The SIPP sector has had all sorts of problems over the past few years, so it should be dead and buried.
But it really isn’t, and it really isn’t.
This week’s article is a reminder that SIPP isn’t just alive and well, it has a lot of life in it.
This, along with the lawsuits, FCA investigations and FSCS complaints, does not alleviate the major problems that some SIPP company failures have caused investors over the past few years.
As a result of a number of risky investments that some SIPP providers did not wisely accept ten years ago, some have gone bankrupt as they have had to merge with larger firms.
But while the recent headlines are often bad, behind the scenes the SIPP sector is quietly working and much more resilient than expected, as the latest numbers show.
According to the latest FCS product sales data analyzed by pension consultant Broadstone, SIPP sales rose to their highest level since 2018 in 2022.
After a significant drop in sales in 2020, both 2021 and 2022 saw strong rebounds, with sales up nearly 20% since 2020.
In 2020, sales fell to 740,410 units, but increased by 15% to 852,019 in 2021 and by 5% to 895,137 in 2022.
Overall, nearly 900,000 SIPPs will be arranged in 2022.
I think the word “sell” here is a bit unfair, as the only sale is the SIPP wrapper. The investments therein are often carefully put together by financial planners and this is all about sales and not advice.
Although the breakdown of recommended SIPPs and non-recommended SIPPs is not immediately clear from sales figures, data across individual annuities, including SIPPs, indicate that recommended SIPPs are on the rise. For example, in Q4 2022 he had 213,049 SIPPs arranged by financial advisors, whereas in Q4 2021 he had 160,902.
Discouraged or direct sales are higher, but growth is slow. The number of deprecated individual annuities sold in the fourth quarter was 392,932.
All of this says something about the market. SIPP is still popular with clients and may become even more popular. I advised that sales were growing and sales were recovering.
Pension savers who choose SIPP seem to distinguish, at least in their minds, between the good old days of a decade ago and the modern and low-cost SIPP plans, mostly endowment-based, available today. Arranging a SIPP is as easy as doing it online. Of course, many of the more sophisticated investors would like to retain the right to invest in more specialized investments, but that’s only a fraction of the overall market.
Of course, SIPP is not for everyone, but the desire among pension savers to take control of their pension plans appears to be strong and growing. While this is reassuring, the bias toward discouraged sales suggests that many people are probably taking more risks than they should.
But as long as they avoid storage pods, sketchy hotel developments in the Caribbean, and arcane investments in green fuel, most should be fine, and the prospects should be decent in the long run. . Most people would invest in stock-based funds, which makes a lot of sense.
Auto-registration has been a huge success with over 10 million auto-registration annuities set up, but maybe it’s time to give the SIPP sector a little boost. It’s battered and scratched, but shows signs of longevity, as critics expected.
• If you haven’t signed up for Financial Planning Today yet, sign up now to read more stories for free. Just click on a few stories and a popup registration box will appear.
> Important Tip: Follow Financial Planning on Twitter now @_FPToday Get the latest news and important updates. Astute readers will have noticed that his Twitter updates on the front page have disappeared. This was due to some unrest in the code we were working on. We will restore it as soon as possible.
Kevin O’Donnell is the editor of Financial Planning Today, where he has worked as a journalist and editor for over 30 years.