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Self Invested Personal Pensions - SIPPs - UK - December 2013

“The main winner following increased regulation from the FCA will undoubtedly be the larger SIPP providers. Their economies of scale will allow them to continue to dominate the market, by acquiring their smaller rivals and lowering costs, to appeal to a wider range of consumers.”

– Alexander Hiscox, Senior Financial Services Analyst

Some questions answered in this report include:

  • How will consolidation in the SIPP market affect consumers?
  • Can taking a modular approach broaden the appeal of SIPPs?
  • How can providers build and sustain their reputation?
  • Will increasing numbers of consumers go direct to their SIPP provider?

The SIPP market has grown rapidly over the past 10 years and now equates to in excess of £100 billion assets under administration. SIPPs have traditionally been regarded as a financial product for more affluent investors, which allow investment into a wide range of non-standard financial products, in order to achieve higher returns. However, increased regulatory scrutiny and the rise of self-directed investing are changing the landscape of the industry.

In thie Report, Mintel examines consumers’ attitudes towards SIPPs. It looks at the channels through which consumers purchase their SIPP, what investments consumers hold within their SIPP and how they contribute. It also investigates what features consumers value in their SIPP and their reasons for transferring out to another provider.

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • SIPP market is expected to go from strength to strength
              • Figure 1: Forecast of new SIPP premiums (at current prices) – Fan chart 2008-18
            • Total assets under administration continue to increase in the SIPP industry
              • Figure 2: Total SIPP assets for the wealth management Industry, 2007-13
            • Market factors
              • Regulatory developments
                • Financial advisers remain the most popular channel, but SIPPs are gaining ground
                  • Figure 3: SIPP purchasing methods, August 2013
                • Companies, brand and innovation
                  • Standard Life remains the largest SIPP provider in 2013
                    • James Hay launches modular SIPP
                      • The consumer
                        • SIPP ownership
                          • SIPP Investment ownership
                            • Figure 4: Investments that SIPP owners want to hold within their SIPP, August 2013
                          • SIPP contribution habits
                            • Figure 5: SIPP contribution habits, August 2013
                          • SIPP satisfaction levels
                            • Figure 6: SIPP satisfaction levels, August 2013
                          • Most valued features and benefits of owning a SIPP
                            • Figure 7: Most valued features and benefits of owning a SIPP, August 2013
                          • Motivations for transferring a SIPP
                            • Figure 8: Motivations for transferring a SIPP, August 2013
                          • What we think
                          • Issues in the Market

                              • How will consolidation in the SIPP market affect consumers?
                                • Can taking a modular approach broaden the appeal of SIPPs?
                                  • How can providers build and sustain their reputation?
                                    • Will increasing numbers of consumers go direct to their SIPP provider?
                                    • Trend Application

                                      • Providers could turn SIPP success stories into a marketing drive
                                        • Consumers can take control of their retirement savings
                                          • Using technology to promote the personal touch of advice in the SIPPs market
                                          • Market Drivers

                                            • Key points
                                              • Capital adequacy will lead to consolidation in the SIPP industry
                                                • Reactions to the capital adequacy changes
                                                  • The market awaits the FCA’s third thematic review
                                                    • The FCA removes SIPPs exemption from disclosure
                                                      • FSCS will protect consumers SIPP cash deposits up to £85,000
                                                        • Issues affecting the wider pension industry
                                                          • The Chancellor reduces lifetime allowance
                                                            • The Treasury plans to cap pension fees
                                                              • Auto-enrolment
                                                              • Who’s Innovating?

