Alan Steel
01506 842365
MENU
  • Home
  • About Us
    • Close
    • About Us
    • What We Do
      • Close
      • What We Do
      • Our Services
      • Our Philosophy
      • Our Awards
      • Our Reputation
    • Who We Are
      • Close
      • Who We Are
      • Meet the team
    • Our Approach
    • Financial Planning
  • Testimonials
  • Investments
    • Close
    • Investments
    • Investment Advice
    • Portfolio Building
  • Pensions
    • Close
    • Pensions
    • Retirement Planning
    • Early Retirement
    • Pensions as simple as...
  • Tax
    • Close
    • Tax
    • Tax Advice
    • Tax Planning
    • When I'm Dead and Gone
    • Inheritance Tax
    • HMRC Digital Accounts
  • Insights & Media
    • Close
    • Insights & Media
    • Letters from Linlithgow
    • Informing You
    • Letter from America
    • See us in the Press
    • Master Investor
    • Points of Few
  • Contact Us
Independent financial advisers founded in 1975
Over £1.4 billion client funds under management
17 industry awards for advice since 1989

See us in the Press

A grim unfairy tale of SIPPs and salesmen

Saturday, 13 May, 2017

ASIMage

We had a recent visit from a retired couple just turned 70, recommended by their best friends who have been clients for 20 years. Their IFA, they explained, was a one-man band and wasn’t returning calls. They understood he had terminal cancer.

So, given they’re receiving income from their pension plans they described as SIPPs (Self Invested Personal Pensions) and as they felt they needed ongoing advice, they asked us to take over the management of their plans.

And that’s when the fun started. If that’s an apt description.

Despite their time in a family business they confirmed that when it comes to investments and pensions they’re not financially sophisticated and that they’re risk averse, cautious at best. So it came as a shock to all of us, them included, to discover their pension plans were so off the scale of risk as to be downright dangerous.

Up to four years ago their pensions were with a well-known insurance company and not exactly setting the heather on fire but safe from nasty surprises. But then their “adviser” got greedy.  As trusting souls they went along with his suggestions of upping their income and transferring to a more up to date scheme. They’d heard of SIPPs in the newspapers, after all.

Could we see the recommendation reports (reason why letters)?  “Well, no, there weren’t any”. How about risk warnings? “Nope, but he knew we were cautious and couldn’t take risks”.

Any details of hard disclosure? “Such as?” Well, charges or fees earned in the transaction? “No, but he was kind enough to pay all the lawyers fees and other bills the investments were bought by the SIPP.” So how much was that? “Don’t know, we never were told.”  Oh oh.  Sound right to you?

For some unknown reason my industry seems to hide the fact that if you have a SIPP you need trustees who are supposed to act in the best interests of the members. So why do they allow this retired couple to be persuaded into a high risk car park, holiday lettings and storage pods income schemes with no guaranteed asset values ?

And why do the trustees keep any commissions or sales charge details to themselves and not disclose to the members (their clients)? I would be surprised if their IFA earned less than 5% to 10% on this deal. And guess who pays that?

If you think I’m being OTT let me share some small print on their income investment linked to their holiday lettings …. “Investment in the bonds carries substantial risk….Potential investors should note these bonds are high risk. They are unlikely to be suitable for those who do not have the experience of understanding to be able to evaluate the chances of success of start-up companies.”

The other risk warnings were even more scary.  Be fearful!  These are Unregulated Investments. There’s no protection from the Financial Services Act when things go wrong. Their adviser maybe didn’t appreciate that such high risk investments are wholly unsuitable for retired cautious investors.

So if you’re being “sold” a SIPP, stop. Take impartial advice. Read the risk warnings. Insist on a detailed “Reasons Why” explanation. And don’t do anything until you find out what are all the costs. You could lose everything. Yes, really.

One last thing.  Commentators are clearly confused as to what a SIPP is. The vast bulk of pensions plans they call SIPPS are not. They are simple plans that allow a wide choice of collective funds to be purchased.

Only if you insist in investing in bricks and mortar, or individual shares etc do you need a SIPP with its extra costs and complications. Other than that,  stay well clear of them.

©2023 Alan Steel Asset Management Limited is authorised & regulated by The Financial Conduct Authority. Please note that the Financial Conduct Authority does not regulate some forms of tax advice. Company Registration: SC58014

You should remember that the value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The investment services and/or investments referred to in this website may not be suitable for you. If you are unsure we suggest you contact us to discuss matters further. If we believe our services are not right for you we will tell you.

When investing money, whether for income or growth, you are placing your capital at risk as the value of investments may vary, so you could get back less than you started with.

The Financial Conduct Authority does not regulate Tax Advice, Trusts or wills. Alan Steel Asset Management Limited is authorised and regulated by the Financial Conduct Authority. The guidance contained in this website is subject to the regulatory regime of the UK.

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients.

FOS details can be found at www.financial-ombudsman.org.uk

Alan Steel Asset Management Limited are not responsible for the content of external sites.

  • Cookie Policy
  • Privacy Policy
  • Website terms and conditions
  • Tax Services Privacy Notice
  • Contact Us

This site uses cookies. By using this site you agree to the use of cookies. Read our Cookie Policy