Self-invested personal pension provider Dentons has reported a surge in new business, much of it coming from rivals, as IFAs “gravitate towards the quality providers”, its sales director said.
David Fox told FTAdviser that over 40 per cent of its new business came from pension savers with existing Sipps moving from other providers in a flight to safety.
Sipps have come under increased criticism in the last 18 months, following high profile problems around some providers’ decisions to allow esoteric and unregulated investments, which have then failed.
Last month, the Financial Services Compensation Scheme revealed it was reviewing Sipp providers’ liability for investor losses, in a move that could have massive ramifications for the market, by potentially putting providers on the hook for hundreds of millions of pounds.
Up until now, financial and reputational liability for ensuring clients’ investments are suitable has fallen almost exclusively to their financial adviser, with Sipp providers always denying responsibility for suitability.
Mr Fox said Dentons - which does allow non-mainstream assets if they pass what it has said are strict due diligence criteria - is in a strong position compared to rivals and is attracting business from them.
“IFAs are gravitating towards the quality providers, the ones that can meet the capital adequacy requirements, the ones that haven’t got any regulatory issues with regards to non-standard assets,” he stated.
The firm reported a record breaking results for 2015, with new business up 12 per cent on 2014 levels. Turnover reached £7m, up from £6m for 2014, while profits hit £1.5m, compared to £1.04m the previous year.
Mr Fox said Dentons’ service proposition and investment in technology, coupled with more money looking for a home in the market as a result of pension freedoms, also helped drive growth.
“Our technology has helped us,” he stated. “A lot of Sipp providers rely on third party software for administering their Sipps, so when the legislation changes or when they develop their product they’ve got to buy other software off the shelf or wait for it to be developed.
“It’s not as efficient as being able to build that in house yourself as we do. We’ve got the flexible system in house which enables us to adapt and develop our service proposition.”
Mr Fox added that pensions have moved from being a “dirty word”, to a savings vehicle people are increasingly interested in.
“Perhaps in the past pensions had become a dirty word, but now people are willing to fund them again. We’re benefiting from the fact the pensions market is buoyant and our position is very good, so we’re taking an increased market share.”