Your helpful SIPP fee comparison – see how a fixed-fee can work for your clients
You may have recently read our guide to the different types of SIPPs that are available in the market. Broadly these have three key differences:
- The level of service provided
- Flexibility for both investments and taking benefits
- How much the SIPP provider charges.
Fees are notoriously tricky to compare between SIPP providers. We often work with advisers who are trying to compare our costs with other providers, and what we find is that this is not always a straightforward process.
To help you, here are some of the different ways that providers can charge for setting up and administering a SIPP, and why we believe our approach works for you and your clients.
Why we believe scenario-based charging helps advisers explain SIPP fees
In our experience, an effective way of comparing providers is by putting a scenario in place and then applying the charging structures of the providers of your choice. Then, run these fees for year one then every subsequent year for the next 10 years to get an idea of the total cost to the client.
Below, we share some examples of how IPM’s charges compare to other providers. Please note that the indicative costs for the other SIPP providers below are based on a random selection of full, bespoke SIPPs and do not accurately reflect any specific SIPP provider. The tables are for illustrative purposes only and should not be used for actual comparisons.
We have not considered online SIPPs or simple SIPPs for this comparison, due to the fact that there are so many variables to each of these types of offering. For example, some may accept an asset class under a simple SIPP but another may not.
The idea of sharing these scenarios is to show you the benefits of a simple fee structure and how scenario-based cost comparisons are an accurate and simple way of understanding a provider’s charges – especially compared with some of the complexities of our competitors.
These examples also show you why the way we charge is more straightforward for you and your clients and makes it easier for you to compare the relative costs of our SIPPs versus other providers.
Scenario 1
In this simple scenario, your client wishes to set up a SIPP, conduct two “transfers in”, invest via a DFM, benefit from a platform, and open two deposit accounts.
| IPM | SIPP 1 | SIPP 2 | |
| Establishment Fee | Nil | £100.00 | £350.00 |
| Annual Admin Fee | £540.00 | £195.00 | £570.00 |
| Transfer In Fee | Nil | £100.00 | £100.00 |
| Making Investment Fee | Nil | £200.00 | £520.00 |
| Annual Investment Fee | Nil | £100.00 | Nil |
| Year One Fee | £540.00 | £695.00 | £1,540.00 |
| Fee Annually Thereafter | £540.00 | £295.00 | £570.00 |
| Total Fees Over 10 Years | £5,400.00 | £3,350.00 | £6,670.00 |
Notice here how our approach means your client will pay a simple, flat annual fee, rather than a range of different charges.
Even in this straightforward scenario, clients can incur additional costs depending on how many times they move monies to or from the trustee bank account.
Also, for some providers, the type of investments made (whether on or off panel) can make a difference to the ongoing annual fee. For this scenario, we have assumed that investments are on panel, where applicable.
Note that where investments are off panel, the total cost over 10 years can rise significantly in some instances.
Scenario 2
In this scenario, your client wishes to set up a SIPP, conduct one “transfer in”, benefit from platform and trustee investment bond investments, take the maximum PCLS and then pay monthly income.
| IPM | SIPP 3 | SIPP 4 | |
| Establishment Fee | Nil | £100.00 | Nil |
| Annual Admin Fee | £540.00 | £250.00 | £640.00 |
| Transfer In Fee | Nil | Nil | £68.00 |
| Making Investment Fee | Nil | Nil | £286.00 |
| Annual Investment Fee | Nil | £400.00 | £156.00 |
| BCE Fee | £150.00 | £200.00 | £148.00 |
| Annual Drawdown Fee | £150.00 | £120.00 | £162.00 |
| Year One Fee | £690.00 | £1,070.00 | £1,460.00 |
| Fee Annually Thereafter | £690.00 | £770.00 | £958.00 |
| Total Fees Over 10 Years | £6,900.00 | £8,000.00 | £10,082.00 |
Most providers will levy a fee for paying a PCLS and then an annual drawdown fee thereafter. What is more difficult to demonstrate, however, are the different charges that relate to how income is drawn.
Some providers charge more for higher frequency withdrawals while some make an additional charge for ad hoc income payments. Note also the differing charges for investments.
Again, our structure means your client simply pays the same fixed fee every year, plus a one-off BCE fee. We do not charge to vary the income amounts, frequency, or if the client wants a one-off payment.
Scenario 3
In this third scenario, your client wishes to set up a SIPP, conduct one “transfer in”, make one contribution, purchase commercial property with borrowing, and benefit from a platform account in the SIPP.
| IPM | SIPP 5 | SIPP 6 | |
| Establishment Fee | Nil | £100.00 | £100.00 |
| Annual Admin Fee | £540.00 | £250.00 | £720.00 |
| Transfer In Fee | Nil | Nil | £50.00 |
| Contribution Fee | Nil | Nil | Nil |
| Making Investment Fee | Nil | Nil | Nil |
| Annual Investment Fee | Nil | £400.00 | Nil |
| Property Purchase Fee | £450.00 | £670.00 | £750.00 |
| Annual Property Fee | Nil | £180.00 | £475.00 |
| Borrowing Fee | £450.00 | £305.00 | £250.00 |
| Annual Borrowing Fee | Nil | £140.00 | £150.00 |
| Year One Fee | £1,440.00 | £2,045.00 | £2,495.00 |
| Fee Annually Thereafter | £540.00 | £970.00 | £1,345.00 |
| Total Fees Over 10 Years | £6,300.00 | £10,775.00 | £14,600.00 |
The picture for understanding fees that apply to property purchase becomes even more difficult to ascertain. There are so many variables for a property purchase that many providers, including IPM, charge additional fees in certain scenarios: for example, where a property is VAT registered.
See more about the IPM approach to commercial property purchase
Some providers are unable to provide confirmation of the charges that will apply, instead saying that fees are “time costed”. Most providers also make a charge where more than one SIPP is involved in a purchase, both on an initial and ongoing basis.
If a provider quotes a time-costed fee, we would always suggest asking for an estimate of this in writing that you can refer back to.
What these comparisons mean for you and your clients
The idea of illustrating these comparative methods of charging is not to compare IPM’s charges with other providers. We accept that we may not be the most cost-effective provider in all scenarios!
These tables are designed to show the benefit of charging on a predominately fixed-fee basis, which is the way we have always operated. This way, clients always know in advance what their fee to IPM is going to be, year in, year out. It also makes it easier for advisers and planners to explain to their client how much an IPM SIPP will cost.
See how our SIPP offers complete investment flexibility for a fixed fee
There are occasions when we do charge additional fees not covered by the above. For example:
- When a client establishes a fourth or more third-party deposit account
- When we make an international payment
- When a new lease is required for a property.
Overall, however, the majority of work we undertake for our clients will be covered by the annual administration fee, the annual drawdown fee, and the property purchase fees.
It’s also important to remember this: when you’re looking for a SIPP, costs are only one aspect to consider. For example, clients also need to consider the level of service they would like from their chosen provider.
If you have any questions about our fees, or you’re looking to help a client compare the costs of SIPP providers, please get in touch. Email info@ipm-pensions.co.uk or call 01438 747 151.