The Suffolk Life Research Centre looks into the enduring appeal of SIPPs and also how clients are using them to meet their retirement planning needs
In this month’s Suffolk Life Research Centre report we aim to establish the ongoing level of demand for SIPPs as well as taking a look at the kind of assets investors are looking to utilise within them. The survey was carried out online with a questionnaire sent via email to Retirement Planner readers. Ninety-one readers responded to the survey.
Client suitability has been a hot topic within the SIPP market with increased FSA scrutiny on advisers to ensure clients are using the product that most suits their needs. Only 1% of respondents said that none of their clients were well suited to using SIPPs rather than a standard personal pension, while 26% said between 1-10% of their client base were well suited to SIPPs.
However, 15% of those who took part in the survey said 51-75% of their client base was better suited to SIPPs while a further 12% said between 76-100% of their clients fitted this category –
What percentage of your clients are well suited to using SIPPs rather than a standard personal pension?
The next question asked was the percentage of client assets that are being held within a SIPP – the responses were wide ranging. Of those who responded only 7% said that none of their clients’ assets were held in a SIPP while 28% said 1-10% of client assets were invested in this way. 27% of those providing responses said 11-25% of client assets were in SIPPs while 26% said 26-50% of client assets were invested in this way.
What percentage of client assets under management do you have in SIPPs?
Still a high net worth proposition
While the results so far may suggest that SIPPs are gaining a broader appeal, the results to the next question seem to suggest that SIPPs remain primarily a high net worth solution. When we asked the readers to name the average amount they had invested in SIPPs 44% of those who answered said the average was over £200,000 with a further 34% saying the figure was somewhere between £100,000-£199,999. Only 3% of those who responded said the average came up between £10,000 and £49,999.
|between £100,000 and £199,999||34%|
|between £50,000 and £99,999||19%|
|between £10,000 and £49,999||3%|
|between £5,000 and £9,999||0%|
Advisers were also asked to give us their views regarding in-specie contributions and the regularity with which they are used. We asked participants to rate the frequency on a sliding scale of one to five with one meaning ‘never’ and five meaning ‘always’. 13% of those contributing to the survey said they never considered using in-specie contributions when discussing contribution options with clients. A further 21% took the middle option of number three while 12% said they always consider using in-specie contributions when discussing contribution options.
When discussing contribution options with your clients, how often do you seriously consider using in-specie contributions? (Rankings between 1 and 5, 1= never and 5 = always)
|1 - Never||13%|
|5 - Always||12%|
We closed this month’s survey by taking a closer look at the appetite for private equity and unlisted shares from investors. While a large proportion (26%) of those who answered the question said that none of their clients chose to invest in these asset classes there were a further 58% who said between 1-20% of their clients either expressed an interest in, or had already invested in these areas. A further 12% said 21-40% of their client base were interested in these asset classes while a 3% of those who responded said between 61-80% of their clients could pursue this route.
What proportion of your clients ask about or already invest in private equity/unlisted shares?
Of those who were interested 62% said they preferred to invest in small companies while the remaining 38% preferred to access investment grade private equity through an investment manager.
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