What is a Self-Invested Personal Pension (SIPP) and Why Can They Go Wrong?
Self-Invested Personal Pensions (SIPP) have been available to members of the public, in the UK, since March 1990, when the James Hay Partnership offered the first SIPP product. SIPPs have since earned the term ‘wrapper,’ as they wrap around investments made until an individual retires and begins to draw an income from the returns their investments provide. SIPP pensions offer members of the public with a higher risk appetite more options than traditional private pension plans; ranging from investment trusts through to corporate bonds, shares and cash. Gold bullion, commercial property or other higher risk investments are an option for even higher returns.
However, not everyone has the financial knowledge or suitable funds required to justify utilising a SIPP. SIPPs may be appropriate if the client has prior experience of investing and are completely comfortable making their own investment decisions.
Due to the higher risk profile of certain SIPP investments they are not suitable for everyone and should only be offered to ‘sophisticated investors,’ defined as someone who earned £100,000 and over in the previous year, has net assets totalling £250,000 (excluding their pension) and or, are a director of a company with a turnover in excess of 1 million pounds or work in the finance and private equity sector.
Workers and pensioners who are new to or uncertain about investment strategies may seek assistance from experts, so another option is to pay an Independent Financial Advisor (IFA), who will make decisions for them.
Often IFAs and companies such as Brooklands Trustees Limited who provide the SIPP add additional charges that eat into the returns, if only a small amount is invested. Thus, SIPPs are more suitable for experienced investors with larger amounts of savings.
It can be difficult to ascertain whether a SIPP providers/IFA has the investor’s best interests at heart; often driven by short term commission incentives which don’t translate well into long term investment strategies for the client.
Some SIPP providers, such as, Brooklands Trustees Limited, don’t have the investor’s best interests at heart and take advantage of the eagerness and excitement of individuals, who are intrigued by numerous investment possibilities; often failing to mention that enticing returns are not guaranteed.
Furthermore, IFAs of companies such as Brooklands Trustees Limited have engaged in unethical practices that are detrimental to an investor’s financial wellbeing, explaining that exotic investments will benefit the investor and that changing to a SIPP is a smart move, to reduce or eliminate taxes. When an inexperienced investor hears good things about an investment from a so-called expert, it is very tempting to follow their advice. Instead, the investors end up with poorer returns, unanticipated taxes and paying significant commissions on an investment that is losing their money.
A number of SIPP account management companies, like Brooklands Trustees Limited, have been found to be less than ethical in their dealings with clients, giving bad financial advice.
Take action today and contact Henderson Lawyers, if Brooklands Trustees Limited have had dealings with you or anyone you know, your or their financial future could be in serious jeopardy.