After transforming itself from a premium, bespoke pension firm to a fixed-fee, pared back Sipp provider, Liberty Sipp has reversed two years of losses.
The Manchester-based company, which this summer celebrates its 10th anniversary, has published results showing it made a pre-tax profit of £420,000 in the year to April.
The provider's revenue grew to £2.1m – the highest in the firm’s history and a 39 per cent increase on the year before.
The provider grew revenue by two fifths and achieved a profit margin of 20 per cent last year.
The rebounding balance sheet comes after the firm spent two years investing in both technology and people, enabling it to handle much greater numbers of clients.
In 2017 it is set to increase the number of administration staff it has by 30 per cent.
Such investment previously came at the expense of profits – with the firm making a loss of £60,000 in the year to 2015 and £80,000 the following year – but according to bosses this laid the foundations for its return to profitability.
The company now offers just one product; the low-cost, Liberty Option Sipp.
Introduced in 2013, it charges no set up fee and an annual management fee of £175 plus VAT.
In the last tax year it grew client numbers to 9,002 up by 44 per cent and nearly doubled its assets under administration.
It currently administers £1.64bn of client assets.
John Fox, managing director of Liberty Sipp, said: “The Sipp market has been transformed in recent years, and we have adapted with it. Not so long ago many advisers we spoke would tell us ‘we don’t do Sipps’.
"Now Sipps have become a much more mainstream product, which for some clients will be cheaper than a standard personal pension. Sipps are now an essential part of every adviser’s toolkit.
“The Sipp industry has evolved beyond recognition in the decade that Liberty has been active. We’re young, lean and agile enough to be able to evolve with it – leaving many of the bigger Sipp providers to play catch up.”
John Moret, director of More to Sipps, said Liberty’s 44 per cent growth in client numbers in a year is well in excess of the Sipp market average which was nearer to 15 per cent, although the lower cost more streamlined Sipp market has enjoyed higher rates of growth at the expense of the more traditional bespoke Sipp market, which has been adversely impacted by the new FCA capital requirements.
He said: "So it would seem as though Liberty’s strategy to focus on the lower cost Sipp market has been sound although maintaining the current growth rate and profitability may prove challenging as this market becomes more congested and margins are eroded.”
Scott Gallacher, director of Leicester-based IFA Rowley Turton, said: "As with many things in financial services, financial strength is key.
"Consequently it is good to see that Liberty Sipp have dramatically amended their offering and returned to profitability."
stephanie.hawthorne@ft.com
