This month we shine the spotlight on self-invested pension specialists, Dentons, as we catch up with their Director of Sales & Marketing, David Fox.
Dentons operate predominantly in the more bespoke end of the SIPP market, which means they are not necessarily a household name, we started by asking David for some basic facts and figures.
David Fox (right):
We are well established, having been dealing with self-invested pensions since 1979 and over that time we’ve built up a business which looks after around 3,000 SIPPs (Self-Invested Personal Pensions) and 700 SSAS’s (Small Self-Administered Schemes).
We’ve got over £2 billion in assets under administration and look after over 1,000 properties in the SIPPs and SSAS which our clients have entrusted with us.
We are also very proud of the fact that Dentons is still an independently owned and profitable business, which has over 60 employees, allowing us to deliver a first class service to our clients as well as the financial advisers who recommend our products.
That’s some track record, what factors lie behind your success?
Without a doubt our high standards of customer service, both to scheme members and financial advisers.
The average assets held within a SIPP at Dentons is approximately £500,000; to attract and retain such large schemes your service standards have to be incredibly high, which we have managed to achieve through a high ratio of administrators to schemes, and whilst maintaining profitability and financial stability.
We notice you changed your fee structure last year?
We did indeed, essentially we moved away from charging time costed fees and replaced most of them with fixed fees, which we believe people find more accessible, transparent and easier to understand. The feedback so far has been great and it’s certainly helped to contribute to an increase in new business, which was up by 28% in 2012.
Looking at your website your fee structure wasn’t the only thing you changed last year
Correct, last year saw plenty of other changes, in addition to the change to fixed fees we also rebranded and relaunched our website, which now includes an online portal for scheme members and advisers.
We are extremely proud of the online portal, which was built having listened to the needs of clients and advisers. It allows both the pension scheme member and their adviser to view valuations, a transaction history, Income Drawdown details as well as wider scheme information and projections.
In addition we have invested in staff, so in addition to our experienced Pensions Consultants advisers now have the support of an enlarged Sales and Marketing team including regional Business Development Managers who can assist advisers both pre and post-sale.
We’ve also worked hard to build more links with discretionary fund managers and platforms, to make our proposition even more flexible.
So, turning to the wider SIPP market, are you positive about 2013? Are there many reasons to be cheerful?
Plenty, our figures show that during 2012 the industry saw the millionth SIPP and we think 2013 will be equally positive.
We’ve seen an increase in the general public’s consciousness of SIPPs and the benefits of self investing, whilst more advisers than ever are contacting us with new enquiries.
We also believe there will be opportunities for us to grow, through acquiring other businesses or books of SIPPs. Indeed we have just bought Tenon Pension Trustees, which will add around 650 SIPPs to our existing book. Clearly we need to take advantage of the right opportunity and the due diligence is vital, but 2013 could present some real opportunities for us.
We also believe we are well placed to cope with any changes which arise from the FSAs (Financial Services Authority) proposals for increasing the Capital Adequacy of SIPP providers.
We thought we’d get round to talking about that eventually. Our readers can learn more about these proposals by clicking here, but in the meantime, how will Dentons cope? Will it significantly increase the reserves you must hold?
The FSAs proposals are probably the biggest challenge facing the industry over the next couple of years and will certainly lead to dramatic changes.
Firstly I should make it clear that if the proposals are implemented in their current form, Dentons can comfortably meet the increased level of capital adequacy we will need to hold.
We do however feel that the proposals should be amended and without change, they could have a negative impact on the SIPP investor.
That’s reassuring for Denton’s SIPP investors and anyone considering using you in the future, but how could these new rules negatively impact SIPP investors? We thought they were supposed to make things safer
That’s true, they are, but we suspect there could be some unintended consequences.
For example, the capital required by most SIPP providers will rise under the new rules, our fear is that providers will look to recoup this cash from investors by increasing their fees.
The FSA is also proposing the amount of capital required is linked to the level of assets under administration. We believe this could mean more SIPP providers moving to a charging model based on percentage of fund, rather than fixed fees, which most use at the current time and are cost effective, especially for larger funds.
Finally, in the proposal document the FSA acknowledges that their proposals will be the catalyst for a number of mergers and takeovers; this would obviously lead to less choice, reduce competition and could also lead to a rise in fees.
We’ll watch this space then to see whether the FSA alter their proposals. In the meantime, turning again to the wider SIPP market, put yourself in a client’s shoes if you can for a moment. What things do you think a client should be considering when they are deciding which SIPP provider to use?
Most people would say cost but, I’d start with stability, both from a financial and regulatory point of view. You want to know your chosen SIPP provider has the resources to stay the course and will be able to cope with any changes imposed upon them.
Value for money is important too, as is flexibility, both now and in the future. It’s all well and good selecting a SIPP provider which meets your requirements now, but they have to accommodate your changing needs, especially in relation to investment choice and retirement options.
Finally, back to Dentons, your rebrand, as well as your growth in 2012, has been impressive, but with over a 100 SIPPs to choose from, what makes Dentons different?
I think there are three things.
Firstly, the transparency of our fee structure, which is easy to understand and offers excellent value for money.
Secondly, our flexibility; whilst we will always have a ‘conservative underpin’, which means we will always protect our clients from tax charges and we are proud that none of our SIPPs have ever incurred a tax charge, we do like to be as flexible as we can. We will consider a wide range of investments, including some which are pretty unusual and certainly not mainstream. Having said that there are a number of investments we simply won’t accept as we believe they are too high a risk and completing satisfactory due diligence is just too hard, for example off plan hotel rooms.
Finally, we continue to innovate, last year we added our online portal and in 2013 we will continue our investment in technology whilst adding more links to discretionary fund managers and platforms.
David Fox of Dentons can be contacted on 01483 521 521 or by emailing firstname.lastname@example.org
The views expressed in this article are those of Dentons.