Rowanmoor Pensions managing director Ian Hammond says the business has set out its stall as a specialist pension company operating at the bespoke end of the market.
The business was formed as the result of a management buyout of James Hay’s SSAS business following Hay’s acquisition by Santander and opened its doors on September 1, 2006.
Hammond, who had been with Hay since 1986, says as SSASs are more hands-on than Sipps, it was quickly clear the SSAS was perhaps not a business area the company could see fitting with its plans.
He says: “SSAS administration is advisery-based administration, whereas Sipp administration is transaction-based administration. You can computerise transaction-based administration but you cannot computerise advisery-based administration. What we did on the SSAS side did not fit within their overall model of the Santander business in the UK so they offered me to opportunity to buy it out.”
Although the SSAS business did not fit within Santander’s plans, Hammond says the SSAS book is still the core of the business. However, SSASs have slowly been eroded by the growth in popularity of Sipps.
He says: “It still represents about 65 to 70 per cent of our income. But the SSAS business across the country is diminishing, not because of a lack of new business but because a lot of SSASs have been around for a long time and a lot of people have transferred into Sipps. Historically, when the flexibility of proper drawdown was not available to SSAS before 2006, people would accumulate their assets in a SSAS but then convert to a Sipp to take their income. And a lot of IFAs find Sipps simpler to deal with, so there is a tendency for SSASs to become Sipps.”
Despite their apparent drop in popularity, he says SSASs retain certain key advantages over Sipps. Property is one advantage and in the current environment, SSASs offer the ability to loan funds to the sponsoring business if other sources of liquidity are hard to find.
As a result, Hammond says: “The IFAs who tend to support SSASs are the ones that tend to specialise in corporate financial planning.”
Hammond is keen for the business not to be seen as a onetrick pony. In 2006, shortly after the completion of the management buyout, Rowanmoor launched its family pension trust, the first family Sipp. This product had been under development with James Hay before the buyout but despite being a personal pension, as it is managed like a SSAS, it was included in the buyout.
Despite some pension commentators saying the changes to age 75 annuity rules that come into affect in April will make family Sipps slightly irrelevant, Hammond is confident of their future.
He says: “One of its big advantages is the common ownership of assets rather than the individual ownership of assets. This is particularly relevant for property, for example. If you have three people who want to own a property, if you have three Sipps, then each one has to own a property and you have three sets of legal costs.”
Completing Rowanmoor’s range of pensions is an individual Sipp which launched in 2009 following the expiry of a coven-ant in the buyout agreement which placed a restriction of the business launching into direct competition with Hay.
Hammond places the Rowanmoor Sipp firmly in the top-end, bespoke Sipp market and says the drivers for this segment of the Sipp market will remain strong and separate from the other end of the market.
He says: “We only operate in what tends to be known as the bespoke end of the Sipp market. People can invest in whatever they like, as long as it does not breach HMRC rules. And there are a lot of people who don’t trust insurance companies and don’t want to see their investments pooled, they want control over their own investments. That is why the top end of the market grows. The bottom end grows for different reasons.”
Hammond: ’There are a lot of people who don’t want their investments pooled, they want control. That is why the top end of the market grows’
Rowanmoor experienced a difficult period at the end of 2009 with the suicide of joint managing director David Seaton but Hammond says the business has been able to rest-ructure to make it more sound financially and that a management restructure should make the business stronger.
He says: “There was a financial impact, which meant we had to issue new shares in early 2010 which put the company back on a strong financial footing but from a business point of view, we shared David’s responsibilities among five or six other people. It sounds a terrible thing to say but as a business, I believe we have come out as strong as before.”
Since its foundation in 2006, Rowanmoor has grown from employing 160 employees to 230 today and it remains focused on the IFA market,with more than 90 per cent of new business coming through intermediaries.
The most recent new business figures for the business show strong growth for both Sipps and SSAS in the first quarter of the financial year. New Sipp business was up by 44 per cent on the same period last year and SSAS business was up by 68 per cent. Hammond says: “We had a very strong Q1 for the SSAS business. It is actually the strongest Q1 was have had in a number of years.”
Despite SSAS having the better Q1 figures, Hammond says he expects the long-term growth of the SSAS business to be slower than that of the Sipp business and for the business to start to generate more income from Sipps that from SSASs.
He says: “We forecast a gradual increase in the growth of new Sipp business. The FPT will probably be more of a straight-line growth and the SSAS will probably see a reasonably steady growth in new business but a gradual decline in overall business, so we should see a slight move in the balance of income towards the personal pension and away from the SSAS business.”