38 questions you should ask before recommending a SIPP provider

38 questions you should ask before recommending a SIPP provider

Selecting the right SIPP provider is hard; you have dozens to choose from and many have multiple products, often with complex structures.

Simply recommending the cheapest provider which allows your client to hold their preferred investments is no longer enough. So many more variables need to be considered before a recommendation is finalised.

The consequences of making the wrong choice are significant for both you and your client. Frustrations at poor service, increasing fees and tiresome investment restrictions might be the least of your worries if a provider fails. That could lead to long delays processing investments or income payments and ultimately result in a change of SIPP provider with the complications that entails.

To help you make the right choice we’ve produced 38 questions which we believe advisers should ask as part of their due diligence.

The basics

Ideally, SIPP providers will grow in a managed and sustainable way. These questions will help you understand if this is the case, whether they are growing too quickly or contracting:

1. What was the total number of SIPPs you managed in 2017 and 2018?
2. What was the total value of the assets held in these SIPPs in 2017 and 2018?
3. How many SIPPs do you currently manage?
4. What is the total value of assets in these SIPPs?

Advisers need to look carefully for potential conflicts of interest; these questions will help uncover whether any exist:

5. What is your ownership structure?
6. If the business is privately owned, who are the major shareholders?

Financial stability

Consistently profitable SIPP providers can reinvest in their business, while clients are less likely to experience fee increases. These questions will help you understand the financial position of SIPP providers you are considering. We recommend asking for an explanation of any significant variations in turnover or net profit, as large rises or falls could be an early warning sign of trouble ahead:

7. What was your turnover in the last three complete financial years?
8. What was the net profit for the same periods?

The capital adequacy requirements placed on SIPP providers changed in 2016. The new rules significantly increased the amount of capital many needed to hold. These questions will help you understand the ease with which a SIPP provider meets their capital adequacy requirements. Furthermore, it’s important to understand whether the requirements are met by holding Tier 1 assets (i.e. cash and an indication of solidity and strength) or Tier 2 assets (which includes debt and other financial instruments):

9. How much regulatory capital do you hold?
10. What percentage of the minimum requirement does this represent?
11. What amount of regulatory capital is held in Tier 1 and Tier 2 assets?


Members of SIPPs will naturally want to invest in a diverse range of assets. It’s, therefore, important to understand whether a SIPP provider will allow your client to invest in their chosen assets. We also recommend asking about the direction in which they are heading; is the provider becoming more restrictive, perhaps to help them more easily meet their capital adequacy requirements or are they becoming more flexible?

12. What assets do you allow members to hold?
13. What assets do you prohibit members from holding?
14. Do you operate panels of investment firms that your clients must select from?
15. What changes have you made over the past three years to the assets you will allow members to hold?

Commercial property

If your client is considering purchasing a commercial property, you need to know it will be acceptable to the SIPP provider. It’s also important to understand any other restrictions imposed by the SIPP provider, as well as their fees:

16. Other than those imposed by HMRC, do you place any restrictions on the type of property or land which can be purchased?
17. What are the additional one-off fees for purchasing a property?
18. Do you charge an annual property fee, or an annual group property fee, in addition to your standard annual administration fee?
19. Does a panel solicitor have to be used or can the client choose their own solicitor?

Many properties owned in SIPPs are ‘owner-occupied’, while members are often experienced landlords. Consequently, appointing an independent property manager might be an unwelcome additional cost. Again, it’s important to understand a SIPP provider’s position and avoid any nasty surprises:

20. Does an independent property manager need to be appointed?

Deposit accounts

Many SIPP members will hold a proportion of their assets in cash. It’s, therefore, important to understand whether they will face restrictions on the type of account or institution they can access. Some SIPP providers may not allow members to open unbreakable fixed rate deposit accounts, which are treated as non-standard assets, or impose restrictions on the institutions with which they can open accounts:

21. Do you allow unbreakable fixed-term deposit accounts to be held in your SIPP?
22. Do you place any other restrictions on the type of deposit accounts which can be opened?
23. Do you place any restrictions on the institutions which members can use?

Some SIPP providers pass on all interest received on the trustee bank account to the member, others will retain a proportion, or even all. It’s important to understand a SIPP provider’s stance, especially if your client is going to retain a significant sum in the trustee bank account:

24. What proportion of the interest paid by the trustee bank account do you retain?


Naturally, you will ask all SIPP providers for a complete breakdown of their fees. We also suggest you ask the following questions. The answers to which should be considered in conjunction with the responses to questions about profitability. After all, SIPP providers with tight margins, or which are loss-making, are more likely to increase their fees. Profitable providers are less likely to face such pressures:

25. How has your fee structure changed over the past three years?
26. Do you have any plans to change your fee structure?
27. Does your annual fee cover telephone and email communications between you and the member / adviser?

Hopefully your client will never need to move to an alternative SIPP provider, however, there may come a time when it’s unavoidable. If that’s the case, it’s useful to have an idea of the fees your client is likely to face:

28. How much do you charge to transfer a SIPP to an alternative provider?

Regulatory compliance

The source of the difficulties faced by a handful of high-profile SIPP providers can be traced back to the non-standard investments they hold and their relationships with non-regulated introducers. Naturally, not all non-standard assets will lead to such difficulties, some are appropriate for sophisticated or experienced investors. However, we believe it’s important to understand both the current and historical position of a SIPP provider you are considering working with:

29. Do you currently work with unregulated introducers and has this stance changed on the past five years?
30. What type of non-standard assets, other than commercial property and fixed interest deposit accounts, do you allow members to invest in?
31. How has your policy on non-standard assets changed over the past five years?
32. How many SIPPs that you administer hold non-standard assets other than commercial property and fixed interest deposit accounts?
33. Have you ever been, or are you currently subject to, regulatory enforcement action? If so, please provide details


By their very nature, SIPPs can be complex and involve complicated transactions. It’s, therefore, important to understand the support that you and your client will receive:

34. Do you provide support from a named administrator to clients and advisers?
35. Outline the support you provide to advisers during the advice process
36. What service standards do you have in place?
37. What percentage of the time do you meet these service standards?

Access to information

Not every member or adviser will want online access to information. However, it’s important to match the information your client requires with that which the provider offers.

38. What information can be accessed online?

A final word, about transparency

It’s never been more important for advisers to carry out extremely detailed due diligence before recommending a SIPP provider. That’s why there are over 30 questions in this list.

We know it’s a lot, but they are all important. Every provider should be transparent and prepared to give a detailed answer to each question.

Get in touch

Whether it’s a question about a specific client or SIPPs in general, we are here to help. Call us on 01438 747 151, email info@ipm-pensions.co.uk or complete the form below: