Q: Who is a Sipp suitable for?
Sipps are about choice and control, not just while saving but also when taking benefits.
Mary Stewart, director of Hornbuckle Mitchell, said they appeal to any pension investor with the confidence to manage their own affairs while working or in retirement, either alone or with the help of their own professional adviser.
She added they are the only way to invest pension money in non-standard and esoteric assets or to borrow within the pension scheme.
Ms Stewart said: “Today’s range of Sipps and highly competitive charging make them an option for a wide range of investors who are serious about building up a pension pot, including those building up provision alongside a defined benefit scheme.
“These include both wealthy and many of the ‘mass affluents’ who make up most advisers’ key clientele.”
For a low cost Sipp, Billy Mackay, marketing director of AJ Bell, said the fund value involved can be smaller but will often be £100,000 plus.
The costs for these products will often be comparable with the costs for personal pensions and funds platforms so it is logical that it is viable to recommend them for clients with similar fund sizes, he added.
For this type of investor, Mr Mackay said the investment strategy may involve use of cash deposit facilities, unit trusts, Oeics, gilts, exchange traded funds, commercial property, funds platforms or a discretionary investment manager.
For the full bespoke Sipp, Mr Mackay said the typical client will tend to have a larger pension fund and may be considering many of the investment areas listed above plus more esoteric investments.
The ongoing running costs of these Sipps are typically higher than those that apply to low cost, online Sipps, he added.
Careful consideration should be taken over the fee structure of the product chosen, he said, as earlier costs can vary considerably between the various products on offer.