A revolution is underway, and it centers around the often-overlooked yet critical process – the Letter of Authority (LoA). Despite its significance, and countless social media posts surrounding its frustrations, the industry faces a daunting yet surmountable challenge: the absence of validated data on LoA volumes and costs. This information void is a roadblock, and it’s hindering an ability to grasp the true extent of the issue and as a result, is thwarting substantive industry action for resolution.
Embarking on a mission to fill this data gap and create a movement within industry, a groundbreaking initiative is afoot. The #LogYourLoAPain initiative founded by a group of pioneering industry organisations (The Pension Lab, Criterion, Beyond Encryption and Punter Southall), aims to encourage financial advisers, planners, wealth managers, paraplanners and their administrators - the warriors at the coalface of the LoA process – to come forward and submit their LoA volumes at www.thepensionlab.co.uk/logloa .
Financial advisers, planners, wealth managers, paraplanners and their administrators are uniquely positioned to spearhead the charge and assist in quantifying the scale of LoA submissions. It is their hands-on experience and insights that are key to helping unlock the volume and cost mysteries that currently surround this critical process.
The #LogYourLoAPain initiative goes beyond a data-gathering effort, it’s an invitation to action with tangible goals. In addition to playing their part in helping the industry determine LoA volumes, each adviser who submits their LoA quantity will also receive a bespoke report that details their own annual cost impact of the LoA process based on cost analysis research conducted by The Pension Lab.
The second goal of the initiative is to present the aggregate data to the wider industry and regulators (FCA and TPR) providing evidence that demands attention and appropriate prioritisation for the improvement of the LoA process. Although frustrations are well documented thanks to qualitative research *(https://thelangcat.co.uk/report/just-fix-it-already-the-broken-letter-of-authority-process-in-uk-wealth-management/) containing shared anecdotal experiences, the #LogYourLoAPain initiative will for the first time quantify LoA submissions, providing practical evidence as to its priority for improvement.
Thirdly, the initiative will highlight that the process cannot be fixed by one organisation alone due to its request and response nature as data moves between multiple parties. In essence, it’s about bringing recognition to the fact that improving the LoA process is dependent upon a collective effort – advisers, paraplanners, providers and technology partners are all required to help improve the process.
With volumes unknown, yet notoriously frustrating, the LoA is the lifeblood of the financial advice process. Without a LoA processed and returned as required, advisers are unable to fulfill client requests or access vital information for comprehensive advice. The typical LoA experience is riddled with delays, taking months to complete after relentless chasing – with most recent research stating the average worst being 42[*] working days, with some quoting 18 months. It is often the client’s first point of service experience beyond their adviser’s control – so it’s not just a bottleneck; it's one of the biggest barriers to timely service, potentially resulting in lost business opportunities.
The LoA process and its challenges are not endured by clients and their advisers only – it is the scheme administrators, providers and platforms that are impacted by the volumes, security processes, identity checks and costs – as well as complexities of requests, with some, after years of consolidation, having to access and rely on legacy systems to fulfil requests. The frustrations of the LoA process are felt right across the board.
Consumer Duty plays an inevitable role in driving forward improvements to the process, with key principles including avoid causing foreseeable harm, often cited to encourage address. However, lump it in with transparency of fees and other such related matters, the priority for LoA improvement can weaken if its cost impact cannot be measured.
The future for the LoA process could be much brighter – where automated, secure solutions are developed and based on common and maintained standards so that competition is fostered. Fixing the LoA process means enabling a broad collective movement that strives towards eliminating the archaic processes of paper trails, post, endless chasing, and the tyranny of wet signatures. It’s about embracing technology for identity verification and data security, ensuring not just efficiency but data portability; where responses from providers are detailed yet standard. The vision for LoAs is one of ease, speed, and simplicity for all parties involved.
The #LogYourLoAPain initiative isn't a call for passive support; it's an open, all-inclusive invitation to action – where any adviser, planner, paraplanner can get involved. Through collaboration, we make a difference, one LoA at time. Every voice counts.
Here are just some of the news articles about #LogYourLoAPain initiative:
- https://www.moneymarketing.co.uk/news/pension-lab-calls-for-overhaul-of-pen-and-ink-letters-of-authority
- https://professionalparaplanner.co.uk/pension-lab-launches-logyourloapain-campaign/
- https://www.ftadviser.com/pensions/2024/01/17/initiative-calls-on-advisers-to-log-volume-of-loas-to-shed-light-on-issue/