The number of SIPPs sold directly is rising meaning more consumers are making pension decisions without the help of an adviser, warns SIPP provider James Hay.
Research by the group shows one in eight providers does more than a quarter of its SIPP business directly with consumers.
This presents a threat to intermediaries who traditionally have recommended the pension products.
Chris Smeaton, propositions and e-commerce manager at James Hay, comments: “Over 90% of our business comes through IFAs and professional intermediaries.
"We would urge investors to seek out professional advice before committing to purchasing a SIPP directly.”
James Hay says the trend raises fears that people buy SIPPs they do not need because of aggressive marketing.
Smeaton says: “Concerns remain that people are investing into SIPPs inappropriately.
"Since A-Day, the rise in commoditised SIPPs has lead to the proliferation of ‘diet SIPPs’ – SIPPs with low charges offering limited functionality.
“While these can be appropriate for many investors, these types of SIPP are frequently sold directly.
"This raises the possibility that people are investing for their retirement without taking advice from a suitably qualified professional adviser."
In June the average sized SIPP reached £430,000, according to SIPP provider Hornbuckle Mitchell. The provider attributes the size to a leap in pension contributions since A-Day.
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"The answer to James Hays concern about SIPPs being sold directly to the consumer is simple – make them only available through a regulated intermediary. That means the likes of James Hay and others should refuse to deal directly with the consumer.
"I would imagine that there is a very high percentage of people with SIPP’s that don’t actually need the SIPP wrapper and the costs that this involves and would find a personal pension with a good choice of fund links more than meets their requirements."
Nick Webb works at P W White and Partners.IFAonline
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