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Three Sipps come sailing in

Following the introduction of James Hay&#39s Flexi-Sipp, we asked our broker

panel to compare it with two existing self-invested personal pensions from

Personal Pension Management (PPML) and AJ Bell.

Examining the market suitability of the three plans, Anglesea says: “James

Hay&#39s new Flexi-Sipp differs from the others because it appears to be

geared primarily towards income drawdown.”

Tinslay says: “All three are suited to the phased, drawdown and group PPP

markets. PPML and James Hay have specialist teams dealing with property

purchase. James Hay and AJ Bell include funded unapproved retirement

benefit schemes and James Hay also provides SSASs.

“Historically, all three have been reactive companies, providing trustee

and administrative services to a variety of pension companies and badged

policies for IFAs. Also, with Flexi-Sipp, James Hay is administrator,

trustee and legal owner, rather than just third-party administrator.”

Turton says: “The James Hay plan offers three discretionary managers as a

package where the terms have been pre-arranged and established so that any

IFA can set up the scheme without a huge amount of arrangement work. The

other two plans require the IFA to bring together the core plan with the

investment skill of a selected manager, of which there are hundreds.

“For the existing IFA fraternity who use Sipps and are familiar with

bringing together the plan and manager, the James Hay plan will not suit

them at all because it removes a lot of flexibility and choice they use

currently. However, for IFAs who have shied away from the use of Sipps

because they are considered complex and involve a lot more administration,

the James Hay plan offers a valuable compromise.”

Looking at the kinds of marketing opportunities the James Hay plan offers

compared with the other two, Briggs says: “This is where the James Hay plan

comes into its own. It can be marketed for small IFAs who cannot get into

fund management but who would like to get involved in the Sipp market. It

takes away the compliance problem that these might face about being unable

to recommend an investment strategy. The other two plans offer standard


Turton says: “The James Hay plan will present itself as a halfway-house

Sipp for IFAs who neither manage monies for their clients nor have

established links with investment houses. I see it as tempting them to use

this product in lieu of a packaged approach.

“The James Hay plan is a full Sipp but with a packaged approach to

management. The choice is a little limited in the managers it has currently

established, two of which have less well-known reputations although they

are relatively big players.”

Tinslay says: “The advantage of the James Hay Flexi-Sipp is the easy

access to specialist investment management. Clients and IFAs need not spend

time making their own arrangements, whereas PPML and AJ Bell leave all

investment management appointments to clients and IFAs.”

Comparing the flexibility of the James Hay plan with the PPML and AJ Bell

products, the panel are divided. Anglesea points out that “the whole point

of Sipps is flexibility and control and all three plans are strong on


But Turton says: “A full Sipp is the ultimate in flexibility. PPML and AJ

Bell&#39s products are this but James Hay&#39s plan is a Sipp package product

which has minimal flexibility within its structure.”

Briggs says: “The James Hay plan is less flexible as you are confined to

just the three choices of fund managers. As a result, you have a lot of the

choice taken away from you compared to the other two products.”

Looking at the strong points of the James Hay plan compared with the other

two, Tinslay says: “James Hay&#39s Flexi-Sipp offers three investment

management links. James Hay correctly emphasises the need for specialist

investment advice and then provides a guide to select the right fund

manager for the client.

“PPML provides an account manager to deal with all the administration for

the client and, in addition, PPML&#39s fees can be deducted from the pension

fund or paid separately by the client if desired. AJ Bell and James Hay

also offer actuarial consultancy if required.”

Briggs and Anglesea both feel the main strong point of the James Hay plan

is that it is more straightforward than the other two and that it makes

life more simple for a client who might otherwise be put off by the

complexity of Sipps.

Turton says: “There are two major advantages to the James Hay plan. First,

the pre-arranged management makes this form of Sipp easy to establish and,

second, the charges are simple.”

But when it comes to the disadvantages of the James Hay plan, the panel

disagree. Turton says: “There are a limited number of managers involved

here – just three when hundreds are available. Also, these three –

Prudential-Bache, Aberdeen and Williams de Broe – are not well-known.”

Briggs also comments that the number of managers is too limited for the

James Hay plan.

Anglesea says: “One drawback to the James Hay plan is that it is less

suitable for clients who want to make their own investment decisions.”

But Tinslay says: “There are no disadvantages to the James Hay plan

compared with the PPML and AJ Bell policies. However, although I welcome

the approach to illustrating that phased and drawdown in particular require

a specific investment strategy, the information supplied by Aberdeen,

Williams de Broe and Prudential-Bache does not give me any confidence that

they do understand what is required.”

Turning to the reputation of the three companies in the Sipp market,

Briggs says: “James Hay is the best known Sipp manager in the country and

is used by a lot of customers. PPML is also well-known but I have not heard

of AJ Bell before at all.”

Tinslay says: “I have found all three companies to have an extremely good

reputation in the market. PPML and James Hay have historically provided

trustee and administration services for many leading insurance companies.

AJ Bell has also formed strong links, the Bank of Ireland being the most


Turton says: “James Hay is very well known and regarded. It is adaptable

to ideas and branding and has secured a large market share. I have heard

comments that the internal settlement service is declining on the back of

volume but its communications are very good.

“PPML, which now incorporates the Winterthur Sipp administration, is the

biggest Sipp provider in the market. Ironically, Winterthur, which has such

a bad administration reputation in the market, owns PPML, which does not.

No surprise why administration was sent to the subsidiary.

“AJ Bell has a next to zero reputation in the market as it is a small

player. However, when settlement through nominees is used, there are no

concerns over maladministration.”

Examining the charges of the three plans, Tinslay says: “Apart from the

set-up fee, the Flexi-Sipp charges 1.25 per cent a year (0.4 per cent for

funds over £250,000) for the administration and trustee services of

James Hay and the investment management services of the selected fund

manager. The PPML and AJ Bell policies are charged in the same way as the

standard Sipp, with set fees for administrative services on a pay-as-you-go


Looking at the product literature and sales aids for the three products,

the panel are not entirely enthusiastic. Anglesea says: “The brochure for

Flexi-Sipp is very clear and easy to read. However, the other two are

rather more technical in their approach.”

Turton comments: “The James Hay brochure looks good but uses too much

upper case, bold and large fonts. Clients of big portfolios prefer plainer

material with quality to match their perception of worth. The current

literature is a little too salesy when it could be more technical.

“PPML&#39s literature is cleaner and simpler and the application form, while

a little gaudy in full colour, is very easy to complete. The AJ Bell

brochure has the right approach to technical data but has a mish-mash of

forms and images.”

Briggs is also critical of the James Hay brochure. He says: “The

Flexi-Sipp literature is dull and boring and having pictures of watches all

over it does not make it inspiring. The AJ Bell literature is also dull.

However, the PPML brochure stands out completely as being clear and

distinct. The application forms are very clear and simple to fill out and

are extremely user-friendly. Getting the application forms correct can be

difficult. PPML has done it well.”

Broker Panel

Paul Tinslay, head of pensions, Wentworth Rose,

Jon Briggs, associate director, Chartwell Investment Management,

Paul Anglesea, partner, Midas Financial Services,

John Turton, head of life and pensions, Best Investment.


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