Your IndustryOct 17 2012

Finding the right tools for the job

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

Twenty-five years ago I joined the Home Service Company and was introduced to tables and a rates book. At the time I found it very confusing but as time passed it became my companion and I was able to quote premiums and sums assured within seconds.

I sit here today and look at the vast range of research tools available to me, most of which we use every day and on occasion, particularly when the computer system is on a go-slow or indeed has crashed, I yearn for the return of the rate book.

It is a fact that nowadays it is impossible to operate, particularly as an IFA, without research tools, whether it be mortgage research, pension switching or life and pension tools but what I have found is that many of them fall well short of their alleged capacity to simplify and streamline one’s role in this very vital area which underpins the work of an IFA.

First, there are certain elements within research tools that are not covered. Peculiarities of certain contracts, for example, that are not shown, if the adviser was aware of, would potentially have an impact on a recommendation, particularly with certain providers and the ability to buy back critical illness cover after a claim. This is not widely available and certain criteria that lenders require are not apparent on the system.

I see them very much as the first part of identifying an appropriate solution to a client’s needs and that without regular emails and visits from business development managers, account managers and life office representatives, the peculiarities of certain contracts would not be known.

The utopia would be for every single contract, and the characteristics of those contracts, to be able to be researched online in one place.

Mortgage research tools are invariably not up to date and information has been omitted. The lender blames the research tool provider and the research tool provider blames the lender for not providing the up-to-date information in a timely manner, or indeed at all.

The other area that advisers need to consider is service. There is no method through a research tool to compare service standards as these vary dramatically and certain providers are discounted manually because of service standards, or lack of them.

When using the research tools and ticking boxes suddenly half of the providers disappear, yet the particular aspect of a contract that you would like to see from a provider may well still be there. So unfortunately there is no replacement for experience and having a good understanding of the providers and the fine detail of their contracts. It is also easy to untick boxes and to tick boxes so that your preferred providers appear which is something I regularly hear about and begs the question why are these people not providing restricted advice?

Even the research tools that are updated daily, and in cases more often, do not provide up-to-date information. My discussions with colleagues reiterate that these tools on their own will not enable us to do the job in question, and why do we not have one source of approved criteria that is regularly monitored by our regulator?

Boxes

I remember some years ago speaking with an account manager of a bank who was doing a mortgage presentation, and he said if you untick these boxes you can get up to eight times income for your clients.

This individual had not been to one of our company meetings before and the expressions on our faces were of horror when this point was raised. Clearly ‘knowing your customer’ and ‘affordability’ were not high on his agenda - needless to say we did not go down that route.

Also the number of criteria within a provider, when discussed with a client, can be daunting and trying to keep them focused and guide them through the research can cause more confusion than was intended.

With any process you only get out what you put in and the risk is that the opinions and prejudice of the adviser can take over during the feeding in information in order to filter out a limited range of providers.

It begs the question how can an adviser know the peculiar aspects of every contract available on the market? Clearly they cannot, so from a regulatory point of view one would assume that the FSA wants to see a good level of contact with providers from advisers to ensure that they are educated and made aware of contract features, advantages and benefits and pending charges.

In summary, research is more than an online tool, it is about keeping up to date through other mediums, triangulating your information and ensuring that you are aware, as much as possible given the constraints of time, that we are providing the right solution with the right provider and should only be used as part of the process - the starting tool, not the research tool.

If product providers simplified the contracts then making direct comparisons would be much easier than they currently are.

It would also make it easier for the public to understand what they are buying as, even with detailed explanations, as time passes ‘memory fade’ kicks in. The amount of clients that I see who do not truly understand the products they have, which they have bought in previous years from other sources and in some cases my own, underlines that their understanding appears vague so maybe there is a lesson here for the product providers.

A recent report by pensions specialist Michael Johnson (who writes for the Centre for Policy Studies) which looked at savings culture, puts forward the suggestion that 90 per cent of the public has simple requirements and I think, from my own experience, that is entirely true.

We simplified pensions (or did we?) so we should simplify the other areas as well and then we will be able to compare on a level playing field.

Karl Hopper-Young is a director of Sussex Independent Financial Advisers

Key points

* It is impossible to operate, particularly as an IFA, without research tools

* Many tools fall well short of their alleged capacity to simplify and streamline one’s role as an adviser

* If product providers simplified contracts then making direct comparisons would be much easier