Protected rights: extra costs for advisers and clients?

Just four weeks after the relaxation of the rules governing the self-investment of Protected Rights, new research reveals that clients of some SIPP providers could be paying extra for self-investing Protected Rights money into a SIPP.

However research, conducted on behalf of specialist pensions and investments provider Merchant Investors, reveals cost and charges is the most important factor for advisers when choosing where to invest clients' Protected Rights monies.

Richard Ellis, Head of Sales and Marketing at Merchant Investors commented: "It is clear that with many providers, especially those previously unable to accept Protected Rights, advisers and clients could be faced with a growing list of fees as those providers get to grips with investing this new money.

The issue of keeping Protected Rights and Non-Protected Rights separate from each other has meant that some providers have to operate two separate accounts which adds additional costs which some providers pass on to their clients. However, other providers have come up with innovative solutions to keep charges low.

Indeed, we launched our OneSIPP product in January 2008 specifically to allow people to access Protected Rights and Non-Protected Rights investments within the one product without extra charges. And we are one of only a handful of companies who can offer this type of flexibility with a clear charging structure."

James Brooks, spokesperson for Brewin Dolphin commented on the benefits of investing through the Merchant Investors OneSIPP as opposed to other providers': "The key benefits of managing money through the One SIPP where Protected Rights and Non-Protected Rights money are pooled are ease of management as all the assets can be managed simultaneously, asset allocation is easier as all the assets reside in one account and the administration savings in not having to set up multiple accounts mean the whole process is quicker, has less duplication and is more time efficient. In addition, the client only receives one contract note, one statement and one combined valuation showing their entire pension's worth and is not left under a mountain of paperwork!"

Richard Ellis concluded: "Clearly, the new Protected Rights legislation has been welcomed by many advisers and their clients, but having to pay additional costs was probably the last thought on their minds when seizing the opportunity to invest this additional money."