Future outlook
Questions on financial strength need to not only look at past results but to question and anticipate future preparation for recapitalisation. Evidence of sufficient capital resource will need to be backed up with assessment of diversification of income to protect against a contracting market – and all this alongside an adviser’s ‘normal’ assessment of suitability for each individual client.
This might appear excessive work for a pension recommendation, but pensions – including Sipps – are undergoing radical changes from April 2015.
Although drawdown has been available for many years, a far higher proportion of investors are going to start selecting flexi-access drawdown over an annuity next year. That means a greater number of clients will need advice and closer management long into their retirements.
A Sipp recommendation might previously have started with consolidation of various pension pots and be expected to last up until retirement in most cases and beyond in a few more. From next year not only will more take up drawdown, the pensions will start to be passed to the next generation too.
The opportunity for advisers is tremendous, the need to make the right recommendation of Sipp provider even more so.
Greg Kingston is head of marketing and propositions at Suffolk Life
