Platforms often bundle Sipp and platform charges into a single fee, says Gregory Kingston, head of marketing and proposition of Suffolk Life.
As a result, Mr Kingston says it is more difficult for investor in Sipps on platforms to see how much they are paying for each service. He says this has led to a number of ‘free’ Sipps being offered in the market, but he adds “clearly the investor will be paying somewhere.”
Mr Kingston says independent Sipp providers tend to have more open, explicit charges that are often flat rate as opposed to platforms, which have a tendency to charge based on the value of the investor’s fund.
Robert Graves, head of pensions technical services at Rowanmoor Group, says usually platforms are set up to make a dealing charge for each asset and an annual management charge based on the fund value.
Sipps from a pension provider are generally set up to make set charges or time-costed charges, Mr Graves says. He says Sipps direct are based upon the complexity of the type of investment made; they may also charge a percentage of the investment value.
Martin Tilley, director of technical services at Dentons, says simple platform or discretionary fund manager’s Sipps will have a very standardised process of establishment of the Sipp and establishment of the platform.
As such, Mr Tilley says the time taken and resources required are known and a Sipp provider should be able to undertake these tasks for a known fixed fee.
Similarly, Mr Tilley says routine tasks like setting up alternate banks accounts, while they could be with any deposit taker, have pretty standard processes in terms of a mandate and identification documents being required.
Neil MacGillivray, head of technical support unit of James Hay, says usually the Sipp provider and platform operator are different companies but his company offers both which he claims “enables a more cost effective solution.”
