This week's column is about cutting costs within an IFA business. If you believe you have already squeezed every last penny of saving out of your business, read no further.
I hear many reasons why IFAs are not adopting e-commerce services from product providers. One of the most frequent objections is that the new processes that are put in place tend to decant cost out of the life offices into the IFA.
In the past, I have had considerable sympathy with this argument but, having spent considerable time looking at such issues in recent weeks, I no longer believe it is valid.
The main reason for this is the widespread availability of fixed-price internet connections, particularly where so-called broadband internet connections are used.
A good example of this is getting information on clients' existing contracts. Traditionally, this is obtained by an adviser phoning the life office, which in many cases means going through a frustrating series of phone menus to get to the right department and then asking a call-centre representative for the necessary information. This process can take several minutes per enquiry and if written confirmation is required you have to wait for a faxed or mailed document.
For most providers, this information is now available via their extranet sites, a far easier way to do things. All you have to do is log on to the provider's website, enter user ID and password, or if you have chosen to sign up for the Unipass process, apply your Unipass certificate, go to the contract enquiry page and enter the client name and policy number. This will give you a wide range of information available immediately and that can be printed straight away.
One of the keys to being able to access such information quickly in this way is having a good knowledge of the various providers' systems. With so many providers offering these services, taking 15 minutes to get to know how their extranets are laid out is a worthwhile investment. Admittedly, this has to be done for each provider you use as no two providers' extranets are the same, although many are similar in their layout.
In the vast majority of cases, such enquiries are carried out by administrators or paraplanners. But regardless of whether it is the adviser or support staff using these services, there must be considerable savings by working online using an internet service for a fixed cost rather than making individual phone calls.
The process is even easier for users of an increasing number of IFA client management software packages. You can get this information by clicking on an icon from the client record within the client management system and the information is automatically obtained from the pro-vider and populated to the adviser system.
1st Software is the market leader in this area as it offers links to Axa, Clerical Medical, Friends Provi-dent, Prudential, Skandia, Scottish Life, Scottish Widows, Scottish Equitable and Standard Life. An increasing number of other IFA system providers, such as Plum and Quay Soft-ware, are also addressing this functionality.
Existing contract information is not the only area where online links can be faster and cheaper than phoning a life office. Tracking new business applications is another important and time-consuming part of an IFA's role. A number of life offices are developing services to meet this need and Friends Provident and Scottish Life have both launched services.
The Friends Provident service, for example, allows the adviser access to the same system used by the company's staff internally. This gives details of the present status of an application, the information that is outstanding, including when it was last chased. In addition, outstanding information can be submitted to the company using the new business tracking service. When information is submitted in this way, the case is automatically brought to the attention of Friends' new business staff to process the application. This is clearly a far more effective way of submitting outstanding information than by traditional means.
Increasingly, electronic new business services are being developed that make it possible for advisers to deliver proposals more quickly to underwriters and to get immediate acceptance. Providers with well designed systems minimise the need for typed data by concentrating on the use of radio buttons and other mouse-selected boxes. A good example of this is Legal & General's Choices Protection package which I looked at in more detail earlier in the year.
Some of the more advanced systems create any additional questionnaires needed as a result of answers given concerning health, occupation or pastimes as the application is completed online.
The e-Select protection service recently launched by Fri-ends Provident is worth looking at for this function, especially when acceptance is needed urgently.
There are many IFAs who have openly embraced all that technology has to offer them but there are many more who seem to believe they have little to gain. This may have been the case a few years ago but new services can help advisers cut their costs significantly.
There is a downside on reliance on internet services. If they suddenly stop working, the amount of time they save you is brought dramatically into focus. I speak from direct experience. As I write, the broadband connection in our office has stopped functioning, British Telecom blames the recent spate of internet viruses as the cause and can give no indication on when service will be resumed.
Going back to a dial-up modem is slow and painful. Despite the fact that this is frustrating, reverting to more conventional methods of communication in anything but an emergency is not even worth considering.
I would rather have high-speed connections and the savings they bring for the vast majority of the time, even if it does mean a few days screaming at a modem, than lose the considerable savings it delivers for most of the year. If you are still using the phone as your default method of exchanging data, it is worth looking at how much you could save by using broadband and e-commerce services.