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SIPP Permitted Investment List

There seems to be a fair bit of chat about at the moment to do with the consolidation of the SIPP market and a call (from some) for a list of permitted investments.  We aren’t going to sit on the fence on this one folks, either something is worryingly wrong at the advice end of things, or there is just no need for a list.

Well, not unless you are a large provider feathering your nest with the income from bland pension schemes with investments providing low or non-existent returns that really ought to be considered so divorced from all that SIPPs promise to be, that if the industry was honest, wouldn’t be called SIPPs at all.  In which case, you no doubt have a vested interest in trying to kill off the specialist end of the market whilst convincing as many people as possible that there is a difference worth a damn between your ‘SIPP’ and the type of personal pension scheme that’s been widely available from massive Life Offices since the dawn of time.  

The concept of a permitted investment list is just a dumbed down facet of this whole dumbed down issue. 

We couldn’t help but note that Matthew Ward, Wealth Management Consultant at Defaqto had commented that the industry would agree on 85-90% of what the list should comprise.  Hang on a mo, isn’t this a) an invitation to the FSA to place a blanket ban on that remaining 10-15% grey area? Therefore denying SIPP investors of the opportunity to explore perfectly legitimate investment options of the sort that not only would some say were kind of the point of a SIPP (or SSAS) but are arguably also all the more important in an era of negligible growth and b) if the industry agrees on 85-90% of what the list would comprise – what is the need for a list after the FSA have binned the interesting 10-15%?

To return to the thought that we started with; there is no need for a list, what there is a need for is IFAs and Providers to up their game and stop being so lazy.  Rather than a call for further and continued simplifying of an area of the market that ought to be automatically characterised by at least reasonably sophisticated investors, players in this industry need to shape up or ship out.  As the old saying goes, if you can’t stand the heat get out of the kitchen.  Those of us that know what we are doing and more importantly clients that want access to interesting opportunities don’t want you opening all the windows because you can’t handle it!

Certain factions of the press have not helped the issue by choosing to highlight comments that might appear to liken SIPPs to the ISA industry.  This is not helpful and only adds to the erroneous impression already given by providers of ‘free SIPPs’ (don’t get us started) that these are products one should seriously consider buying from a Jack of all trades.  The fact that a permitted investment list worked for the ISA industry is as entirely irrelevant as pointing out that it worked for bank accounts targeted at the under 15s.  It ought not need to be pointed out that ISAs and SIPPs aren't quite the same thing. 

Furthermore it has been noted that it is hard for a consumer to decide, without advice, what type of SIPP & Investments is right for them, but what is it we are trying to achieve in this industry?  The removal of the need for advice altogether or the removal of the need for advisers to know what they are on about?  Surely any product, from a new toaster to a new car is worth getting advice on, so to suggest there is something wrong with the need for a consumer to get advice in order for them to understand and decide what type of SIPP and investment is right for them is bizarre. 

If it’s hard for the consumer to make these decisions without advice – they should get advice!  The industry should not be attempting to remove the need for it.

 

Are we really going to assist in and accelerate the process which leads to all financial products being bought from Tesco or a small handful of Financial Industry equivalents? The illusion of choice and variety; just like a Supermarket.

If we take a consumer focused view on this issue then Advisers need to get clued up so they can justify fees for sound & considered advice.  Allowing Advisers to remain in commission land (especially when RDR is demanding otherwise) is not an option.  Consumers deserve proper advice from people in a suitably qualified position to impart it and Advisers should choose between simple/volume business and technical sophisticated business that might require more knowledge and more time.

Trying to force the whole of the SIPP market, which ought to at least include some of the more sophisticated investment options, down towards the Noddy end of things, is not appropriate.  Furthermore, as we’ve highlighted before, this also invites the risk of a future miss-selling scandal.  How, when investment growth across the board is hardly anything to shout about, can it be the right time to divert investors away from potentially exciting stuff and into bland ‘on platform’ (yawn) options. 

Our final thought on this; let’s take a step back a second and think about it; there is just something fundamentally wrong with the term ‘vanilla SIPP’ and yet we hear it all the time.  How has Self Investment become something that people can refer to as vanilla without blushing?  Permitted Investment List? No thanks, we’ll stick with providing real SIPPs to grown ups.

Having (sometimes unfortunately!) had to deal with other organisations similar to PSG, I can honestly say how impressed I have been at the professional service they provide to clients.  Complicated matters are made easy to understand in a very friendly and efficient manner.  It is always a pleasure to do business with them and I cannot recommend them too highly.

David Barr, Brighouses Solicitors
 

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