Rachel Dalton finds out why more adviser firms are turning to white label SIPPs to boost their service proposition.

The phenomenon of white label SIPPs is gaining traction in the adviser community, especially among those who have segmented their client base in the lead up to the retail distribution review (RDR).

White label SIPPs are supplied by providers but can be branded and modified to suit an intermediary firm. Traditionally favoured by discretionary fund managers (DFMs) because they allow the SIPP offered by the firm to better match its investment strategy, now there is increasing interest from IFAs.

But are they the right solution for your firm?

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Why IFAs?

Jo French, managing director of Pointon York, says advisers’ growing interest in white label products is due to the increasing sophistication of their client targeting.

“IFAs have been satisfied in the past to choose a provider that fits the needs of their customer off a panel,” says French.

“However as more advanced customer targeting is emerging, all distributor firms are looking at different solutions for their customers.”

Client relationships

As financial advice comes under increasing scrutiny and margins are squeezed with the onset of the RDR, many IFAs are focusing more on their own branding in order to compete for a shrinking pool of customers.

French says a firm can improve its client retention using strong branding.

“In the current climate there is increasing competition for customers, so by focusing on brand loyalty the adviser firm can, using a white labelled and branded SIPP, reinforce their relationship with their customers,” she says.

While Pointon York offers a white label SIPP which allows advisers to fine tune its structure according to their client base, AJ Bell offers white labelling to IFAs purely as a co-branding exercise.

Gareth James, technical marketing manager at AJ Bell, says this co-branding is growing in popularity.

“We offer Sippcentre to IFAs with co-branding on all of the literature, the website and the illustrations,” says James.

“It gives the firm control of the scheme from the client’s perspective and reinforces their position in the advice process.”

Client segmentation

Some advisers segment their services to reflect the different clients they serve by offering a choice of service packages, labelling them as bronze, silver and gold or similar.

French says IFAs can use a white label SIPP to better define the different packages they offer.

“An IFA working with a platform could design a range of investments to suit their customers,” says French.

“A white label SIPP could be used to access these ‘home brand’ or gold/silver/bronze investment choices.”

As the RDR approaches, it is clear that various “streams” of advice, such as simplified, restricted and full, will form a part of some IFAs’ strategies 
in future.

French says white label SIPPs could help IFAs to define the parameters of these different advice streams as well.

“The white label SIPP may be used for a restricted advice proposition, and other SIPPs used for whole of market purposes,” she says.

“It can be used in different ways. The IFA could build model portfolios on a platform, work with a DFM to build risk-rated or life-styling portfolios for certain types of their customers and wrap any and all of these solutions up in a white label SIPP. “

However, James says that with pay-as-you-go SIPPs which only charge for the services the client uses, there is no need to create a different white label SIPP for each client segment.

“Sippcentre is low cost but also has investment flexibility. If a product offers that flexibility there is no need for several different propositions for segments of clients,” he says.