These flexible investment vehicles, originally established in the 1990s, have gained substantial traction, with 1.7 million individuals in the UK opting to establish a SIPP by 2023, accumulating £205 billion in assets. What is particularly striking is the potential SIPPs hold for engaging younger individuals in retirement planning. Thanks to their self-directed nature and the opportunities technology provides, a slick SIPP offering can help advisers to tap into the younger, but growing, pool of digital natives.

Digital natives – those born after about 1980 – have grown up in the era of ubiquitous technology. Generally, digital natives consider instant access to information to be the norm and appreciate the convenience of managing finances online. This shift in perspective is leading to an increasing number of young people forgoing financial advisers with their out-of-office hours and seeking their own alternatives to managing money.

Further, the pandemic ushered in a surge of interest in markets and stock picking. While this is encouraging in one sense, it remains crucial for wealth managers and financial advisers to remain well-informed about the dynamic DIY sector. Though SIPPs offer investors the flexibility to craft a tailored savings portfolio, this flexibility also carries the risk of clients venturing into investments that may prove excessively volatile or ill-suited for their financial objectives.

Despite the SIPP sector’s aforementioned growth, the number of providers has gradually dwindled over time. Escalating regulatory pressures, particularly in the aftermath of notable failures, have spurred industry consolidation. Concurrently, a new wave of technology-driven SIPP providers has emerged, addressing the evolving expectations of investors. To retain their competitive edge, advisers must harness technology to remain competitive.

A self-service generation

Large cohorts of young people set to come into wealth in the coming years have already become quite self-sufficient. With the vast amount of information readily available, people can easily Google what they should be investing in, which weakens the demand for traditional financial advice. However, this shift presents a great opportunity for companies to offer robust self-service tools and functionality. Financial advisers should offer SIPPs via investment platforms that allow savers to easily access their accounts, track investments, and make informed decisions from their smartphones or laptops. This convenience not only fosters active engagement but also demystifies the often-complex world of retirement planning.

Technology also allows SIPPs to incorporate goal-oriented investment features. Clients can work with their advisers to define their retirement objectives and risk tolerance, and the system can suggest suitable investment options. This tailored approach empowers savers to align their investments with their individual financial goals, providing a sense of ownership and purpose in their retirement planning.

Towards hybrid advice

I also believe the younger generation will prefer a hybrid approach to financial advice. When people seek out an adviser, it will more often be for specific advice at that moment, not a long-term commitment. Firms will therefore need to handle a larger volume of business because they’ll be able to charge less per client unless they show they are consistently adding value to that client’s finances over time. The technological advancements will allow more flexibility for people to mix and match their advice sources, manage where they hold their assets, and tailor their financial strategies.

Rarely in living memory has the global economy seemed so volatile. This leads to clients who have more questions than ever and – when they spy an opportunity – are keen to put their money to work. This means an effective SIPP platform needs to facilitate the rapid deployment of client cash into the markets. This quick response to market developments aligns with the expectations of younger, tech-savvy investors. Furthermore, user-friendly interfaces that are easy to navigate and understand are crucial to ensuring younger individuals feel comfortable and confident in managing their retirement savings.

Technology plays a pivotal role in making retirement planning more accessible and engaging, particularly for younger individuals. In parallel, technology plays an important role for advisers looking to tap into a younger generation with technology deeply embedded in their day-to-day.

Via a SIPP on an advanced platform, advisers have the potential to harness the power of technology to provide flexible, convenient, and personalised solutions that cater to the preferences of the digital generation.

By Ian Partington, CEO, Third Financial

According to Companies House the firm is in liquidation with a voluntary liquidator appointed on 3 May 2023.

The Financial Conduct Authority (FCA) register shows that the company is still authorised but the firm has applied to cancel its authorisation which it submitted in June 2023.

Until the cancellation the firm must still meet the FCA’s standards in dealing with its customers.

To read more on this topic, visit: Three firms declared in default

Quadros Financial Solution must fulfil specific requirements made by the FCA which includes immediately ceasing to the extent it has not already ceased all Defined Benefit pension transfers for which it has part 4A permission.

