SIPP - big adviser pay days

escroooge

Its seems many advisers are cashing in on this SIPP thing.

It is possible to place in to the SIPP shares, which may be in the form of preference share in a company developing foreign property.

I am not questionning whether the investment can make money or whether it is appropriate for a sipp holder.

More importantly, I do wonder whether clients are having this as an investment because it pays the adviser 10% commission on the investment which he does not have to declare to the client, in addition to commission in setting up the sipp, very lucrative.!!

If I were recommeded a foreign property developement preference share in my sipp I would ask the adviser to confirm if he's receiving commission on the investment and ask for a cut/ rebate back into the sipp of say 7%.

Lets just hope these investments are not being made for the benefit of advisers remuneration.

dunstonh

More importantly, I do wonder whether clients are having this as an investment because it pays the adviser 10% commission on the investment which he does not have to declare to the client, in addition to commission in setting up the sipp, very lucrative.!!

10% commission???? Tell me where I can get one of those. Actually, I know where and that facility is damned useful on complicated SIPP transactions where you can use the tax relief to reduce your charges down by upto 40%.

which he does not have to declare to the client

You do have to.

If I were recommeded a foreign property developement preference share in my sipp I would ask the adviser to confirm if he's receiving commission on the investment and ask for a cut/ rebate back into the sipp of say 7%.

Typical commission is 3% with market average on unit trust/oeic/sicavs being less than that. More complicated SIPP transactions, such as commercial property, are likely to incur higher explicit charges due to the extra workload.

escroooge

My point was:

IFA's seems rather keen to promote the holding of "a preference share which is related to foreign property investment"

the key feature of this investment is that it pays a rather lucrative 10% commission to the IFA and maybe just maybe the IFA may be advising this investment because of the 10%.


but if you are being advised to hold this investment now, do ask for a rebate of commission, the horredous work involved in selling this investment is the writng down of the investment on the sipp form.....

dunstonh

IFAs dont hold authority to give advice on the purchase of shares. That is the role of a stockbroker. IFAs can only facilitate the purchase of a SIPP and investments within approved regulated investments (such as investment funds). So, if your investment includes areas outside the scope of advice, the IFA can only arrange the product. In which case 10% is exceedingly excessive. Is any of that 10% going to an accountant or stockbroker to cover their costs? In which case, it may not be so bad.

The transaction may be fine but in effect you have a non-regulated pension with a non regulated investment within it. Is the person you are seeing really an IFA?

escroooge

Is the person you are seeing really an IFA?

yes, I am his rather concerned paraplanner!!!!!!

1. Clients are approached regarding their Personal Pensions.
2. Clients are sold SIPPs in replacement.
3. Personal Pension Funds are Transferred to SIPP.
4. Substantial holding of Preference Shares (PCC Closed cell) Spainish property are bought.

Adviser declares 3% for PPP TV but not 10% received on Preference Shares,

Adviser declare in Suitability letter "no authority to advise on Shares"

I am not anti IFA some are ethical (just not the one I work for) !

dunstonh

yes, I am his rather concerned paraplanner!!!!!!

And he is charging you that amount??? Blimey. You arent out North Suffolk way are you? I need a new paraplanner. We do staff contracts with no initial commission.

I am not anti IFA some are ethical (just not the one I work for) !

I think I have to agree with you in this case. At least from April SIPPs are regulated and full disclosure is mandatory.

escroooge

Its not my personal case this is being done to most of the client bank.

almost all clients are "being advised" to transfer or change their plans to similar plans that have trail commission.

Clients with big Personal Pensions are being advised to go SIPP and then the funds are partially invested into the 10% commission paying spanish property closed cell preference shares. we recently converted to a limited company if we have big problems we can go bust.

the ifa company will be sold in near future so he's milking every client for as much commission as possible getting them all on trial commission structured plans so it enhances the business value on sale.

this is what happens when IFA's near retirement age and are looking to maximise their business value on exit.

I am appalled and would use fee based advisers only if I were using an IFA.

DavidLaGuardia

escroooge wrote: »

Is the person you are seeing really an IFA?

Adviser declares 3% for PPP TV but not 10% received on Preference Shares,

Adviser declare in Suitability letter "no authority to advise on Shares"

I am not anti IFA some are ethical (just not the one I work for) !

I believe the IFA here is in breach of FSA rules if he/she is not declaring such material benefits whether they occur directly or indirectly.

I think you need some speedy advice on whistle blowing.

claretmatt

Info below about whistle blowing. Think a phone call to your friendly recruitment consultant might be in order to.

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If you are concerned about possible wrongdoing at work, the Public Interest Disclosure Act 1998 (PIDA) provides guidance for dealing with these and other whistle blowing issues in a safe and constructive way. It encourages you to raise concerns internally in the first instance.

PIDA states that individuals who make qualifying disclosures of information in the public interest have the right not to suffer detriment by any act or omission of their employer because of the disclosure. A qualifying disclosure is one, which, in the reasonable belief of the worker, suggests that one, or more of the following has been, is being, or is likely to be committed:
• A criminal offence;
• A failure to comply with any legal obligation;
• A miscarriage of justice;
• The putting of the health and safety of any individual in danger;
• Damage to the environment; or
• Deliberate concealment relating to any of the above.

PIDA protects you in making a disclosure to your employer where the disclosure meets the requirements set out above and is made in good faith.

Advice

If you want free, confidential advice on what is protected by PIDA and how best to raise your concern, you can contact: (for example, the independent charity, Public Concern at Work on 020 7404 6609 / https://www.pcaw.co.uk)

External - Financial Services Authority

If you're worried about something at work, it may be that you are concerned about something that is relevant to the functions of the FSA. If you've disclosed your worry internally and you are concerned either by the response or lack of response, or if you feel unable to talk to anyone internally for whatever reason, you can contact the FSA. PIDA protects you if you contact the FSA where:

• You satisfy the test for speaking to your employer (see above);
• You reasonably believe the information and any allegations in it are substantially true; and
• You reasonably believe the FSA is responsible for the issue in question.

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escroooge

Thanks everyone.

I will try to find out a little more about the disclosure issue.

I thought this thread would allow people who recognise the investment to negotiate a share of the commission they were not aware was being paid (in money saving fashion) and has turned out a little differently...