Over the past few months, we have received a marked increase in the number of enquiries from advisers looking to transfer their client’s self-invested personal pensions (SIPP) to a different administrator.
This isn’t a new issue, but what we are now seeing are requests to bulk transfer whole books of SIPPs across to us, rather than it being one or two.
Talking to the advisers, the main reasons for this are continued consolidation, lack of development in technology and a sense that some administrators are not focused on developing their business.
So advisers are concerned about lack of development in a business, but of major concern to the SIPP administrator is their exposure to non-standard assets.
Recent regulatory changes mean that it is no longer possible for a SIPP provider to allow a client to invest in potentially toxic assets, but they may still have assets on their books that are toxic. Continuing to manage these assets, which in some cases are valueless, can be a huge cost to the administrator not only in regards to capital adequacy but also in time. In some instances, this could lead to an increase in client fees or more often than not deterioration in client service standards.
The increases in capital adequacy requirements for SIPP administrators that came into force in September 2016 caused some consolidation, but not as much as was expected.
Instead, there were a number of administrators that changed their investment propositions to reduce their capital adequacy requirements. This has meant that a number of clients who would like to either initiate an investment or increase their current investment in certain asset classes are no longer able to, as the administrator has stopped accepting them.
Bad administration is a further reason why we are seeing advisers wanting to move their clients. Although the implementation of recent regulatory changes has caused some unforeseen issues for administrators, service levels are something that have been scrutinised for many years.
Efficiency, accuracy and depth of knowledge and experience are all key attributes for SIPP administrators and are important to advisers. So, if a deadline is missed, a payment is made incorrectly or a client request is not processed correctly, it can all reflect badly on the adviser.
This means they need to be sure they are working alongside an administrator who can meet the needs of not only themselves but their clients too.
Often the process of transferring a whole book of business can seem daunting to an adviser firm, and understandably so.
The first stage involves completing a thorough due diligence process to ensure a new SIPP administrator will provide a better service and meet the client expectations and needs. The final stage is the process of physically moving the book of SIPPs. It is important that this is made as easy and pain-free as possible for the adviser firm so that they can concentrate on servicing their clients and not on administration. We created a team that can handle this process from start to finish for advisers, believing this is the most efficient way to handle bulk transfers.
With more advisers looking for SIPP administrators who are dedicated to the industry, secure, diligent and can provide a high-quality service, it is important that we, as providers, make this as easy as possible.
At the end of the day, the clients are what is most important and ensuring they are given the ability to achieve their expectations.
David Bonneywell is director at Talbot and Muir