Langcat: Letters of authority remain adviser nightmare – Money Marketing

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Letters of authority remain far too much work for many advisers hard hitting research finds.
A new paper from consultancy Lang Cat sheds light on the scale of damage inflicted on financial planning by poor provider processes.
One of the headline findings is that letters of authority and transfers remain a massive source of frustration for advisers.
The Lang Cat tested how much time it would take to submit a letter of authority and get satisfactory data.
The process often ran to several months but in the very bad cases, firms were waiting over six months for the data they had asked for.
The report is based on more than 40 interviews with advice professionals ranging from the big consolidators and national firms to the smaller specialists.
This was supplemented this with online research alongside input from providers, platforms and tech companies.
Interviews with those professionals and providers named the guilty parties most frequently reported for frustratingly slow letters of authority.
These were legacy closed-book insurers and platforms who have grown by acquisition and defined contribution providers, especially Mercer, Towers Watson and Capita.
The Lang Cat principal Mark Polson said: “Despite the threat of regulatory action in this space, progress is not being made quickly enough. We need everyone to accept and adopt common standards before we see meaningful integration and automation.
“This part of the technological world needs to de-fragment before it can be fixed and properly connected.”
The research points out some have tried to fix the problem, like Origo and its Unipass LOA, but it is still early days.
It adds some adviser and paraplanner groups have had varying levels of success in trying to unite more progressive providers in a set of common standards.
Wealth Wizards chief executive Andrew Firth said: “After the pandemic we saw a lot of processes speed up and barriers reduced for financial advisers.
“Wealth Wizards’ consumer-led and human-assisted (hybrid) guidance and advice platform automates key processes such as onboarding, fact finding, suitability report production and cashflow analysis. We are also looking at making the letter of authority process easier by creating automated digital signature and provider requests.”
Today’s (20 September) paper called the Fragmented World is a follow up on a paper from 2019 called A Disconnected World.
In the new research one managing director of a financial planning firm told the Lang Cat: “Technology allows our clients to go from 0-100 in terms of their engagement, but they then fall off a cliff with letters of authority and transfers taking months to complete.”
Advisers have called Letters of Authority (LoA) a “major stumbling block” in terms of the service they receive from providers. This is the finding of a NextWealth study that found several shortcomings in provider client onboarding services for advisers. It revealed the process takes on average between three to four weeks while provider systems for […]
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There are 2 comments at the moment, we would love to hear your opinion too.
Needless to say we are a industry fast in reverse, and its not just LOA’s
Regulatory intervention (for the last 10 years or so) by and large, has been counter productive, those trying to do the right thing, are stone walled and fighting to get the simplest of things done in a reasonable timeframe, the poor advice, scammers and feckless do what they have always done, ignore it all.
We have been stuck in this dependency culture for way too long, and its unintended consequences are now showing massive cracks …something has to give.
We are the metaphorical Ferrari with a thimble of fuel ration per month … enough to get the engine started then we stall before the 1st gear is engaged !!
Poor Provider Legal & Compliance is at the heart of this mess. I was on the Origo Steering Committee in 2013 that had an on-line LOA facility (electronic signature) yet only 2 Providers signed up to it. I believe Origo have now revamped this yet once again Providers are reluctant to adapt. I still wonder how Providers can square DP breaches if a client has sent in an LOA 4 months ago, its not been processed and annual statements etc are then still being sent to the old Adviser. Its no excuse to say ‘i had a backlog’. In addition are Advisor Charges being backdated and refunded to the client from the date they signed the LOA? Answers on a post card to that one? Providers have bigger issues here than Legal & Compliance signing off electronic LOAs, but nobody seems capable of holding them to task re potential data breaches and non refund of charges as a starting point.
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