                                                                • Key points
                                                                  • SIPP Chat – the trip advisor for SIPPs
                                                                    • AJ Bell’s Sippdeal launches free mobile dealing app
                                                                      • James Hay launches modular SIPP
                                                                        • Liberty SIPP reduces its offering to one product
                                                                        • Market Size and Forecast

                                                                          • Key points
                                                                            • Assets under management continue to increase in the SIPP market
                                                                              • Figure 9: Total Wealth Management Industry SIPP Assets, 2007-13
                                                                            • SIPP sales estimated to have increased in both volume and value in 2013
                                                                              • Figure 10: Volume and value of new SIPP business, 2009-13*
                                                                            • Mintel expects SIPPs to become increasingly popular amongst investors
                                                                              • Figure 11: Forecast of the number of new SIPP sales – fan chart, 2008-18
                                                                              • Figure 12: Forecast of the value of new SIPP premiums- fan chart, 2008-18
                                                                              • Figure 13: Forecast of new SIPP business, at current and constant prices, 2013-18
                                                                            • Forecast methodology
                                                                              • Fan chart explanation
                                                                              • Market Share

                                                                                • Key points
                                                                                  • Standard Life remains the largest SIPP provider in 2013
                                                                                    • Figure 14: Top 10 SIPP providers, by value of in-force business, 2013 (mid-year)
                                                                                  • New capital adequacy rules expected to create consolidation in the SIPP industry
                                                                                    • SIPP market will be increasingly be dominated by larger providers
                                                                                    • Companies and Products

                                                                                      • AJ Bell
                                                                                          • Figure 15: Interim financial data for AJ Bell, H1 2012 and H1 2013
                                                                                        • Hargreaves Lansdown
                                                                                            • Figure 16: Annual financial data for Hargreaves Lansdown, 2012 and 2013
                                                                                          • James Hay Partnership
                                                                                            • Standard Life
                                                                                                • Figure 17: Interim financial data for Standard Life UK, H1 2012 and H1 2013
                                                                                              • Suffolk Life
                                                                                                  • Figure 18: Annual financial data for Suffolk Life Pensions, 2011 and 2012
                                                                                              • Channels to Market

                                                                                                • Key points
                                                                                                  • Over half of SIPP holders purchased their SIPP through an adviser
                                                                                                    • Figure 19: SIPP purchasing methods, August 2013
                                                                                                  • The best of both – mixing advice and direct investing
                                                                                                  • SIPP and Pension Ownership

                                                                                                    • Key points
                                                                                                      • Consumers have low levels of retirement savings
                                                                                                        • Figure 20: Active pension ownership and retirement savings, December 2012
                                                                                                      • Auto-enrolment set to increase workplace pensions ownership
                                                                                                        • SIPP ownership is low amongst the general population
                                                                                                        • SIPP Investment Ownership

                                                                                                          • Key points
                                                                                                            • Simple investments are most popular amongst investors
                                                                                                              • Figure 21: Investments that SIPP owners want to hold within their SIPP, August 2013
                                                                                                            • Financial advice enables consumers to invest in more complex financial products
                                                                                                              • Figure 22: SIPP investments, by SIPP purchasing methods, August 2013
                                                                                                          • Contribution Habits

                                                                                                            • Key points
                                                                                                              • Over a third of SIPP holders make irregular contributions
                                                                                                                • Figure 23: SIPP contribution habits, August 2013
                                                                                                              • The majority of SIPP holders are making regular contributions
                                                                                                                • Advised SIPP holders contribute more regularly than direct SIPP holders
                                                                                                                  • Figure 24: SIPP contribution habits, by SIPP purchasing methods, August 2013
                                                                                                              • Satisfaction Levels and Value of Different SIPP Features

                                                                                                                • Key points
                                                                                                                  • SIPP holders are satisfied with the performance of their investments
                                                                                                                    • Figure 25: SIPP satisfaction levels, August 2013
                                                                                                                  • SIPP holders value having control over their pension savings
                                                                                                                    • Figure 26: Most valued features and benefits of owning a SIPP, by SIPP purchasing methods, August 2013
                                                                                                                  • Advised and direct investors have different preferences
                                                                                                                    • Advised SIPP holders are prepared to take more risks to achieve higher returns
                                                                                                                      • Advised SIPP holders are prepared to pay more for good financial advice and higher returns
                                                                                                                        • Direct SIPP providers should focus on low cost solutions
                                                                                                                          • Tax efficiency is an issue which appeals to advised and direct consumers
                                                                                                                            • Ad-hoc investors seek control over their investments
                                                                                                                              • Figure 27: Most valued features and benefits of owning a SIPP, by SIPP contribution habits, August 2013
                                                                                                                            • Consumers who contribute higher amounts are more likely to want to diversify
                                                                                                                            • Motivations for Transferring a SIPP

