There is a “huge technology-driven opportunity” for SIPP providers to develop new services, says SIPP veteran John Moret, in a new industry report.
According to the report from MoretoSIPPs, the specialist consultancy run by Moret, the SIPP market has grown “enormously” over the last five years, with the total market now worth £500 billion and on track to reach £750 billion within the next five years. Much of that growth, he notes, has been driven by investment platforms, which now administer SIPP assets of around £200bn.
The report estimated that there are currently around 60 active SIPP providers left in the market, of which around 40 administer complex SIPPs. However, there has been a marked trend toward the simple streamlined SIPP sector, with most of the growth occurring there, with a new breed of fintech SIPP providers emerging who have started to market a breakthrough in this market, particularly in the non-advised space. While the complex SIPP sector has plateaued.
The report also showed that the number of SIPP investors who do not receive advice now account for two thirds of the market, with this figure expected to grow. It added that less than 15% of SIPP investors have vested their benefits.”
It is here that Morey sees the opportunities. “The growth in non-advised SIPP numbers and the staggering finding that less than 15% of SIPP investors have vested their benefits, suggests there is a huge technology-driven opportunity for providers, existing and new, in developing services focused on the decumulation market, particularly for non-advised investors,” he said.
He added that regulatory pressures had led to the SIPP market changing dramatically over the past decade, noting that pressures such as Consumer Duty continue to have an impact. Despite this, Moret expects the market to continue to grow.
“Despite these regulatory pressures MoretoSIPPs remains optimistic about the growth prospects for the overall SIPP market and believes it is realistic to project that the total SIPP market could grow to over £750 billion within the next 5 years.
“If the ‘one pot for life’ solution materialises so that SIPP providers can participate in some form, then it is entirely feasible that the market could grow to £1 trillion by 2030.”
Commenting on the report, Stephen McPhillips, technical sales director for Dentons Pensions, said:
“The data is interesting – particularly the non-advised aspect. At Dentons, the majority of our clients have been introduced to us by professional financial advisers over the years and we expect that to continue.
“It’s also interesting to read that John believes that the complex SIPP sector has plateaued. Whilst we are seeing more and more clients opt for a single investment platform or discretionary fund manager proposition within our SIPP product range, we are still seeing very healthy numbers of clients accessing more complex investments such as commercial property and so on.
“There seems little doubt that there is contraction within the complex SIPP sector, and John’s figures seem to bear this out. That’s partly down to SIPP provider failures and consolidation of books of business, but at Dentons, we’re pleased to say that we are seeing year on year increasing new business growth and the current shape of the SIPP market seems to favour those providers with a strong balance sheet, a profitable business model and outstanding service credentials.”
