Carrying out a SIPP book migration
Where industry consolidation means a SIPP book ends up with a provider an adviser would not have chosen, a migration may be necessary but not always easy. Brian Talbot, director, Talbot and Muir looks at the process
The unintended consequence of consolidation in the SIPP market is that some financial advisers are finding themselves working with SIPP providers they might otherwise not have chosen. Accordingly, many are now looking to move some or all of their book of business to an alternative SIPP provider.
This isn’t a decision that advisers take lightly as it can be very time consuming. But there are a number of ways that it can be simplified and made as pain free as possible for an adviser’s business and their clients.
It isn’t just consolidation that has been driving this SIPP book migration, it is also a lack of innovation and evolution of the provider’s proposition, a lack of development in terms of technology and a general lack of investment in the SIPP provider’s business.
Also, where a provider has significant exposure to toxic non-standard investments, resources can be diverted to handle complaints with the inevitable fall off in administration and service standards.
For advisers looking to migrate a SIPP book to a new provider, there is a detailed due diligence process that needs to be run. This process will ensure the new provider will offer a better service, value for money and meet the client’s expectations and needs, as well as those of the adviser.
5 stage process
There are five key stages to the SIPP migration once a new SIPP provider has been chosen:
1. The adviser will need to supply management information in relation to the client book. This will set out the investment profiles of the SIPPs, the extent of any non-standard investments (NSI) held, the number of clients in drawdown and any existing administration issues or problems. The more accurate this information is, the smoother the migration process will be.
2. The receiving SIPP provider will then assess any risks and set out a provisional proposal including costings and the extent to which they are able to assist with the physical migration and ensure the process is as automated as possible.
3. One of the most important elements of any migration is the clever use of technology. The receiving SIPP provider should establish any likely IT considerations relating to the transfer of the client records. This will normally be in the form of exported files from the adviser firm’s system which are then used to auto populate the new SIPP providers application form. Efficiency, accuracy and a depth of knowledge and experience is important in this phase. If any of the records do not match then deadlines can be missed, a payment made incorrectly or a client request not processed correctly. This can all reflect badly on the adviser and the SIPP provider and the more experience the SIPP provider has in migrating large books of business, the better for the adviser.
4. Having a realistic timeline is important and both the adviser firm and the SIPP provider need to be in full agreement on this. Migration can be done all in one go or schemes can be phased over an agreed period, say six months or a year.
5. The final hurdle is for the adviser to ensure that all compliance requirements in relation to client advice for the pension transfer is in place.
With more consolidation likely, advisers are looking to partner with SIPP providers that are committed to the long term future of the market, provide high quality and timely administration and are financially strong.