The beauty of SIPPs is in the fact that they are personal; one gets to decide what happens, where, why, and how. Unfortunately, the curse of SIPPs is also the very freedom it gives to individuals. Some companies and financial advisors have taken it upon themselves to sway people to make the wrong call; hence, losing their life savings. Some blame unregulated SIPPs, others blame fraudulent financial advisors, and some think individuals are to blame.

Stakeholders

The main stakeholders in SIPPs are the investor (you), financial advisors, and SIPP providers.

1. The investor

Being a personal pension scheme, SIPPs are investments from a personal perspective. However, not everyone is money-smart; in fact, few people are money smart, and that is why financial advisors exist. Some advisors think that the individual is to blame when things go wrong because they should be smart enough to recognise a worthwhile investment. However, things are not that simple, especially to clients who only want to secure their future.

2. Financial advisors

Most heart-breaking SIPP claims involve poor financial advice. Clients rely on their advisors to determine what is beneficial to them. This faith is on the basis that advisors are professionals who have dedicated a significant amount of their time to study the flow of money and worthwhile investments. Furthermore, many financial advisors agree that it is their responsibility to guide their clients on good investments. Missing a mark or failing to identify a weakness in an investment is the key to failed investments. Most people who are suffering due to a mis sold SIPP owe it to either a fraudulent or an incompetent financial advisor.

3. SIPP providers

Some advisers believe that a provider is responsible for failing to take care of a client’s investment. Moreover, they think that a provider should not allow a client to make an irrational investment

Regulation of SIPPs

Of all these stakeholders, more often than not, the client knows the least. Perhaps it is due to this reason that about 70 per cent of advisors believe it is their ultimate duty to ascertain that a client is making the right SIPP investment. Be that as it may, non-standard SIPPs cannot be ignored. Any unregulated establishment that handles money is bound to cause trouble. It would be safe for you (the client or investor) to only deal with bodies that have some form of accountability, in case of unwanted outcomes.

Owing to these issues facing the SIPP industry, more than 60 per cent of financial advisors believe that the industry’s future is not promising. Everyone has some form of accountability in this matter, but, evidently, the share is not equal. Advisors are the eyes and ears of clients; they see and understand what the clients do not. It is their duty to guide you to the best investment, particularly when it comes to something as crucial as SIPPs.

Who is to blame for the declining faith in SIPPs?