For Stewart Dick, head of sales at Hornbuckle Mitchell, running a successful Sipp and Ssas proposition means supporting advisers and offering clients the maximum amount of flexibility. It also means providing a range of at retirement solutions to make sure the individual’s needs are met throughout the retirement journey.
He says: “Hornbuckle Mitchell is very much a company that is here to help. We have eight consultants working in the field who are supported by a desk-based consultancy team and technical support as well. We are looking to work closely with advisers to help them find the best solutions.”
Celebrating its 30th anniversary this year, the typical client tends to be high net worth individuals, with an average scheme and case size of around £275k. All business is submitted through financial advisers, which means all of the firm’s resources are channelled into helping them put together the best proposition for the advisers’ clients rather than dealing with them direct. Underpinning all of this is five guiding principles that govern the entire company, the first of which is making sure the products offer the maximum amount of flexibility.
“If you are looking at Sipp or Ssas, it is very much about being the most flexible pension plan possible for the individual and being member directed,” Mr Dick says. “It should be a pension for life that allows them the flexibility in terms of the accumulation phase and building up the pension pot and should then be something that stays with them in retirement as well, whether that be through capped drawdown, scheme pension or flexible drawdown. We will try to work with financial advisers to find solutions and ways to make things work.”
The second principle is that clients should own the assets that are held within the product. In fact, Hornbuckle Mitchell offers a co-trustee structure where the member is a trustee of the plan alongside the firm. “It certainly appeals to the entrepreneurial spirit you so often see in self-invested pension members,” Mr Dick adds. “It is something people assume is always the case, but that is not true of many providers.”
A further central tenet of the proposition is ensuring service excellence so that strong products are supported by even better service. That means things like having a dedicated point of contact on the administration side, rather than a call centre or broad teams dealing with specific types of transactions. It also means the company has invested heavily in a new back-office system to maximise automation, freeing up time for the individual administrators to speak to advisers and better understand what they are trying to achieve for their clients.
“It is fairly straightforward to come to the marketplace with a Sipp structure. You can copy anyone’s Sipp and charging structure. However, if you are going to be successful you have to get the service right and that is absolutely vital to us,” Mr Dick says. “Once a Sipp has been set up, that case will be looked after by the same individual from cradle to grave. If you are an adviser with multiple clients with Hornbuckle Mitchell, you will deal with the same people for all of your cases, so the service is consistent and personal.
“As well as investing in the back-office system – the biggest outlay in our 30 year history – we have also joined the Institute for Customer Service for the first time, working with them to make sure our service proposition is exactly what it needs to be.”
Receiving feedback from the adviser community is also important to the team, with advisers having regular visits from trustee consultants. It is also common for senior managers and board members – and even the managing director – to meet with advisers to engage with customers on the front line.
Linked to the service proposition is the principle of providing support for advisers, which has led to the creation of an adviser support program .
Mr Dick explains: “We send out technical updates and useful information to advisers, and we try to make that as helpful as possible. So, we might not be the first to send out a piece of information, but when we do it is a case of, this is what the rule change was, this is what it means, this is where the opportunity lies and this is what you have to watch out for with your clients. We want to support the adviser rather than simply throwing information at them or trying to sell them something. It is integral to what we do and adds value to that relationship with advisers.”
The final principle is to make the fees and pricing structure as fair and transparent as possible. This means, for example, that they offer flat fees for things like property purchases for a pension fund, reasoning that, whether the property is worth £50k or £5m, the work Hornbuckle Mitchell does is exactly the same and should be charged for accordingly. The fees are also very competitive.
In terms of the at retirement proposition, this centres on income drawdown products, with Mr Dick believing this option is highly attractive for a large swathe of investors.
“There are better death benefits than you would find with most annuities and the individual can control the fund and remain invested, so it is very flexible. Those principles have been – and will remain to be – very attractive,” he states.
Mr Dick recognises, however, that those clients in drawdown have had a difficult time recently, with legislation coming in last year to reduce the amount of income that can be taken from 120 per cent to 100 per cent of GAD. In addition, gilt rates fell to an all-time low of 2.25 per cent. These factors combined mean some clients have seen their income fall by as much as 45-50 per cent.
“It is a bitter pill to swallow for anyone,” he says. “It also makes it difficult for advisers and their clients to plan effectively when income levels are fluctuating so violently and gilt rates are bouncing around all over the place.
“One of the things we are suggesting to counter that is putting in a collar and a cap on Gad rates for the purposes of calculating drawdown income - perhaps a collar of around 3 per cent and a cap of 5 per cent. This is based on the concept of trying to build in a little stability to enable people to plan ahead.”
A further change to the proposition was the introduction of flexible drawdown last year. And although the uptake has so far been relatively small, Mr Dick sees the potential for interest in the product to rise.
He explains: “In order to qualify for flexible drawdown you have to meet the minimum income requirement, which means £20k of pension income paid in that tax year. For some people, they may have bought an annuity part way through last year, meaning that they did not have the full £20k payable in the tax year, so they couldn’t enter flexible drawdown. They will now be in a position to consider flexible drawdown this year.
“In addition, what clients typically want to do is fund the plan as much as they can before going into drawdown. We certainly saw people making use of the carry forward allowances and putting in significant contributions with an eye to going into flexible drawdown this year. It is a timing and planning thing.”
The final part of the Hornbuckle Mitchell offering is a scheme pension, with the company being the first to offer them for individuals in 2008. It remains a niche market, targeting people with shorter life expectancies – often as an alternative to an impaired life annuity. The benefits include an income tailored to the individual client, and the fact the fund remains invested, maintaining flexibility and control for the client, as well as the death benefits which are better than many annuities.
Overall, Hornbuckle Mitchell represents choice for advisers and their clients. With a broad range of options and the support of a service proposition that is second to none, advisers can enter the brave new world post-RDR safe in the knowledge that they have all the tools to provide excellent products and advice to meet the clients’ needs.
