Challenges remain
Conversely, Moret says the challenges in the Sipp market include meeting the needs and demands of clients and their advisers as they reach retirement and move from accumulation to decumulation.
“This is particularly true for non-advised clients where there remains considerable uncertainty over the level of support/guidance that can be provided without straying into the area of regulated advice,” Moret adds.
“That said, this area also offers considerable opportunity as the majority of Sipps still remain unvested.”
Another challenge is for those Sipp providers, and the administrators of failed Sipp operators, with clients who have failed investments/assets that have zero or near-zero value. For this, Moret says, an industry solution is needed.
A challenge facing not just Sipp providers but other pension providers, according to McPhillips, is getting to grips with the abolition of the pensions lifetime allowance and the need for regulations to be passed urgently, which deal with issues arising from Finance Act 2024.
He adds: “That aside, in terms of managing risk and toxic assets, one would sincerely hope, in light of Hartley and other failures, that far more attention is paid to not only due diligence on investments, but also due diligence on acquisition targets and on operating a business model that actually works. This year alone, we have witnessed the failure of a very low-cost provider.
“We have a clear direction of travel in the certain sections of the Sipp provider community and I’m sure that adviser firms will want to recommend a provider that is in it for the long term, not one which is the cheapest on the market with an unsustainable business model.”
The collapse of Hartley has been a major event in the industry, given the size of the business, which had 16,000 clients with assets valued at £1.3bn.
But McPhillips says a key message from Sipp providers has to be that not all Sipps are tarred by the same brush, and that Sipps still play a key part of retirement planning for certain individuals.
He adds: “High-quality and respected Sipp providers that have been careful in setting their business models, and which have had robust due diligence processes in place for many years, will stand the test of time because they have not chased fee income and client numbers at the expense of sound business logic.”
