Are advisers overlooking a SSAS opportunity?
Clients dissatisfied with the running of their SSAS is an opportunity for advisers to help and thus build a valuable relationship with this group HNWs, says Matthew Storey, business development manager, Xafinity SIPP & SSAS
The SSAS has taken a bit of flak over the past few years. The fact that they are not regulated by the Financial Conduct Authority has meant that they were viewed by some as easier targets for the “non-regulated investment introducer” and, sadly, some unscrupulous scammers.
There is a risk that the ‘true SSAS’, that is every bit as legitimate and valuable as it always has been, has become somewhat sullied in the eyes of genuine regulated financial advisers. So let’s have a quick reminder of some of the key facts:
SSAS is not an FCA regulated product. Although it is still an HMRC registered pension scheme and must conform to the myriad of rules and legislation that surround pension schemes. The FCA also regulate any advice to the SSAS trustees to invest in regulated investments.
SSAS members are trustees and can exercise control over investments. This is a “self-administered” pension scheme after all, but this control lies with the trustees and the Scheme Administrator who may be a SSAS provider, a trustee, or sponsoring employer. The liability for any unauthorised payments under the SSAS ultimately resides with the Scheme Administrator so they are likely to set up some powers of investment veto before taking on the role.
• Scheme Administrators must submit annual returns to HMRC. If they don’t then penalties apply. If the client wants to take on this role in order to take maximum control they can delegate much of the administration to an appointed ‘practitioner’. Xafinity can undertake either the Scheme Administrator or practitioner roles, and so ensure annual returns are submitted accurately and timely.
• SSAS is a complex occupational pension arrangement. It is, but the right provider will help enormously in simplifying complex matters while making sure the complexities are dealt with effectively.
SSAS pre-dates SIPPs in the self-invested pension space. In fact it is argued that the self-investment principles of SSAS set the direction for the development of the SIPP.
Xafinity continue writing new SSAS via regulated financial advisers, and while the background music may have changed a little, the dance remains the same. Core traditional investments such as commercial property, land and loanbacks to the sponsoring employer, are supplemented by any number of newer sexier investments, indeed if an investment can fit within a SIPP we can fit it into a SSAS. Business directors tend to really appreciate the best of both worlds..
SSAS takeover – opportunities to advise
There are thousands of SSAS out there and you’ll often find that your accountant contacts have a number on their books. This is where advisers can find great opportunity.
So what is the ‘advising’ option for clients who have a SSAS?
Well, the first step is fully understanding just how healthy the scheme in question is – is reporting up to date, have the investments been reviewed, is the commercial property rent up to date, are there all loans correctly documented and being repaid, etc. Fairly in-depth stuff.
This is where advisers may prefer the help of a SSAS expert who has the in depth expertise and knowledge to guide them through the process they will have to follow to ensure the best outcome for their clients.
Here’s how a typical SSAS query would look, from an adviser’s perspective:
1. The adviser calls accountant to discuss a SSAS;
2. Basic details are discussed – how many members, what are the assets, what is its value and of course, how happy is client with current SSAS provider (there are cases where clients can have taken over the operation of the SSAS themselves – unless they are well versed in pensions legislation this is self-evidently not a great position);
3. The adviser calls on Xafinity to undertake a ‘free health-check’ review of the scheme;
4. Xafinity run through the review process in detail including what they need to see, the timescales, the costs and just what level of work they can expect to do on the project;
5. The adviser gathers key documentation as instructed by their BDM – trust deed and rules, asset list, bank statements etc;
6. Xafinity will then fully review the documentation and feedback on the current state of the scheme.
At the end of this health-check process, and assuming the scheme is in good order, Xafinity can offer to takeover running the scheme. If this is to progress a new trust deed is sent out for the trustees, Scheme Administrator, and the sponsoring employer if one is still in place, to adopt. Once returned, the adviser and their SSAS will be provided with their own Xafinity administrator for the scheme; a single point of contact who will deal with all matters on the scheme.
The scheme assets are owned by the SSAS trustees meaning that there is no need to fully re-register them although if there was a professional trustee registered against any assets they will need to be removed. This is very important where property is involved as it means no expensive legal fees.
The SSAS market is alive with opportunity for both new and existing clients. There are many thousands of schemes registered, and a good number of these will have unhappy members due to high costs and/or poor or non-existent service. There will also be some schemes where bigger issue are lurking. The key is that schemes can be moved and rescued, and strong HNW client relationship built.