Many industry commentators have given us several reasons why they think most networks can’t survive this brave new world. Outdated business models, crippling PI costs due to past errors and their tendency to become distribution channels for product providers, just to name a few. Well, a recent experience drives home the points for me.
It was meant to be a simple pension switching case, PPs to PP. No GAR, no guaranteed growth rates or bonuses. No SIPPs. Nothing complicated. This should be over in a minute. Or so I thought.
First the network insisted on using a particular software provider for the analysis and comparison, even when we pointed out that alternate software can do an equally good job, may be even better. Fair enough, standardised processes, consistency…. blah blah blah (although the cynic in me thinks this is really down to money changing hands between the network and the ‘preferred’ software provider)
So off we went! We produced shiny comparison reports, illustrations for the consolidated plan and a client report, all of which were sent off to the ‘compliance team’ within days. Job done!
Well, not quite. Days later, I got an email saying they want illustrations for each of the plans being transferred, from the new provider so they can compare with the projections given by the ceding schemes. Hang on, isn’t that what your ‘preferred’ software was meant to do in the first place? At this point, I have to say the software did do a good job!
Then I pointed out that obtaining individual illustrations will give incorrect comparison as it won’t reflect the large fund discount offered as a result of the higher fund value in the consolidated plan. That fell on deaf ears. They still insisted we get it anyway, so we did!
As if that wasn’t enough, few days later, they wanted us to check that the 5 year performance of the new plan was better than each of the ceding plans! What? Really? Regardless of the fact that the new plan has lower reduction in yield, well-monitored portfolio with asset-allocation which better reflects client’s risk profile and automatic re-balancing facility, all of which the existing plans were lacking?
And why 5 years? Why not 3 years then? Or 10? Client retires in 6 years time, so why not 6? ‘Just get 5’ I was told. Ok then.
Two weeks, tears and blood later, they gave their approval. Fact is, none of these did anything to improve the recommendation. Let’s remember there’s a client in the middle of all these.
I am all for compliance and file checkers doing a thorough job but when you have over-zealous people who show very little technical competency and almost no commercial awareness, following out-dated rules like robots, everybody ends up a loser!
And you know you have a real problem when network members deliberately avoid pension switching business because they know someone sitting in a cubicle at the head office is about to make their life hell, just for the sake of it! You can’t blame them for seriously considering leaving! I can’t help but think this is one key reason why many networks are going the way of dinosaurs!