In the early days of IT, it was claimed that technology would make IFAs redundant. We can now see just what an effect new technology has had on the way our industry operates.
The only real barrier to the wholesale adoption of new technology is inertia. Many simple and complex tasks that were traditionally paper-based – in an industry that prided itself on the amount of paper it could consume – are now routinely performed electronically.
Database management has switched from cards in a shoebox to the PC, product research has moved from sales presentations by hungry and keen company inspectors to a simple process inspired and managed by the web, even quotes and illustrations have moved on, for many, from a phone call to your local branch to a simple pc-based process.
But there is still one major hurdle to cross if e-based capabilities are to become well and truly embedded in our industry. Much of the progress has concentrated on back-office and admin tasks. The challenge is to change perceptions and begin to realise the enormous value of technology by adopting a true exchange of data between the adviser and the product provider.
There are two ways of approaching the new business process. One is traditional. It begins with the search for the right application form – not always as easy as it should be. Then the form must be completed, by hand, of course, checked, signed and sent on its way.
The margin for error in this process is legendary. Why else would providers employ armies of staff whose daily task is nothing more than looking for errors on forms submitted by weary advisers? And my, how that army is needed.
Various industry studies have concluded that between 35 and 50 per cent of all new business applications are sent back to advisers because of errors or the need for more information. Your work will usually sit in a processing queue for days, possibly weeks before it is eventually shoehorned into an overworked new business system where another long list of checks and counter-checks takes place.
Then, there is the underwriting and the medical checks to put the brakes on your application before, at last, some acceptance terms can be issued, a start date requested and your client can be assumed to be on risk. Even for clean cases accepted at ordinary rates, it can sometimes take a month from final client meeting to getting acceptance terms through. What a nightmare.
No matter how good you are, no matter how efficient your favourite provider, the whole process is slow, expensive and downright inefficient.
Many advisers have now discovered they can become more efficient by widening their skill base and learning how to jump one last big technology hurdle.
Consider an alternative. Take a look at Assureweb.
Your client and product information is entered on to an application form that is accessed via your pc or laptop. If you have previously produced a quote electronically, the data already input is used. Remember, too, that you can seamlessly link from client records in a back-office system such as misolution, Plum or Adviser Office from 1st Software, saving you time and reducing the potential for error.
You will instantly be told if you have made a mistake or missed some information, giving you opportunity to correct the form before submission.
The data is then sent directly into the provider's new business system, bypassing the processing queue, and the checks and underwriting processes can begin straight away. More often than not, your client is on risk and an acceptance is issued within minutes – and not a human has been involved.
Ask an adviser why they do not adopt the process and you will not get a very convincing response. Consider the experience of leading national IFA. A staggering 40 per cent of the cases it submitted to providers were sent back for errors to be corrected or more information. Since it started to use electronic application forms, it has reduced the return rate to a much more manageable 9 per cent and, as administrators become more used to this new way of doing business, that figure continues to fall.
There has been significant progress in the adoption of the more simple protection-based products such as term insurance, critical-illness cover, private medical insurance and some of the more basic income protection products to e-based new business processes.
The challenge facing providers is one that faced the industry some years ago when direct marketing became de rigueur. Rather than simply try and distribute traditional products by mail or via off-the-page advertisements, the industry began to develop brands that were designed to be bought purely via that route. Similarly, we now see life offices looking to develop e-products that are specifically designed and marketed for the electronic media.
Electronic-only quotes are not new. Companies such as Friends Provident and Norwich Union have blazed the trail for several years. But this is only part of the e-equation and only begins to scratch away at cost and efficiency savings.
A true e-product will allow the IFA to complete the entire new business process through to acceptance and offer terms that are only available electronically. The whole process should be completed in minutes rather than days or weeks and – and, here's the rub – those hours saved by the provider should mean better commission. You save time, you provide a slicker service for your clients – and you earn more.
There will still be those who bemoan the disappearance of “good old-fashioned advice practices. But there is no reason why the best of the old cannot be combined with the best of the new. Just imagine, you recommend a product to your client and before you leave their house, you have given them their acceptance terms and, with a bit of luck, before you get back to your office, the commission is on its way to your bank account. Is that progress that benefits your client? Of course, it is.
Technology will never remove the need for independent financial advice but will continue to complement it. Even in the complex cases, there is nothing to stop you researching and securing quotes electronically even if the rest of the process is still largely manual.
The onus is on the industry to develop more appropriate e-products and the onus is on IFAs to jump that one last big hurdle and look to embrace new technology as far as possible and, while you are at it, help yourself to the cost savings and enhanced earnings that this new way of working brings.