Life offices should already be under no illusions that they must improve service levels but, says John Enos, managing director, marketing of The Hartford, now the sector must go one step further
Ask any adviser what the key issues are facing their business and invariably poor service from insurance companies will be near the top of their list - just read some of the results of the preceding RealAdviser Report. This will come as no surprise to advisers, who have consistently argued they have to spend far too much time and energy quality-checking the service outputs from insurance companies.
At a time when the industry needs to become more efficient and customer-centric, significant cost is driven into distributors through providers' poor quality and inefficient service models. Advisers speak of waiting for tens of minutes for call centre staff to serve them. This poor service is exacerbated by complex queries or requests for information on older 'legacy' policies.
No reliable measure of the true cost of poor service exists in the UK and estimates vary. But the hours spent by advisers on checking and chasing providers is estimated at anything between 10% and 20% of an adviser's time.
Just imagine the value to a business of an increased 20% productivity! This value, spread across the entire UK adviser community, would equate to at least another 6,000 financial advisers being released to provide advice and support to their clients.
Treating advisers fairly
There seems to be a fundamental disconnect in the way providers are working with advisers. Often the result is that advisers are left protesting about poor service to beleaguered broker consultants. The ultimate solution, of course, is for advisers to withdraw support from providers with poor service. However, many advisers have large existing client portfolios with the same providers, so voting with your feet is unfortunately not a viable option.
But all this needs to change. That is because, from April next year, the FSA's Treating Customers Fairly (TCF) initiative will include post-sales service - which is principally directed at advisers. For instance, one of the factors which an adviser must take into account when considering the selection of a particular provider is the quality of service and administration of that provider - as TCF beds down, this will only require greater attention by the adviser.
Working in a post-TCF world will mean providers may have to come clean over both service standards and service performance. So how long until we see service standard league tables alongside financial strength comparison tables?
In order for life offices to be successful, they must place the success of the adviser as well as the client at the core of what they do. That means that they must deliver the kind of service they both demand.
That is exactly why The Hartford is committed to delivering a superior service offering to advisers in the UK. We have built our service model on that of our US parent, where we have won numerous coveted DALBAR service awards, which are based around mystery shopper findings and will hopefully find their way into the UK soon.
Many advisers are not receiving this level of service from providers, nor are they receiving the support needed to help them grow their business. As a minimum, advisers should expect good service but they should also receive assistance in identifying new business opportunities, as well as the support necessary to help them achieve their own business and financial goals.
In addition to the changes needed to improve service and policy administration, life offices should also look to improve on their marketing and technical support. Providers are, after all, in a unique position in that they have the skills and resource to supply advisers with the tools to help them better advise their clients. However, much of this has an inherent product focus, which can become meaningless when used with clients.
Instead, providers should look to develop long-term working relationships. This works best when providers give advisers the tools and the context in which they can be used to grow their business. For our part, we recently travelled the length and breadth of the UK running more than 100 adviser seminars, aimed at growing their businesses. For this, we developed a range of practical tools designed to show how advisers could set up their own client seminars or meetings.
In addition, we have also been working with advisers to dispel some of the misconceptions around equity investing and the perceived safety of cash. This tactic has formed the core of our marketing this year, in which rather than just pushing products, we talk about the need and then the solution that the adviser can deliver to their clients.
Another example of how providers can support advisers and their clients is in the area of with-profits. Once hailed as the champion of the cautious investor, with-profits has undergone a spectacular fall from grace. The issues surrounding its demise are well-documented. However, this still leaves many investors tied to an investment that is no longer suitable to their needs, and may have little or no chance of achieving their original financial goals.
Conducting a review of a clients' with-profits investment is a complicated area and many advisers would welcome some assistance. That is why The Hartford has developed a With-Profits Review guide to help advisers through each stage of the process.
As well as helping advisers conduct the reviews, providers need to be able to support advisers and their clients with a viable alternative to with-profits. Let's not forget that the type of investor who is looking to transfer from with-profits is generally cautious and looking for a more tailor-made product that has the scope to manage the risk more effectively. That's why The Hartford entered into the UK with its unit-linked investment bond - Hartford Gold. Unit-linked investment bonds allow investors to retain control over the asset allocation through a choice of fund managers and asset classes, as well as invest at a level of risk that they're comfortable with.
However, what makes our product stand out from its peers as an alternative to with-profits is its unique protection option - Hartford SafetyNet. In contrast to the opaque approach to 'smoothing' with-profits adopts, Hartford SafetyNet is clear and simple in that it not only protects a client's initial investment, but also locks in gains during the good years - and keeps them locked-in during the poorer performing ones.
Providers undoubtedly need to improve on their service offering and move to a model where they focus on helping advisers to build their business. This should not only be in terms of efficiency of service, which should be taken for granted, but by giving them the tools and knowledge to service prospective and existing clients more efficiently and effectively.
While the knowledge of the client will always rest with the adviser, providers need to listen to the needs of consumers - as advocated by TCF. That way, providers and advisers can work in partnership in offering relevant solutions that can satisfy clients' needs and enable advisers to reach their own financial goals.The Hartford at a glance lThe Hartford Gold unit-linked investment bond is available with a unique protection option called Hartford SafetyNet.
lHartford Gold, with Hartford SafetyNet, can guarantee income by protecting clients' initial capital, as well as locking in investment gains for the long term, regardless of market performance.
lThe Hartford is able to provide this unique guarantee due to its investment expertise and its position as one of the world's largest financial services companies.
lWith more than 195 years of experience, The Hartford today employs over 30,000 people across the globe and has in excess of £185m under management (as at June 2006).
lHaving established a leading position in the world's two largest markets (the US and Japan), The Hartford launched in the UK in 2005.
lWe believe Hartford Gold is ideal for many of your cash clients looking to make their money work harder, or with-profits clients who are concerned about actually meeting their financial goals.
lFor more information please visit our website at www.thehartford.co.uk
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