Vantis claims self -invested personal pensions could lead to mis-buying rather than become the next mis-selling scandal predicted by some IFAs.
The business advisory, tax and accountancy firm argues warnings from some IFAs over the dangers of sipps are mistaken as it claims investors have sometimes bought into the product in spite of advice which states they are the wrong vehicle.
It says the coverage of the A-day changes to sipps has made some people determined to invest in the product, "in the face of recommendations to the contrary", which it claims is “more a case of mis-buying than of mis-selling”.
Steve Harvey, director of Vantis Financial Management, says the company has been approached by a number of people who think they want a sipp because of what they’ve read about in the press.
He says: “They like the idea of managing their own pension investments, but fail to take into account the associated costs and whether the potential benefits merit the sometimes high outlay.”
Vantis argues sipps have been around for 16 years prior to A-Day, but says the “hype of pensions simplification brought them to the fore”, leading to a number of providers “jumping on the bandwagon to supply a product the market seemed to be clamouring for”.
Harvey says: “Sipps can be costly to set up, with high annual charges, and are really only of interest to people who want to devote time to managing their own financial affairs. There are huge numbers of investors out there paying into a sipp, for whom it's a completely inappropriate product. And in many cases, it’s no one’s fault but their own.’’
The comments follow the Financial Services Authority's (FSA) takeover of personal pensions regulation, including sipps, on 6 April, with Vantis suggesting over the last 12 months the impending regulation has seen the number of providers “thinning out from over 150 to more like 100”.
Harvey says: “The financial services industry in general has suffered damage to its reputation as a result of earlier mis-selling scandals. Tighter regulation is only to be welcomed if it protects people from any such danger. However, in this case, I believe some individuals are themselves to blame for ill-advised investments."
“For many investors, a simple stakeholder pension is perfectly adequate. I'd urge all investors to seek regular advice and review from a genuinely independent financial adviser, and above all, heed their recommendations before leaping into a costly and perhaps ineffective investment.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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