AJ Bell, Curtis Banks and James Hay Partnership have been touted by John Moret, founder of MoretoSipps, as the three biggest self-invested personal pension business competing to become the provider with the most Sipps under administration.
The three providers currently hold 85 per cent of the market share, with AJ Bell holding 34.9 per cent of the market, James Hay Partnership 26.1 per cent and Curtis Banks and Suffolk Life 12 per cent and 11.7 per cent respectively.
FTAdviser has asked bosses at AJ Bell, James Hay and Curtis Banks to explain their business models, how they intend to get more of your business and which non-life company they think will dominate the Sipp landscape in the years to come.
The three companies all agreed they were the three largest non-life company players likely to dominate the Sipp space in the years to come and that they have different approaches to building their market share.
However they disagreed on which approach will reap the most rewards.
Mr Moret said: “Except for Standard Life and Hargreaves Lansdown, which are a bit different, we now have three big Sipp businesses – AJ Bell, James Hay and Curtis Banks, which between them probably have around 200,000 Sipps.
“But each employs very different models. AJ Bell has never really made acquisitions. At the other extreme is Curtis Banks, which has grown mainly through acquisitions. Then there is James Hay in the middle, doing a bit of both.”
Mr Moret said over time the interesting question is which will be the best strategy, adding AJ Bell is essentially a platform business, James Hay is trying to become a platform business and Curtis Banks does not have a platform.
Alastair Conway, chief executive of James Hay Partnership, said he agreed with Mr Moret’s vision of the market in the future.
He said: “Curtis Banks is much more of a traditional Sipp shop but theirs is very much taking traditional Sipp books and going on doing a really good job of managing them as they are.
“That is fine, there is a place for that. They are doing quite a bit of consolidation of other books at the moment that look similar to the ones they have got.”
Mr Conway said AJ Bell was ahead of James Hay in moving into operating as a platform, but he claimed his rival was looking to do more “direct to consumer” business.
Mr Conway said James Hay sits “somewhere in between the two” rivals as he plans to grow his Sipp book without going direct to consumers.
He said: “The vast majority of our business is through the advised market and we see that as our role of providing a retirement platform to the advisers.”
A spokesman for AJ Bell stated Mr Conway was wrong to think the Sipp provider was going direct to consumer in a bid to boost the business.
When asked would AJ Bell be the biggest non-life company Sipp provider in the future, Mike Morrison, head of platform technical at AJ Bell, said there will be room in the market for all types of Sipp operator, whether platform focused, bespoke or self-managed.
He said any operator left in the market will have done their due diligence on what would sustain them.
Mr Morrison said: “Companies that survive and prosper will understand service levels and pricing. Where a lot of Sipp providers have fallen is they have tried to do things they were not experts at.”
Rupert Curtis, chief executive at Curtis Banks, agreed AJ Bell are taking the platform route, whereas Curits Banks are dedicated Sipp administrators.
Talking about company plans, he stated the intergation of the Suffolk Life business, which it acquired earlier this year, would be a big project.
“We have been gaining numbers very rapidly and we see ourselves as having potential to become number one at some point.
“Post Suffolk Life we reckon we will be number two. We will have circa 65,000 sipps then.”
Abraham Okusanya, principal at research firm FinalytiQ, said following Curtis Banks latest acquisition of Suffolk Life, each of the three providers will have more than 20 per cent market share of the bespoke Sipp market, if you exclude life companies.
All three of the providers are well capitalised and more importantly profitable, with pre-tax profit margins in excess of the industry average of 20 per cent, Mr Okunsanya pointed out.
He said: “I think the three providers have clearly got a room in the market place; different strategies but they appear to be working well.”
He added in a recent report on sipp market financial capability: “The current marketplace, where the top 3 providers hold nearly 85 per cent market share, is a concern.
“While this isn’t to suggest that small niche operators can’t survive or even thrive, the accelerating pace of consolidation in the industry may put even more pressure on the smaller providers.”
Martin Tilley, director of technical services at Dentons Pension Management, said: “They have all become volume players but James Hay and AJ Bell are now devoting their attention to platform-based technology driven Sipps, and both have changed their propositions as far as the more bespoke assets are concerned.”
When asked what his expectations were for the future of the Sipp market, Neil MacGillivray, chairman of the Assocation of Member Directed Pension Schemes, said due to changes to capital adequacy many Sipp providers have decided it is time to leave the market place.
He said there will be fewer opportunities to buy up other businesses because those that remain will be able to meet capital adequacy and be quite profitable.
ruth.gillbe@ft.com
