The uptake of drawdown products from baby boomers reaching retirement will fuel the Sipp market in the future.

Independent financial research company Defaqto believes that this area of the market provides a real opportunity for advisers.

It expects large numbers of baby boomers reaching retirement age in the next few years and drawdown products offer significant potential for advisers servicing these clients’ retirement needs.

Sipp sales have grown by 15 per cent in the past year and Defaqto forecasts Sipps could total up to as much as one-quarter of drawdown products. It belives the demand for drawndown will fuel Sipp sales.

Andy Leggett, Defaqto’s insight analyst for wealth management, said: “The proportion of Sipps in drawdown could be as much as one-fifth to one-quarter of the total number of plans-and the FSA’s data shows Sipp sales are growing at a rapid rate.”

However due diligence is needed to ensure the most suitable provider is selected for the client.

This is even more crucial for Sipps and drawdown products as they require not only initial due diligence but recurring reviews.

Mr Leggett said: “In choosing the right drawdown proposition, advisers will want to think about which providers match well with their own business models as well as conducting due diligence and considering which will endure.

“Advisers will need a comprehensive set of probing questions to ensure the process goes well beyond size, brand and reputation. They need to unearth whether a provider’s business model, administration, systems and service can be trusted and are sustainable.”

Defaqto has published a ‘Defaqto Guide to Drawdown’ to help advisers identify drawdown partners that meet the needs of their clients.

The guide is free to download at www.defaqto.com/adviser/ifa/guides