Automating the LOA process; maximising the work not done

Research from The Lang Cat shows that processing an LOA can take an average of just shy of 10 days in the best case to 60 in the worst case. What should be a simple and quick process gets glued up because there is no single way to:

• Request the information.

• Submit the LOA and track the progress.

One adviser estimated that he could spend a total of 3 and 4 hours on progress chasing a single LOA. Whilst Origo’s Unipass LOA is designed to fix this problem it needs widescale adoption across the adviser and platform provider community to enable efficient and transparent LOA processing. The good news is that advisers can use this for free for now and if or when charging is introduced, it's likely to be minimal, around the cost of a first-class stamp according to Origo. Provider adoption is gaining momentum with 8 companies signed up with a target of 20 by the end of 2024.

I think there are three reasons why some providers are not motivated to increase the efficiency of the LOA process:

1. Conflict of interest; for advisers, the LOA process will lead to new relationships and ultimately increased revenue. For providers, it's often the start of a transfer out. Given 2023 saw near-record outflows it's not hard to see why some providers are in no rush to increase the speed of outflows.

2. Priorities; regulatory change and propositional enhancements will always trump service improvements.

3. Visibility of effort; I bet that firms that have highly manual and arcane processes have no idea of how much it costs to process an LOA and how much effort is being wasted handling chase-ups and correcting mistakes. You've probably heard the saying, “What gets measured gets managed.” It comes from the management guru Peter Drucker and the basic tenet is that if you're measuring something then the probability of you acting on the information you have is a lot higher.

I have spent a large part of my career as part of teams delivering large-scale software systems. Scaled Agile has taken centre stage as the leading framework for rapidly delivering high-quality software that provides value to customers in smaller, more frequent increments.  One of the most important principles underpinning the framework and most relevant to the LOA process is "Simplicity— the art of maximizing the amount of work not done" This means avoiding unnecessary complexity, keeping solutions as straightforward as possible, and making value flow without interruptions. This is achieved by:

1.    Visualising the work and limiting the waiting time for items to be actioned.

2.    Removing bottlenecks.

3.    Minimizing handoffs and dependencies.

Plenty of software solutions do this, some are free and most are very easy to use. They are all designed to visualise the status of a work item in one collaborative workspace, completely removing the need for chase-up e-mails or worst still phone calls. Suppliers like Monday.com, Trello.com, and many more provide this capability.

The workflow is visualised on something called a Kanban board which you can imagine as a grid with post-it notes (Cards that contain the to-do items) in the columns and rows. Each column representes a different stage in the process, each row could be a different LOA submission. The simplest examples of columns are: To-do, in-progress, and done. For an LOA this could translate to the following six steps:

1.    Client data capture.

2.    Client signature.

3.    Submission.

4.    Submission acknowledgement.

5.    Provider processing.

6.    Data received from provider.

As an item is being worked its status is changed to provide real-time updates. When applied to the LOA process providers and advisers would be able to measure and quantify the costs associated with delays and rework. This could provide hard data to make a compelling business case for the adoption of an automated digital solution.

There was a great quote in the Fundscape Platform Report 2023.

“Platforms should be raising the bar of driving efficiency into financial services  whilst enhancing and complementing the experience to the client by their adviser.”

Automating the LOA process is a quick win and should be on the 2024 to-do list. You never know it may work out cheaper than stamps.