In this installment of Midweek Digest, we give you a summary of the interesting stuff so far this week. Click on the title to read the article in full (opens new window). So here goes…
This week the FSA published a report of its thematic review of SIPP providers and I have to say, it makes an interesting read.
We can sum it all up in a simple sentence ‘when taken as a whole, the SIPP operator sector has the potential to cause significant consumer detriment.’
In English, the regulator thinks some SIPP providers have been nutty and they need to get their acts together.
The lack of experience amongst managers at SIPP providers is quite shocking. The regulator noted that ‘over half of the senior managers we spoke to had no previous experience in a regulated environment.’ Can you believe that?
The worse failings include:
- Several firms may have been used as a conduit for financial crime
- Inability to identify investments that may attract a tax charge from Her Majesty’s Revenue & Customs (HMRC), leading to potential consumer detriment
- An increase in the number of non-standard investments held by some SIPP operators, with often poor monitoring of this
- Poor understanding among firms’ senior management of regulatory requirements and their individual responsibilities
- A lack of senior management oversight of the conduct of their firm
- Evidence of conflicts of interest existing within some SIPP operators, with firms acting as the administrator, trustee and adviser without sufficient controls in place to manage potential conflicts between these roles, and without clear disclosure of the potential conflict to members.
This report has a number of ramifications for IFAs. Many advisers have expressed concern about certain SIPP providers allowing questionable investments, without proper due diligence of the promoters or real nature of these investments. The FSA noted that about 70% of the SIPP operators in the review reported that they held non-standard investments but over a quarter of the them ‘were unable to identify the percentage of non-standard investments held due to poor quality MI.’ So I am sure advisers will welcome the new that the FSA is reigning them in.
As always, advisers and paraplanners have to take extra care when recommending SIPPs, paying particular attention into to how providers conduct their business.
That is the title on a publication by the Personal Finance Society, which makes a number of suggestions for advisers looking to take their quest for higher professional standards to the next level.
As well as the Fellowship of CII, the paper suggested higher degrees including Masters and Ph Ds! Yeah…. P H D….
Other more pragmatic suggestions by the paper include…
- ISO 22222/BS8577
- Society of Trust and Estate Practitioners (STEP)
- Society of Later Life Advisers (SOLLA)
Others professional qualifications not suggested in the reportbut equally relevant include
- Certified Financial Planner
- Chartered Tax Adviser
- CISI Masters in Wealth Management
This article in the FinancialPlannerOnline, based on a research by iShare suggests that, at least for larger investors, the active v passive debate is over and many now look to use both investment styles on a regular basis with no style dominating.
The research identifies 3 categories of Adviser/Wealth Manager/Professional Investors as follows:
Actively Active: This accounts for 30% of respondents. They are focused on generating alpha for clients through stock selection with a high level of conviction in active management.
Embracing Blending: This represent 25% of respondentss group are increasingly adopting indexing for tactical exposure and moving towards a comprehensive approach to blending
Agnostic Allocators: This account for 45% of total respondents. They considers asset allocation as the key driver and the type of vehicle (be it active or index) used for implementation is a secondary concern
It would be interesting to know if this is representative of the adviser community. As an adviser, which of these best describe you?