Polarisation among self-invested personal pensions could be emerging as a result of regulation, Elaine Turtle has claimed.
The director of DP pensions said: "Consolidation has continued to be a theme throughout 2016 for the Sipp industry.
"We are starting to see a polarisation of the market with the platform based Sipps on one side and the bespoke providers offering the full investment flexibilities on the other."
This could have implications for advisers looking to choose from a full range of Sipps for their clients, either on-platform or off-platform.
Neil MacGillivray, head of technical support for James Hay, agreed there has been much consolidation this year in the Sipp and platform market (for example, with the Embark Group buying Sipp provider Rowanmoor in July this year, and Aegon buying platform rival Cofunds).
He said: "This means inevitably less choice for the client with regards to a provider. But the diversity in functionality and pricing has never been greater."
You can imagine what a dull and unfulfilling world it would be if your only option were to choose between a fine malt whisky or a supermarket brand blend with nothing in between. Neil MacGillivray However, he did not completely agree the market was set for a polarisation. Mr MacGillivray explained: "Yes we still have the full bespoke Sipp at one end of the spectrum and restricted choice platforms at the other but there is a multitude of options in between to choose from.
"In particular we have seen the introduction of modular schemes that allow a client to move from a basic Sipp to a full bespoke Sipp and back again, and only paying for the services required at any specific time."
He believes the demand for the ability to tailor a product to meet a client's exact requirements and allow them to hold the rest of their investments on the one platform would continue to grow.
He added: "What is key is that there needs to be enough choice in the market to meet a client's particular needs.
"You can imagine what a dull and unfulfilling world it would be if your only option were to choose between a fine malt whisky or a supermarket brand blend, with nothing in between. The same can be said for the Sipp and platform market."
The comments came after the FCA's Product Sales Data Report revealed Sipp operators in the UK had reduced by 25 per cent from June 2015.
FTAdviser reported that Chris Jones, principal at Rock Consultancy told delegates of the market contraction at the Associated Member Directed Schemes conference on 21 September.
Earlier this month, Martin Tilley, director of technical services for Dentons, told FTAdviser: "We have already seen some consolidation but we will see more.
"In the struggle to reach capital adequacy, many Sipp providers may just about be able to operate but then they may not have sufficient capital on top of that to grow their business or redevelop their systems and rewrite programmes should any new legislation come out.
"As mentioned, we do sympathise as the regulatory burden of preparing for and complying with the capital adequacy regime has been high and previously unforeseen."
