I recently looked at the progress made in the protection market in removing paper from traditional processes. It is fair to say that the protection industry has led the way in such advances but it is easy to overlook the progress made in the investment market.
This week, I want to look at a couple of long-term success stories and at additional areas where a small but significant number of providers are delivering change. These are important issues for any adviser firm to consider when planning their operating processes for the RDR.
There are really two main areas where significant progress has been achieved in the last decade. Electronic commission payments were very much the preserve of an exclusive few networks and big firms just 10 years ago.
In the last few years, an enormous amount of progress has been made, so that any adviser firm still reconciling commission payments manually is wasting vast amounts of time and money. True Potential has built its whole business on its ability to automate payments to adviser firms but it is by no means the only software provider to have made huge progress in this area. Avelo, Intelliflo and most of the other leading adviser system providers now make such processing a cornerstone of their value proposition.
Almost without exception, savings achievable by using electronic commission processing should save the cost of software licences many times over. Most of the leading life offices and platforms offer electronic commission but there is still a considerable group of laggards, especially in the fund management and mortgage industries, which has yet to implement such technology. Fund managers are treading a dangerous path. This can only drive more advisers to transfer business from direct servicing to platforms.
A huge amount of progress has been made, so that any adviser firm still reconciling commission payments manually is wasting time and money
No summary of electronic services would be complete without mentioning the huge volume of valuations obtained electronically. That said, it is easy to take this for granted. When I recently approached product providers for success stories about removing paper from their processes, only a handful mentioned valuation services in their responses.
Top marks then to Mark Locke from Aegon who pointed out that in December, normally a low month for such activity, his organisation delivered 107,000 electronic valuations, doubtless saving many trees and helping avoid Christmas postal delays into the bargain.
One thing that is really important with electronic valuations is to offer information on the full range of providers’ current and legacy contracts.
This is an area in which Aviva has been delivering great advances in recent months. Currently, quality information and valuations for over 90 per cent of its existing business book can be accessed via its extranet. From recent conver-sations, I understand this is driving behavioural change in the adviser market, where Aviva has experienced the number of adviser requests being handled online rising from 40 per cent to over 60 per cent across its investment and pension range in the last 12 months.
This is worthwhile progress and while it is desirable for these valuation services to be moved on to a messaging basis so the communications can take place seamlessly between the adviser system and Aviva, having such a volume of its legacy book online is a major step forward for a provider which has assimilated so many other insurers.
I have written on a number of occasions about the benefits of electronic tracking for new applications, so I will not repeat this information in detail other than to reiterate the need for such services to deliver a real-time message rather than the position based on close of business the previous day. I have been challenged on whether there is a business case for such immediate notification. I cannot do better than repeat a recent observation made by Stuart Bayliss of Better Retirement who summarised this issue by saying: “Failing to give a real-time message is just asking more advisers to pick up the phone.”
Another new and worth-while trend emerging is making the delivery of the documentation to advisers electronic. Our industry delivers frightening quantities of paper to clients and copies are often sent to the adviser. With more firms trying to move to paper-less offices, these are frequently scanned so a digital image is kept.
It would be so much more sensible if the adviser could be provided with an electronic copy in the first place. Prudential has recently introduced an initiative to allow advisers to obtain bonus statements in respect of its with-profits or income choice annuity products electronically from the Pru adviser website. These can either be downloaded for individual clients in PDF format or by creating a CSV file of the relevant data.
In a similar development, Aviva is moving to offer advisers all documentation via its adviser extranet.
This has the potential to save the need for the company to print and post millions of documents during the year. I will be taking a more detailed look at this service in the coming months.
After the RDR, handling paper should be considered too time-consuming and too expensive. The foun-dations are in place for a paperless industry and it is time for a major push to make paper a thing of the past.
Ian McKenna is director of the Finance & Technology Research Centre