Delays in getting responses to letters of authority (LOA) and transfers are causing a headache for Financial Planners who are seeing client engagement levels drop as a result, according to a new report.
The time taken from submitting an LOA to getting full, satisfactory data, often runs to several months according to the report from consultancy The Langcat.
Some Financial Planning firms surveyed by the consultancy were waiting over six months for the data they had asked for.
The providers who were most frequently reported for frustrating slow responses to LOAs were legacy closed-book insurers and platforms who had grown by acquisition, and defined contribution providers including Mercer, Towers Watson and Capita.
Financial Planners were typically creating between 5 and 15 LOAs per new client.
Planners told the consultancy that technology has enabled them to improve client engagement but then client engagement can fall off a cliff when it takes LOAs and transfers months to complete.
One advisers said: “LOAs are the bane of the industry, not just for advisers but for providers as well. It makes absolutely no sense at all for everyone not to kind of join hands and try and work on this. It’s a perfect example of an industry that gone mad where we’re just creating more work for everybody.”
Mark Polson, principal at The Langcat, said: “Despite the threat of regulatory action in this space, progress is not being made quickly enough. We need everyone to accept and adopt common standards before we see meaningful integration and automation.
“This part of the technological world needs to de-fragment before it can be fixed and properly connected.”
Whilst some fintech providers have tried to address the problem, there is still a lack in a set of common standards.
Andrew Firth, CEO of fintech Wealth Wizards, said that the Coronavirus pandemic saw a lot of processes speed up and barriers reduced for financial advisers and that the firm is currently looking at a solution for making the LOA process easier by creating automated digital signature and provider requests.
GBST also told the consultancy that connectivity of systems to improve efficiency is “paramount” to its product strategy.
The Langcat interviewed 40 Financial Planners and supplemented this with an online survey of 146 financial advice firms. Of these firms 75% were independent and 79% were directly authorised.