The number of companies leaving the small self administered scheme sector has called into question advisers’ due diligence processes.
Nathan Bridgeman, director at provider Seabridge Ssas, said he expected advisers would do a “much deeper dive” when it comes to Ssas administrator due diligence in future, after some have been “burnt by the consolidators and those not committed to the market”.
Due to this, Bridgeman expected further consolidation in the Ssas provider space with advisers and clients more likely to choose small specialists that add value with personalised service and technology rather than large consolidators.
This year both Hartley Pensions and Rowanmoor have gone into administration. Rowanmoor has since sold its Ssas book to Westbridge but Hartley's administrators have yet to finalise a deal.
Last year James Hay quit the Ssas sector, selling its book to Westbridge.
Bridgeman said: "We are seeing lots of advisers take up our free Ssas review which involves a full analysis of their clients existing Ssas.
“We provide a detailed report and guidance adding value through our highly personalised service (dedicated administrator and director allocated to every scheme).”
According to Bridgeman there are five things advisers need to ask when considering a Ssas administrator for their clients.
1. Ownership structure and commitment to market
Bridgeman said advisers should look at the background, qualifications and experience of the providers’ senior management team.
He said: “Are the owners and their team likely to be committed to the Ssas profession for the long term? Are they a consolidator in for the short term and a quick profit at the expense of client service and ongoing investment in the proposition? What’s the exit strategy of the ownership and succession strategy?”
2. Financial strength
Another thing to look out for is whether the administrator is profitable in its own right.
“Making a profit is essential and alarm bells should be ringing if the company has a high level of debt,” Bridgeman said.
“What exposure to toxic failed investments and unauthorised payments do they have as not only does this threaten their sustainability but will impact service requiring huge investment in reconciliation and backfill.”
3. Service
The focus should not be on fees but rather if the administrator offers value in the service it provides.
Bridgeman said that advisers do not want to be dealing with a call centre and lengthy service delays but should instead have a direct dial and email with someone who can respond the same day.
“At SeaBridge every Ssas has a dedicated administrator and director looking after the scheme with accountability, efficiency and accuracy the foundation of our business,” he said.
4. Proposition
Another thing to look out for is transparency, certainty and simplicity of fixed fees rather lengthy menus of charges and time cost.
5. Technology
Unlike platforms a lot of back office systems have not changed much for the last 10 and in some cases 20 years, Bridgeman pointed out.
He added: “Visibility of the Ssas is essential and the ability to earmark makes the life of an adviser a lot easier to plan.
“Beware of firms outsourcing and firms that don’t have their own bespoke technology capable of handling things like price feeds, VAT and PAYE all in house.”
Consolidation of Ssas providers
As part of the Rowanmoor deal, Westbridge will buy all of the Rowanmoor Executive Pensions Limited staff currently involved in Ssas administration and will continue to operate from the Bolton and Salisbury offices until the second half of 2024.
The deal is expected to complete at the end of January.
This is the second major acquisition by Westbridge and follows the purchase of the James Hay Ssas book in March 2021.
Elsewhere, the administrators of Hartley Pensions have written to clients to let them know that discussions are ongoing regarding the sale of the firm’s Ssas client book.
amy.austin@ft.com