It also cannot hold and cannot control client money.

The FSCS told UK Adviser that it has received 9 claims in regard to the firm with five still in progress, three rejected and one upheld.

All claims are for pensions advice relating to SIPPs.

Kevin Whitmore of WBR Group was also elected to the committee, which represents the interests of over 120 member firms, including SIPP and SSAS providers, advisers, banks, investment managers and other service providers.

Following the committee’s annual conference its members have opposed the DWP’s consultation on the general levy on pension schemes.

To read more on this topic, visit: Pensions not a ‘top priority’- industry reacts to cabinet reshuffle

It proposes to increase the levy rates for schemes with less than 10,000 members, potentially including SSAS, by an additional £10,000 from 2026.

Arguing that it would be unfair and disproportionate to the small schemes sector and would discourage the use of SSAS as a flexible and cost-effective pension vehicle for business owners and entrepreneurs.

Andrew Phipps, chair of the AMPS, said: “We are deeply concerned about the DWP’s proposals to increase the general levy for small schemes, which we believe are unjustified and detrimental to the SSAS market. We urge the DWP to reconsider its approach and to engage with the industry to find a more reasonable and sustainable solution.”

Published today (9 November) the document also revealed the levy in the Life Distribution & Investment Intermediation (LDII) class is set to rise to £140m in2024/25 – a near £40m increase from 2023/24.

This increase is a result of lower expected surpluses being carried forward from 2023/24 to 2024/25 than were carried from 2022/23 to 2023/24, the FSCS said. It also reported the LDII class is expected to receive £53m in provider contributions from other classes during 2024/25.

Compensation costs for this class are also expected to increase by £42m to £224m with the main factors behind this increase including processing additional DB pension claims following recent failures, potential new firm failures and a number of SIPP decisions expected in 2023/24 moving into 2024/25.

To read more on this topic, visit: UK firm declared in default in regard to pension advice

Simon Harrington, head of public affairs at PIMFA, told International Adviser that while it was disappointing that the levy was forecast to increase, the trade body wanted to highlight the relatively stable cost of compensation over the preceding years.

Harrington said: “Our view has always been that anyone who falls on the FSCS has received an outcome it would be better to have avoided in the first place and relatively stable costs of compensation at least indicate we are currently not seeing a significant rise in claims.

‘Barrier to growth’

“This will, of course, provide little solace to firms who are ultimately required to fund these compensation costs. The cost of funding the FSCS represents a very real barrier to growth for many firms and it remains the case that alternative funding models should be pursed in service of the polluter pays model that industry stakeholders and the FCA agree would be preferable.”

He added: “Our view continues to be that FCA fines should be used to fund compensation costs rather than being diverted to the Exchequer as this would be the purest distillation of a ‘polluter pays’ model.

“Going forward we are of course concerned about how long claims take to work through the system and the potential this may have to contribute to significant rises in the cost of funding the FSCS in future. We remain supportive of a broader review of how the FSCS functions and what protection should be afforded to UK consumers.”

Using Platform One custody, technology and brokerage, the platform will offer the full spectrum of Alltrust products including Full SIPPs, family pension trusts and Small Self-Administered Schemes (SSAS) at a price of 10 basis points.

Alltrust managing director James Floyd, said: “This white-label solution presents a client-centric offering that notably enhances our value proposition. It bolsters our commitment to supporting IFAs and clients with efficient solutions, which are fundamental to our business strategy.”

To read more on this topic, visit: Platform One rolls out new software to advice firms in Middle East and Asia

Alex Cowan-Sanluis Platform One chief executive, added: “We’re known for our UK wrap platform but, as this fantastic partnership with Alltrust shows, we also have the flexibility to provide our services in a myriad of ways for businesses across the wealth management and financial services spectrum.

“This arrangement showcases our ability to help businesses launch propositions using the modularity of our technology. Our software as a solution/infrastructure offering is growing from strength to strength as we continue to prove ourselves at the forefront of wealth technology.”