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Nick Bamford: The shocking cost of poor provider service

Nick Bamford MM 700

Impartial, independent professional advice is not cheap and one of the often-discussed contributory factors in this cost is that of regulation. The Financial Services Compensation Scheme interim levy bills are a good example of regulatory costs pressures. Adviser firms have little choice but to find a, hopefully, palatable way to pass this on to the consumer.

But there is a cost that constantly bubbles along causing deterioration in service from the adviser to the client and adding a substantial extra amount to the calculation of client fees. It is called “poor provider administration”.

It has been around for as long as I can remember and I see few, if any, signs it will improve anytime soon. For a while there was some hope that new technology was going to improve things. At the touch of a button we would be able to access the information we needed about our client’s pension and investment arrangements. This would enable us to deliver more timely advice and a better client experience.

The sad reality is that the difference between modern client centric platforms and the service that can be expected from legacy business models makes things appear even more stark. How can it take days (sometimes even weeks) for the production of a plan valuation? Even more worryingly, how can the act of sending a required document take so long when, in reality, attaching it to an email ought to take no more than a few seconds?

If we could strip out poor product provider service I am confident that the turnaround time for advice delivery could be reduced by at least two, possibly as much as four, working weeks. I could provide a better service to my client and from a commercial perspective get paid a lot quicker as well.

My concern is that poor administration can be viral. There is a real risk that many of the modern platforms are going to be infected by the virus of poor provider administration. Whenever manual and automated processes touch each other this virus seems to be passed on.

My major concern, though, is that slow service seems to be becoming the norm rather than the exception. The worst culprits are well known and do not need to be “outed” here. However, I have a simple message for the senior people of organisations who have staff passing on messages such as “our current turnaround time is 15 days” or “our agreed service levels are six days”.

My first point is that if your turnaround time for administration is 15 days what you are actually saying is that you “really couldn’t care about your clients”. You are not honest enough to say so.

If you try to play the “agreed service level” card then I have to simply say “you did not agree poor service with me before you asked for my clients business”. The cost of poor provider administration is truly shocking.

Nick Bamford is executive director at Informed Choice 


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. Bang on!

    Even worse are the supposedly modern platforms that are either impossible to fathom out how to do something simple or say, “oh, you can’t do that on line, we need a form sending in.” Funny they don’t mention that when they are touting for your business and telling you how wonderfully slick their all singing, all dancing system is.

  2. Maybe the worst ones should be outed, and constantly! We all know they dislike bad press, regardless of whether it’s true or not. We had a record turnaround quote of ’61 working days’ just last week, but even 10 in this day and age is unacceptable. Especially if it is to send a form to us that we have to fill in (which is always that same day) and then wait while it is placed back in the 10WD queue again…

  3. I don’t believe the providers are absolutely at fault on this; you wrote a very good article a while back (if memory serves me) about how we are slowly drowning in a sea of regulation, I think this affects all of us (in financial services) providers included.
    You cant ignore the fact bad service is bad service, however if the regulator has us all caught in the headlights like a scared rabbit, not knowing whether to stay put, run left or right, forward or back, its little wonder the whole process is self defeating ?

    The regulator is there, primarily to ensure, smooth running, innovation, competitiveness and fairness; I would argue we get very little, to none of this, it very hard to swim with your hands and feet bound, whilst being circled by a “gam” of sharks all eager to take chunks of you while your back is turned

  4. Andrew Newman 15th May 2015 at 2:48 pm

    Nick, I couldn’t agree more, I remember when you once said to me that this would be great industry to work in….if we didn’t have to deal with providers!

    I think that the fundamental point here is that they cannot recognise who actually “owns” the money, and if they started by acknowledging that they are merely custodians of someone else’s assets that would be a good place to begin.

    The major problem I have with poor service is “expectations” which are set by the provider, from a client persepctive. For the majority of clients most of the time clients merely see pieces of paper or online statements and there are only a few occasions when they actually need the providers to work for them, and thats when they are so often let down.

    How many times have we/clients been given a date when they will receive the money in their accounts from whatever plan/provider only to find it hasn’t actually arrived when they expected it to?

    The other point is that as an industry many of us benefit from regular referals and recommendations from happy clients, I absolutely know that I won’t receive referals from those clients who have been let down by poor service from providers, and that is because we have made the recommendation to go to that provider in the first place.

  5. John Hutton-Attenborough 15th May 2015 at 3:22 pm

    61 working days is actually a period of 3 calendar months…..shocking but it does happen.

  6. Totally understood but the point being, the request in question was trivial and should be a couple of button clicks and an email, and I’m sure the poor souls working for the firm in question would feel the same way.

  7. Back in my day when I worked for a provider on the administration side there were a number of reasons for delays in processing business:

    1) Limited resource – this is not as easy as you would think to fix as just throwing more bodies at something can make it worse. Under trained, under supported staff make mistakes.

    2) Checking, checking and more checking – this changed over the period of time I worked in administration as more automation was bought in. When I first started a change of address would take 3 people to ensure it was entered correctly. When I left administration this wasn’t even an issue.

    3) Incomplete, unclear or incorrect instructions – sometimes the client or adviser (oh dear) is at fault and needs cleanup from administration!

    4) system processes, processes and more processes – a lot of companies back end systems are from the 80’s or 90’s and so updates to those systems may be limited or require work arounds, especially if they are dependent on further backend systems from exchanges etc. Additionally the staff that use or know how to use the old systems reduce over time if new systems are brought into place and so the time to get information or make changes to those increases (see point 1) This would be why a lot of historic polices etc may be delayed massively.

