, in my opinion, is a joy to deal with.


It has teamed up with three respected investment managers to provide a


bespoke service ideal for bigger drawdown cases.”


Humble says: “It fits in extremely well, bearing in mind that most clients


do not require the full Sipp options.”


Turning to the type of client for whom the plan is suitable, Shaw says:


“This could appeal to the more sophisticated investor as it is somewhat


more comprehensive than the insurance company hybrid. It would suit the


case where more flexibility of investment was required on a personal


pension transfer bond, which could be transferred to the Sipp.”


Briggs says: “This is for more sophisticated clients with big pension


funds who are seeking a personalised investment service.”


Humble says: “This is for anyone with funds of £100,000-plus who wants the


benefits of income drawdown but is not interested in the full range of Sipp


investment options.”


Flowers says: “The whole thrust of the plan is designed for those nearing


retirement with substantial pension funds to manage and with an awareness


of the need for asset allocation and risk assessment within their pension


portfolio.”


The panel are lukewarm on the types of marketing opportunities provided by


the plan. Humble says: “It gives no new marketing opportunities but it does


provide an interesting alternative to plans already on the market.”


Flowers comments that it is easy to present this as a pension planning


solution to sophisticated clients.


Briggs says: “This would appeal to professional contacts like solicitors


and accountants who deal with high net-worth clients.”


Shaw says: “As a suburban IFA, I doubt whether I would get much call for


such a product. However I would expect that bigger IFAs, say, in central


London, may well find potential clients for this product.”


Turning to the strong points of the plan, Briggs says: “The main useful


features include flexibility, the bespoke investment service, competitive


charges for bigger cases and the portfolio valuation service.”


Humble says: “Two strong points are, first, the appointment of an


investment manager who will carry out rev iews taking into account the


cashflow requirements of the plan and, second, the ability to spread


investments of more than £250,000.”


Flowers says: “Strong points are the transparent charges and one contract


that can encompass, in a designed way, all the main pension planning


options.”


When it comes to the drawbacks of the product, the panel offer different


viewpoints. Shaw says: “I cannot see any defects in the plan, apart from


the fact that the contributions will be capped to an earnings&#39 ceiling of


£90,600 in 1999/2000 and £91,800 in 2000/01.”


But Briggs says: “The concept of the product flies in the face of the


rationale for using a Sipp, as investment choices are perhaps restricted by


virtue of the limited choice of investment managers.”


Humble says: “One drawback is that the investment managers will only


review assets held by them. They will not take into account other


investments held within the plan.”


Flowers says: “James Hay insists on using its own deposit accounts and


will only pay out pensions on the last day of the month. The option of only


three investment managers is restrictive.”


Commenting on the range of investment options available, Flowers says:


“James Hay is pushing strongly for pension planholders to invest with its


three fund manager links. It is a clever arrangement but investors at this


level want easier access to more options.”


Shaw says: “The investment range is very good. All the investment managers


are of high standing. Apart from equity-based investment, there is the


possibility of purchasing commercial property, which may or may not be used


for the client&#39s own business.”


Looking at James Hay&#39s reputation, Briggs says: “I use James Hay regularly


for my Sipp business and hold the company in high regard. The service I


receive is exemplary.”


Shaw says James Hay is a leading firm of pension fund trustees with a


respected position in the pension administration field.


Flowers says: “Its reputation is excellent, although not without the


occasional administrative banana skin. But can it keep it up as it grows?”


The panel agree the charges are fair. Shaw says: “The charges are quite


reasonable for a sophisticated scheme, with a set-up fee of £250. Annual


charges are also very much in line with the market.”


Humble says: “The charges are fair and reasonable, provided that the


client is happy with one or more of the three investment managers.”


Briggs says: “The charges look good, especially for bigger cases. The


set-up fee of £250 is the same as a standard Sipp.”


But the panel are less impressed by the commission. Humble says: “Three


per cent plus 0.5 per cent renewal commission as a maximum is quite


sufficient but, in practice, lower commission is likely to be taken for


bigger cases.”


Shaw says: “The commission is average although IFAs may be working on a


fee basis for clients in this field.”


This is echoed by Briggs, who says: “I suspect most IFAs operating in this


market will be charging fees.”


Turning to the product literature, Humble says: “The literature is


informative and easy to read. I was not impressed by the CD-Rom. It did not


tell me much and I wonder if it was worth the expense of production.”


Shaw says: “The literature is excellent,with everything explained in great


detail.”


Briggs says: “It looks classy – what the high-net-worth client would expect. The application forms should reflect the same design, however.”


Flowers says: “The literature is generally good, well written and easy to


understand. The CD-Rom brought up a nice picture but nothing else.”


Summing up, Shaw says: “This product looks good but the proof of the


pudding will be in the eating.”


Humble says: “The plan recognises that, once benefits have begun under


income drawdown, the plan effectively ceases to be a pension contract and


becomes an investment contract. The principle is very sound but I am not


sure about the choice of investment managers.”



Broker Panel


Mike Humble l Divisional director, Lambert Fenchurch Financial Services,


Colin Shaw l Director, Woodfield Financial Services,


David Flowers l Director, RBC,


Robert Briggs l Principal, Robert Briggs

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