September is my time for reflection as I contemplate the run-in to the end of the year. It’s prompted by September being the month in which my parents passed away, several years apart.
Reflecting on what’s working and what isn’t is vital if your objective is to move forward positively. The reality of the RDR is now percolating through the minds of the industry, for those who thought adviser charging meant commission (i.e. label change only), the reality is beginning to dawn.
Friends Life recently sent us a retirement pack where unlike pre-RDR packs, no commission (sorry – adviser charge) was assumed. Just as we prepped the options letter to our client, Friends Life called us to request information about the aforementioned client. What information did they seek to elicit from us? The client’s telephone number.
Now the client may have contacted Friends directly to request information but any further communication should have been through ourselves.
This is a new take on client acquisition, where providers expect us not just to keep out of the way, but to remain as a source of information. Naturally, one of my team sent them packing, empty-handed and with a flea in their ear.
Friends Life seems to have abandoned the IFA market, or at least developed a PR and communications strategy that is taking them down that road at a rate of knots.
I recall speaking at a workshop where a member of Friends Life’s senior management spoke of their “clients”.
Last time I checked, they had not popped any money into our account to cover the development/servicing of the client.
The fact that some of the senior personnel in life companies actually believe that policyholders are clients explains the crazy valuations currently placed on them by analysts in the same daft place as the senior personnel. TCF has never quite made it into the culture of many of the UK’s providers – luckily, I think the new regulator sees TCF being for all, not just for us advisers.
Looking back Friends Life was ahead of the game in the 80’s and 90’s. Its ability to process business electronically via GLADIS (their system) was impressive. I recall dropping off a proposal and picking up the policy later that day – I could have had an as-you-wait service but I had clients to see.
The question is: where did it go wrong? Why have they decided that they can assume control of part of my client bank without my permission or, more importantly, without the permission of the client, either?
Just prior to RDR we received the advice that evidence of no service would suspend renewal commission. Now, there was a host of conditions attached, but call centres are not staffed with pragmatists, so a battle between switching off and switching on was sure to follow.
A while ago I used a slide in a presentation discussing the upcoming RDR which was headed ’small numbers big problem”. The small numbers were the under-£1 payments of renewal commission, and the big problem occurs when each of these small payments are stopped till proof of service is forthcoming.
Clearly the cost of recovery of individual payments far exceeds the amount sought, and that’s why those who bought books of renewal commission are now finding out the risk that comes with assumptions.
However, the concept that the insurer can cite systems costs as the barrier to passing it on to the clients doesn’t hold water. That’s a free piece of IT consultancy. For those that know me, this is a not to be repeated offer. It’s simple: give them all agencies, then simply rebate into their account. Job done.
The demise of consultancy charging has now snared the group scheme commission that many thought they had stored up as a hedge post-RDR. The providers don’t want to pay commissions anymore – Adviser charging is a pain, so more change is coming. Let’s be better prepared.
I recently attended an FCA positive compliance workshop where the presenters were informative and wanted to help us, not to catch us. For me this is a major sign of the change in direction towards proactive help to avoid problems, instead of mopping up in the most uneconomic way, as was true under the FSA.
There is evidence through courses like this that the regulator seeks a real partnership, and wants to avoid the “us and them” so prevalent since the days of the PIA.
Let’s take the opportunity, and if you should take the chance to go on one of the Positive Compliance courses I’d recommend them. THe one I was on was run by two Glaswegians who exude the positivity so sorely lacking, before telling us what was expected of us and not just what was unacceptable.
As I return to my reflective state, I recall that my parents also stressed the importance of looking forward, and not looking back. For that I am forever in their debt.
Robert Reid is managing director at Syndaxi Chartered Financial Planners