Such additional costs, for a provider large or small, will likely end up on the client’s invoice in one way or another. Charging structures across the industry are diverse and complex enough already, as shown in Table 4.
It is clear from the Table that companies take different approaches to charging. A total of 33 providers levy no initial charge, while the most expensive – Mattioli Woods – charges £895 upfront. Transfer-out costs also vary hugely, from £0 from 25 providers to £400 for @sipp.
Looking at transaction costs will be more relevant for some clients, depending on what they want to do. For frequent traders, a Sipp with no transaction charges is likely to be more appealing than one that charges upwards of £30 per trade. For others, costs associated with property purchase are more important; these can be found in Table A.
If the FSA’s proposals go ahead unchanged, many small providers are concerned they will be unable to compete on cost.
According to Taylor Patterson, meeting the challenges of governance and risk management is a major issue for small providers, which in turn has an impact on costs. “It is all part of the growing cost of regulation and with fees being driven lower, there is a real risk to our ability to remain competitive,” it says.
But cost should not be the main driver for selecting a Sipp. It is more important that the plan chosen meets the client’s needs and objectives both in the immediate future and in the longer term.
Part of this is looking at retirement options, which can be found in Table B. Although retirement may be a way off for some clients, their potential needs should always be kept in mind. For example, the Table shows that 11 plans do not offer flexible drawdown, which could be a big drawback for clients with significant assets.
Pick ‘n’ mix
Gaining access to a wide variety of investment types is key for many Sipp-holders. Table 5 breaks down the allowable investments for each plan, showing the spread of asset types investors can access. Further detail on cash accounts can be found in Table C online.
Although many plans remain unaltered on what they will accept, when comparing to the previous survey it is clear that some anxiety around esoteric assets is creeping in.
In October 2012, 32 per cent of plans said they accepted off-plan hotel rooms; now the number stands at 24 per cent. Ucis have also seen a drop from 63 per cent acceptance to 51 per cent. Commercial property, defined as ‘non-standard’ asset despite widespread objections, remains steady.
“The FSA’s view that commercial property within Sipps should be considered as ‘non-standard’ is somewhat confusing,” says AWD Chase’s Mr Bean. “A large proportion of ‘specialist’ Sipps have investment in commercial property, based in the UK, such as offices, warehouses and factories. It is our opinion that these should not be considered as non-standard assets. Otherwise, why have a Sipp in the first place?”