                                                                                                                              • Key points
                                                                                                                                • A providers’ reputation would persuade a third of consumers to transfer
                                                                                                                                  • Figure 28: Motivations for transferring a SIPP, August 2013
                                                                                                                                • Three out of 10 SIPP holders want a wider range of investments
                                                                                                                                  • Over a fifth of SIPP investors would not consider transferring out
                                                                                                                                    • Appetite for complex investments divides SIPP holders
                                                                                                                                      • Figure 29: Motivations for transferring a SIPP, by Most valued features and benefits of owning a SIPP, August 2013
                                                                                                                                    • Price remains important to over half of consumers
                                                                                                                                      • Figure 30: Motivations for transferring a SIPP, by SIPP purchasing methods, August 2013
                                                                                                                                    • Similar motivations for transferring for advised and direct investors
                                                                                                                                    • Appendix – Market and Product Definitions

                                                                                                                                      • Product definitions
                                                                                                                                        • Self-invested personal pension
                                                                                                                                          • Simple/platform SIPP
                                                                                                                                            • Mid-range SIPP
                                                                                                                                              • Bespoke/full-range SIPP
                                                                                                                                                • Standard and non-standard investments
                                                                                                                                                  • Esoteric investments
                                                                                                                                                    • Illiquid assets
                                                                                                                                                    • Appendix – Channels to Market

                                                                                                                                                        • Figure 31: SIPP purchasing methods, by demographics, August 2013
                                                                                                                                                    • Appendix – SIPP Investment Ownership

                                                                                                                                                        • Figure 32: Most popular SIPP investments, by demographics, August 2013
                                                                                                                                                        • Figure 33: Next most popular SIPP investments, by demographics, August 2013
                                                                                                                                                        • Figure 34: SIPP investments, by SIPP purchasing methods, August 2013
                                                                                                                                                    • Appendix – Contribution Habits

                                                                                                                                                        • Figure 35: SIPP contribution habits, by demographics, August 2013
                                                                                                                                                        • Figure 36: SIPP contribution habits, by SIPP purchasing methods, August 2013
                                                                                                                                                    • Appendix – Satisfaction Levels and Value of Different SIPP Features

                                                                                                                                                        • Figure 37: SIPP satisfaction levels, by demographics, August 2013
                                                                                                                                                        • Figure 38: Most valued features and benefits of owning a SIPP, by demographics, August 2013
                                                                                                                                                        • Figure 39: Most valued features and benefits of owning a SIPP (continued), by demographics, August 2013
                                                                                                                                                        • Figure 40: Most valued features and benefits of owning a SIPP, by SIPP purchasing methods, August 2013
                                                                                                                                                        • Figure 41: Most valued features and benefits of owning a SIPP, by SIPP contribution habits, August 2013
                                                                                                                                                    • Appendix – Motivations for Transferring a SIPP

                                                                                                                                                        • Figure 42: Most popular motivations for transferring a SIPP, by demographics, August 2013
                                                                                                                                                        • Figure 43: Next most popular motivations for transferring a SIPP, by demographics, August 2013
                                                                                                                                                        • Figure 44: Most valued features and benefits of owning a SIPP, by motivations for transferring a SIPP, August 2013

                                                                                                                                                    Companies Covered

                                                                                                                                                    • A J Bell Limited
                                                                                                                                                    • Cofunds
                                                                                                                                                    • Deutsche Bank AG
                                                                                                                                                    • Hargreaves Lansdown Plc
                                                                                                                                                    • IFG Group Plc
                                                                                                                                                    • James Hay Pension Trustees Limited
                                                                                                                                                    • Legal & General Group PLC
                                                                                                                                                    • Morningstar, Inc.
                                                                                                                                                    • Pointon York SIPP Solutions
                                                                                                                                                    • Skandia UK
                                                                                                                                                    • Standard Life Assurance Company
                                                                                                                                                    • Suffolk Life

                                                                                                                                                    Self Invested Personal Pensions - SIPPs - UK - December 2013

                                                                                                                                                    £1,995.00 (Excl.Tax)