Finding the best SIPP is made easier when an investor understands the provider landscape and associated charges. Picking one SIPP provider over another could cost an investor thousands of pounds in extra charges over a year depending on their pension pot and SIPP behaviours. These tips should help an investor find the best SIPP based on their circumstances and find the best SIPP for them:
Understand charges in context
Looking at our SIPP provider comparison table gives an overview of the key charges levied by SIPP operators. Some charge a percentage based annual fee for holding funds, some charge a flat-fee for holding funds, some charge for dealing funds, some do not charge for funds, some charge to transfer holdings to another provider, some charge a lot more to transfer to another provider.
When comparing SIPP charges with a view to securing the best SIPP, it is important that an investor understands the charges based on their expected usage pattern of their SIPP. SIPP providers have become relatively sophisticated in terms of differentiating themselves in terms of charging for certain elements – therefore what may seem like a great ‘deal’ may not turn out to be one for every SIPP user. For example, low fund charges and free dealing may seem like a great deal, but if the provider has excessively high transfer charges then it will make it difficult for an investor to leave without paying lots of money to transfer. Likewise, some larger platforms may secure lower fund manager charges from fund managers on certain popular funds – but lower fund management charges are not generally secured across all funds. Therefore, investors should also be careful not to get drawn into a provider on this basis, particularly if they will be holding lots of different funds.
Some of the key charges to keep an eye on are: account set-up and administration fees, dealing charges (both fund and shares), fund manager and administration fees and transfers out.
Reputation and service
Reputation and levels of service can be an important consideration for an investor when selecting a SIPP provider. Investors should always ensure that their SIPP provider is authorised and regulated by the Financial Conduct Authority. Secondly, an investor should look to understand the level of service they will receive from a potential SIPP provider, reading third party reviews as well as contacting the company themselves to understand how efficiently their support team deals with queries.Some SIPP providers also provide additional guidance and tools that can make navigating a SIPP easier – these will usually come at a premium.
When looking for the best SIPP, don’t just consider the charges. An investor should consider the charges based on their context and try to model out how much their charges will equate to from a shortlisted selection of suppliers. However, there is more to it than consideration of charges. An investor may be willing to pay more for their SIPP should they receive a better service from the provider of choice and have greater trust in the company that they are dealing with.
Ultimately, pricing is the key consideration when looking for a SIPP but pricing should be considered in line with the aforementioned factors.