The great SIPP sell off

Whilst all the big debate and attention has been focused on the power struggles between fund mangers, fund super markets, wraps and life cos, slowly a change is happening.

Various papers relating to the SIPP market are changing the landscape. Smaller books of SIPPs are being bought up at a rate of noughts.

Reasons have all been “it’s not core”. No doubt some truth in that, but I’m sure new rules and disclosures will play a part.

Whilst at this stage these books are being bought up by other specialists it makes me think how specialist the market will be in 5 or so years time. Lots of talk about consolidation in the platform world. I think the SIPP world will be first.

Lots of due diligence will have been done I’m sure. These books are small, but the assets likely to be complex and potentially riskier than you find in mainstream. The good news is the guys buying them up do know what they are doing – but with any acquisition new risks will emerge.

I hope the consolidation doesn’t lead to a vanilla SIPP market. The variety will keep it healthy, but it wouldn’t surprise me if in a few years maybe only 25% of the providers today will survive.

We will once again I suspect be having the debate about big, small, life co, new model in the SIPP market too.

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12 thoughts on “The great SIPP sell off

  • It’s much quicker and easier to talk about consolidation than to actually do deals. For example, Dentons volunteered that their friendly acquisition of SIPPs from RSM Tenon took well over 12 months. Of course, that’s only part of the story. I wonder, for example, how long it will take Curtis Banks to integrate the bespoke SIPPs they bought from Alliance Trust Savings – I dare say that will be by far their biggest project to date.

    Like you, Dave, I hope we won’t end up in a bland world where big brands are built to try to make up for the fact that you can’t taste the difference. We will all be much poorer if that is the eventual result.

    Reply
  • What happens when someone running a SIPP wants out, as it’s too tough going forward or they’ve picked up too much junk, and there is no buyer because nobody will take the liability and the FCA won’t approve a deal without liability coming across? Is this likely to happen?

    Reply
  • Agreed Andy. Consolidations of all shapes and sizes through up more surprises, even for the most diligent.

    Some moves will be made out of necessity. The worry has to be what happens when firms have taken in too much. I think it isn’t beyond the realms of possibility to see firms fail here. Not sure what happens then. .

    Reply
  • Typing my response to Andy as you sneaked you comment in Phil. I think it will happen. And I’m not sure who is looking out for it.

    Reply
    • There’s a $64,000 question from Phil: what happens when someone wants to sell and no one wants to buy? Many debates seems to be predicated on the assumption that there will always be a buyer. I believe there are operators that have significant exposure to investments liable to tax charges and which would not be worth a peppercorn without some form of amnesty from HMRC. (Let’s hope I’m wrong about that.) I’d like to see the FCA and HMRC confirm how they’d respond – if an operator is wiped out financially, would outstanding liabilities fall on members and/or new owners?

      At the end of the day, I still say the issue is about quality, not quantity – quality of the business, not quantity of the reserves.

      Reply
  • The government will need to set up a “Bad SIPP” in the same way we have bad banks that contain the old space junk (CDOs etc.) that nobody else wants.

    Reply
  • The government will need to set up a “Bad SIPP” in the same way we have bad banks that contain the old space junk (CDOs etc.) that nobody else wants.

    Reply
  • It’s much quicker and easier to talk about consolidation than to actually do deals. For example, Dentons volunteered that their friendly acquisition of SIPPs from RSM Tenon took well over 12 months. Of course, that’s only part of the story. I wonder, for example, how long it will take Curtis Banks to integrate the bespoke SIPPs they bought from Alliance Trust Savings – I dare say that will be by far their biggest project to date.

    Like you, Dave, I hope we won’t end up in a bland world where big brands are built to try to make up for the fact that you can’t taste the difference. We will all be much poorer if that is the eventual result.

    Reply
  • What happens when someone running a SIPP wants out, as it’s too tough going forward or they’ve picked up too much junk, and there is no buyer because nobody will take the liability and the FCA won’t approve a deal without liability coming across? Is this likely to happen?

    Reply
  • Typing my response to Andy as you sneaked you comment in Phil. I think it will happen. And I’m not sure who is looking out for it.

    Reply
    • There’s a $64,000 question from Phil: what happens when someone wants to sell and no one wants to buy? Many debates seems to be predicated on the assumption that there will always be a buyer. I believe there are operators that have significant exposure to investments liable to tax charges and which would not be worth a peppercorn without some form of amnesty from HMRC. (Let’s hope I’m wrong about that.) I’d like to see the FCA and HMRC confirm how they’d respond – if an operator is wiped out financially, would outstanding liabilities fall on members and/or new owners?

      At the end of the day, I still say the issue is about quality, not quantity – quality of the business, not quantity of the reserves.

      Reply
  • Agreed Andy. Consolidations of all shapes and sizes through up more surprises, even for the most diligent.

    Some moves will be made out of necessity. The worry has to be what happens when firms have taken in too much. I think it isn’t beyond the realms of possibility to see firms fail here. Not sure what happens then. .

    Reply

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