Around 80% of advisers are considering special campaigns to win new clients who want to move Protected Rights money into a SIPP following recent rule changes, according to research by Fidelity FundsNetwork.
Before restrictions were lifted on October 1, £100bn of Protected Rights money built up by individuals who were ‘contracted out’ of SERPS or the State Second Pension had to be held in life insurance funds.
However, following the rule change, over a third of people (38%) are now planning to move their Protected Rights money away from these funds and into a SIPP, according to the research.
FundsNetwork’s study found only 9% of respondents were very happy with the performance of their Protected Rights pot, while a further 28% had no idea how their money had performed. Less than 8% would be happy to leave their Protected Rights money untouched.
Holders still want to move their money despite nearly a fifth of respondents saying they would face exit charges by their incumbent provider of up to 25%. A further 40% were unsure if penalties would be imposed.
Fidelity FundsNetwork believes the current situation surrounding Protected Rights money creates enormous opportunities for advisers, particularly as only 19% believe clients are aware of the rule changes.
David Dalton-Brown, head of Fidelity FundsNetwork, says: “Protected Rights is a big opportunity for advisers as there is still a lot of money out there. Our research shows a lot of protected rights holders are just fed up with the poor returns offered by insurance company funds and, despite the burden of exit charges of up to 25%, want to switch the money into a SIPP.
“More modern vehicles like SIPPs not only offer greater control, with a wide range of investment options for example, but they also enable consolidation of holdings, saving time and money, and making asset allocation decisions that much easier.”
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created