Letters of Authority (LOAs) remain a source of deep frustration for advisers, with firms left waiting up to six months or more for client data, a new paper from the lang cat has revealed.
In its new paper ‘A Fragmented World’, a follow up to its 2019 paper ‘A Disconnected World’, the lang cat said legacy closed-book insurers and platforms who have grown by acquisition were often responsible for slow LOAs, as well as DC providers including Mercer, Towers Watson and Capita.
The findings showed that the time taken from submitting an LOA to receiving full, satisfactory data often ran to several months and in the worst case scenario, could take over six months to complete.
According to the lang cat, the slow process poses a major challenge for advisers seeking to implement a financial plan for a client. To put in place a plan for a typical client in their early 50s, an adviser will often have to deal with between five and 15 products meaning they will need to create between five and 15 LOAs and agency transfer forms in order to be able to take control of the client’s plans.
Despite attempts to solve the problem, the lang cat said advisers and paraplanners have had “varying levels of success” in trying to unite providers in a set of common standards.
Mark Polson, principal of the lang cat, 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.”
Commenting on the findings, Wealth Wizards CEO 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 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 LOA process easier by creating automated digital signature and provider requests.”
The new paper also explored the technological landscape as a whole for advisers and found a number of key issues including digital ability is greater than technology; a lack of control; data is the new oil; and platforms are not enough.
It also highlighted three fragmenting forces; misaligned commercial interests; decentralised control without tech to match it and no shared desired view.
The lang cat said advisers reported difficulty understanding software before they buy it and challenges in distinguishing good systems from marketing hype with more than 70% of firms agreeing that it was impossible to make an informed comparison on software providers.
David Simpson, head of EMEA at technology solutions provider GBST commented: “We recognise the importance of open access to data, common standards, ease of integration, paperless processes and reduced cost of ownership of maintenance to support this drive for improved efficiency.
“One of our key principles in developing platform technology is to provide a single core solution to all our customers, so any new feature and that includes an API becomes available to everyone in the same format, structure and functionality.”
Also commenting on the new report Anthony Rafferty, CEO Origo said: “Origo collaborated with the lang cat on the initial deep dive into adviser firms’ issues in the efficient use of technology. A Disconnected World highlighted the lack of integration between technologies used by advice firms.
Since then, the Origo Integration Hub has helped the industry better integrate, with 45 companies now signed to the Hub, integrating for services such as valuations, bulk valuations, bulk transaction history, account opening, remuneration and transfer tracking.
Three years on, the lang cat’s new paper has found that advice firms are still facing “significant” barriers in terms of efficiencies, this time with the Letter of Authority highlighted as a major frustration.
Clearly, providers have had numerous calls on their resources in the intervening years since 2019. But hopefully, post pandemic, Letters of Authority will be an area where providers can see a quick but important win in terms of improving efficiencies and productivity for themselves and advice firms and to help the industry deliver better service to the end client.
Origo’s Unipass Letter of Authority service was specifically launched to simplify and streamline the current LoA process, aimed at greatly improving the experience for advice firms and their clients, who currently must deal with a myriad of differing provider requirements and procedures.
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