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Sipp firm aims to cut out advisers

Fidelity FundsNetwork is looking to boost direct sales of its Sipp offering by waiving costs for Sipp clients if they buy direct.

The firm has launched an offer whereby any client who takes out a FundsNetwork Direct Sipp by 10 October will be waived the normal £100 set up fee and the annual administration fee of £250 permanently.

But if the client then chooses to link up with a financial adviser they will have to start paying the £250 admin fee.

Fidelity says the product, supplied by Standard Life, is only suitable for “people comfortable with making their own financial decisions”.

Its website includes details on charges, key facts, benefits and drawbacks of the product, and frequently asked questions. It also includes a number customers can call if they want more information.

Predictably the news has not gone down well with some advisers. Richard Jacobs Pension and Trustee Services director Richard Jacobs accuses Fidelity of undermining advisers and says the product is a personal pension not a Sipp, because it can only hold investments in the funds on FundsNetwork.

Fidelity director UK corporate communications Richard Miles, meanwhile, says it remains highly committed to the IFA market but wants to provide an option for self directed investors.

He also points out the majority of the £1bn in Sipp and bond business channelled through FundsNetwork is conducted through advisers. He says the firm would recommend people who need more sophisticated investments in their Sipp, such as direct property, use a financial adviser.

If nothing else the news further demonstrates the downward pressure on Sipp prices, and would appear to corroborate a recent Defaqto report which suggested that providers are adopting more aggressive pricing strategies to win new business.

Elsewhere Legal & General has become the latest provider – after Scottish Widows and Friends Provident – to confirm plans to launch a group Sipp offering later this year. Its pensions strategy director Adrian Boulding says the firm is getting “really excited” about the group Sipp market. Blimey.

Anyway, Boulding says the real reason for an increased focus on group Sipps is the fact that personal accounts are looming on the horizon and will render many basic group personal pensions offerings null and void. Therefore, providers will need to be able to offer a product with more strings to its bow and L&G clearly believes their group Sipp will fit the bill.

Certainly, it will be interesting to see whether the group Sipp market will really take off in the run up to the introduction of personal accounts in 2012.

If that happens I’m sure the FSA, just as it has on the individual side, will take a close interest in the suitability of recommending a group Sipp rather than a GPP – which may well be swallowed up by personal accounts.

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