Consolidation of the self-invested personal pension market has persisted over the past year, stoking fears that reduced competition could stifle innovation.
Major transactions in 2018 included Curtis Banks’ acquisition of the Hargreave Hale Sipp book, Embark’s acquisition of the Liberty Sipp and Hartley Pensions acquisition of the Lifetime Sipp and the Greyfriars Sipp.
The number of new market entrants has been far outmatched by those consolidating, but the past 12 months did see some notable arrivals, including Seven Investment Management and robo-adviser Moneyfarm (albeit through a partnership with the aforementioned Embark).
Despite the arrival of new challengers, the general consensus is that consolidation in this market is set to continue, as evidenced by a poll of financial advisers at a Dentons Pensions event in January 2019.
For advisers, this lack of competition is frustrating and can mean that spotting genuine innovation is extremely difficult.
“They’re all much of a muchness, if I’m being honest,” says Jamie Smith-Thompson, managing director of specialist retirement IFA Portafina.
“There’s nothing out there that makes you think ‘that’s weird and wonderful, let’s use them ahead of another’”.
Sadly, Mr Smith-Thompson’s remarks are echoed by plenty of others in the market. “There has been limited innovation in the UK Sipp industry in 2019,” says Adam Wing, a financial adviser at UHY Hacker Young’s Nottingham office. “
Hunting the innovators
While it would be easy to dismiss the entire sector for a lack of progress, others disagree. Advisers and providers, alike, say there have been great strides forward in technology, product design and permitted investments.
“There have been innovations in terms of what Sipp providers are allowing for underlying investments,” explains James Lindley, a financial adviser and founder of Castell Wealth Management.
“Recently some providers have allowed individuals the ability to invest in peer-to-peer platforms through a Sipp.
“However, this was not adopted by most major Sipp providers due to the ‘connected members’ rule making it not worth the risk to the Sipp operators and their members.”
Sipp operators have been very careful about the investments that they permit for inclusion in recent years, after the collapse of Harlequin Property, and the numerous legal disputes which followed, says Lindley.
“The industry has moved to ensure there are clear distinctions between providers accepting non-standard assets and unregulated investments and those that are happy to accept these riskier assets,” he says.
“The vast majority of providers nowadays have reduced their exposures in recent years. There has also been a clear differentiation between those providers offering full Sipp services and those companies that could be deemed 'platforms'.”
On the product side, there has been innovation which offers more options to clients in both the accumulation and decumulation stage.