Research commissioned by IW&I shows that half (50%) of SIPP holders manage their investments either themselves or get their partner to do so. However, when asked how confident they are about achieving maximum returns according to their risk profile, less than a third (30%) feel “very confident” that they have the expertise required.
When asked to think about their SIPP specifically in connection with recent volatile investment market conditions, only a third (37%) said they were “very confident” they had the necessary time and 28% the necessary expertise to ensure their SIPP delivered a strong risk-adjusted performance.
The study found that 15% of people managing their own SIPP said they were likely to appoint an investment professional to do so within the next 12 months.
Chris Aitken, head of financial planning, Investec Wealth & Investment, said:
“Many people set up a SIPP thinking they will have the time and expertise to manage it properly but they realise that theory and reality can be very different. Managing a SIPP properly requires time, expertise and a strong understanding of market risk and appropriate asset allocation. Unfortunately, for many people this is simply too difficult. We’d advise anyone who is concerned about having a ‘Self-Ignored Personal Pension’ to take professional advice.”
The research from IW&I also found that, of those managing the SIPP themselves, under half 45% actually understand how their charging structures are calculated by their SIPPs provider. According to the study, the vast majority of those self-investing – some 70% – felt that SIPPs providers should simplify their charging structures.
Chris Aitken added:
“This is a poor reflection of some SIPP providers and it’s also a call to action for SIPP holders to better understand what they are paying for and whether or not their current plan represents good value and is the right product for them. Many Self ‘Ignored’ Personal Pension holders will probably not fully understand the flexibility and power that a SIPP can provide. Not all SIPPs providers are the same, and only a few, including Investec Wealth & Investment, offer a dedicated, discretionary service with a fully transparent and straightforward fee structure.”
Stewart Dick, Head of Sales, Hornbuckle Mitchell, says SIPPs remain the investment du jour but investors must receive professional guidance to maximise their potential.
“SIPPs make a fantastic retirement savings vehicle given the freedom and flexibility they offer investors, however, they also require specialist knowledge in order to help them achieve their maximum potential. It is unsurprising that such a large percentage of people feel they do not have the right expertise to manage them properly and I would urge SIPP members and those considering a SIPP to receive professional advice.”
“SIPP members can often be excited by the initial allure of having the freedom to manage their own pension pot but this can prove to be a double-edged sword. By employing the knowledge and understanding of a professional adviser, investors can make full use of the wide range of benefits available and ensure its power is maximised.”
