There is much talk in the industry at the moment about SIPP Consolidation and this is only natural given that the boom in SIPPs has passed. Some consolidation is inevitable even without the FSA introducing changes that might be well intentioned, but will only make life even more uncomfortable for specialist providers and ultimately impact negatively on the one group of people the FSA was formed to protect: The Consumer.
Another strange facet of the consolidation process that we are likely to see manifest itself as 2013 rolls on is the drop in fees payable to some SIPP providers. It’s interesting to note that this is being kicked off by one provider who is cutting its charges for ‘middle band’ SIPPs by 40%. Impressive.
This one example is apparently due to a regular review of the company’s pricing structure and as good as it looks as a headline figure for current and future clients in that bracket, it does sort of beg the question – what can possibly have changed that much since the last review?
We also conduct pricing reviews every year and we are always looking for ways to reduce our running costs, so long as they aren’t detrimental to our valued team members nor, more importantly, our clients (we firmly believe these things are linked by the way). However, despite making some radical changes in 2012 that have indeed made us even leaner and despite being sufficiently demure to implement change within days of said change being mooted, we’re damned if we can get anywhere near those types of savings.
So maybe our ability to make changes isn’t linked to our inability to find sufficient savings that can be passed on but instead has more to do with our fees having been right, fair and appropriate from the start. You see, it’s become a little hot in the kitchen for providers that for far too long have basically got away with charging fees that are all but invisible such as the odd percentage of interest earned on bank accounts here and the odd percentage on funds under management (often an in-house fund of course) there.
Well, with the FSA demanding greater transparency and an end to charging structures based on percentages under management, it’s inevitable that many providers will be charging less if that’s how they’ve received a good portion of their income up until now.
So are we to celebrate this trend, should it become one, in the same way that we’d all unconditionally welcome a drop in say the price of fuel following the discovery of a vast new oil field? Well that’s down to the individual but I’m always a little uncomfortable continuing to add to a company’s revenue once I’ve found out that for the last X years, they appear to have been ripping me off.
We always say you should choose your experts wisely and as with everything that money can buy that is available from more than one source, that must start with asking yourself what you want from that provider and their product. The cost is irrelevant, there are plenty of very low cost SIPPs that do exactly what they say they do and charge appropriately. There are also plenty of providers looking to use SIPPs to their maximum potential, also charging entirely appropriately for what they offer and how they look after you. What isn’t, or shouldn’t be irrelevant and in fact ought to be universal, is being given full disclosure from the outset rather than being left to find it in what is not said i.e. in the small print, or perhaps just as bad; in a large reduction in fees, especially at a time when such savings ought to be at their hardest to find.