    I’ve seen this from an administration and then a sales side so completely understand the frustration and annoyance when this happens.

    I remember dealing with a company where they were saying their pension valuation’s took 6 months to produce then the transfer could take anywhere from 6 to 9 months after that. Everyone was trying to leave that company at the same time so they didn’t have the resource to deal with that level of valuation and so got completely swamped.

  8. Couldn’t agree more.
    The truth is that the providers assign too few resources to anything other than new business-I have posted on a number of occasions that if you are asked to press the buttons for i) new business, you get through almost at once to any of them but if you press (say) ii) for existing business “…lots of people are calling us today. A consultant will be with you as soon as possible…etc”
    Those of us who charge an hourly rate have somewhat of a quandary. If we are kept waiting for say 15 minutes (not unusual) should we feel guilty about counting that against the client?

  9. Very good article on the back of just having to register a complaint with a large well known firm. We were told that funds we’re being transferred to the client within half an hour, over a week and 10 -15 phone calls later the money actually turned up.

    A lot of the time there have been that many mergers and acquisitions that you can phone 1 company and need to speak to 2 or 3 different departments that all have different “agreed service levels” and have no idea what each department is doing.

  10. Increasingly we are getting requests to verify a client’s identity because the client’s signature does not match that on the file – this suddenly happens and is prevalent amongst the legacy providers. You do wonder if they have lost records or failed to migrate their systems properly onto new ones.
    But the questions remains – why are some so much better than others? It is not regulation as we should all abide by the same rules although the cynic in me suggests some or catching up on what they should be doing in the past at our expense. And of course our expense means the client’s since we have to pick the file up again, get up to speed and more often that not chase the provider because they are late with their promise! It all takes time.

  11. Yes Nic, of course you are right. But you and I have been around long enough to know that this has always been the case. There have been innumerable attempts to get the life offices (they are by far the worst culprits) to mend their ways, but to little or no avail. Indeed this very publication once had a service standards section on the website to shame the culprits – that didn’t seem to have much effect.

    Indeed over the years things have got worse. We now have the dreaded offshore call centre to contend with, where often even simple English isn’t a prerequisite and any conversation is commenced by an unwanted discussion of the weather.

    Many of the other points have been eloquently laid out above. The fact that far too often personnel are poorly trained. How many times have I had to explain the difference between an OMO and IVPP, or what Inter Vivos Term Assurance was? Who takes ownership? Hardly anyone. The worst perpetrators are generally the largest firms. I’m not reticent in naming the worst – L&G wins an Oscar as do the Pru and AVIVA. But we all have our own experiences. I find Old Mutual a lot better than most. But as has been pointed out all the much vaunted praise of on line capabilities look rather inadequate, when you have to (say) use a Trust or in many cases submit client ID and cheques, not to mention the waste of time tapping in details, which can normally be filled in by the client with a posted application.

    But not all blame can be laid at the feet of the providers – our old nemesis compliance has much to answer.

    Has anyone considered the following?

    As we are all aware when a call is made to an Insurer, or fund manager you are first assailed by a voice message telling all sorts of stuff you have heard a hundred times before. That calls are recorded, that prices are not guaranteed, that the firm takes everything seriously etc. etc. Some of the messages seem interminable. However let us take an average of say 30 seconds. Let us presume that each provider firm takes on average 200 calls per day and let us suppose there are only 150 firms.

    That equates to 250 hours per day. Take a five day week and a 40 week year. That’s 5.7 YEARS!! wasted every year. And I would guess that I have presented a pretty conservative estimate. But this wasted time needs to be multiplied because the calls have to be charged for either toll free – when the provider pays or – the caller pays.

    As with so much else with regulation, the recipients of these banal messaged not only pay no heed but get extremely irritated by the whole process. The overall cost – which is ultimately borne by the customer – is grotesque. Is this really effective regulation or just the usual box ticking mechanical observance to something that no one apart from the regulator considers of any real value?

  12. When you have to explain the difference between level term assurance and decreasing term assurance to someone who works for a major life company who couldn’t understand why the latter would have a smaller premium you know things are different from when you started in the business. Some (not all) providers appear as if they couldn’t care less about their customers or the advisers trying to service them on their behalf. They enjoy the benefits of business being introduced to them but that’s where the relationship appears to end. Recorded messages that take you through a whole menu of options to end up telling you to ring another number for the department you want to speak to makes me wonder what these people sit and discuss at their weekly meetings. How to aggravate people and lose friends?

  13. In case of doubt I meant an Oscar for absolutely terrible, abysmal and shocking levels of non service.

  14. Stephanie Pickering 19th May 2015 at 5:27 pm

    I find this amazing having ranted this afternoon about being placed in a queue by Scottish Widows for 1 hour 45 minutes. I managed to get put through to two people who transferred me elsewhere as they couldn’t help but no mention they were just putting me back in the queue – eventually I hung up as I had nothing else I could be doing without the need to concentrate whilst waiting in said queue. Thought I’d give it another go just in case the fact I went over an hour was actually the problem but after a further 10 minutes again hung up. This call was due to client needing retirement benefits as his true retirement age is in 4 weeks time on a so called simple Stakeholder Pension Plan, but the minute I asked for flexible benefits no one could cope! We had a notification in Feb that they would send figures closer to time but nothing has arrived! Companies have no idea of the true mess they are in, at least possibly those at the top don’t as they are never informed. I have had to WRITE snail mail to them for my requirements as no email address available to contact them…..oh and guess who will be paying the telephone call costs; when the bill comes in I may send it to them!

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