Client onboarding process needs immediate overhaul

Client onboarding process needs immediate overhaul, finds new report

Provider processes for client onboarding result in higher costs, a lack of efficiency and erodes the client experience finds new research by NextWealth for Origo.

There is also a disconnect between providers’ views on the time taken to process and advisers’ experience.

A key issue concerns the Letter of Authority (LoA), which is a major stumbling block for advisers due to the lack of standardisation among providers.

Heather Hopkins, MD of NextWealth comments: “Of the 10 steps we identified in the report to onboard clients, without exception advisers complained most about the Letter of Authority. Every financial advice firm we interviewed described delays and frustrations, resulting in workarounds and extra unnecessary steps. One of the main problems is that the information requested is not standardised, meaning several different letters may need to be prepared for a single client, requiring significant additional time for rework. This all adds up to higher costs for clients and can also erode trust in our industry.”

Anthony Rafferty, CEO of Origo comments: “The broken LoA process risks confirming consumers’ worst opinions of our industry as archaic and out of touch. I have experienced first-hand this broken process. Early on in lockdown, my financial adviser drove to my house to get my signature on a few forms to support a pension transfer. The forms were mislaid after being sent to the provider and he had to come back again for another wet signature. We want to change that, to make the LOA process secure and slick.”

NextWealth’s Financial Advice Business Benchmarks Study found the average cost to a financial advice firm to onboard a new client is £1,543, with the process taking an average of between three and four weeks.

Significant disconnect

In the new research for Origo, NextWealth found that there is a significant disconnect between the timescales stated by financial advisers and those claimed by providers.

Advisers cited turnaround times in weeks (and sometimes months) while providers claimed they take days. The difference appears to come down to when the clock starts. Advisers start counting from the day the request begins, while providers count from the day the request is received by them with all required information in place.

Delays occur with providers when information is lost between departments, advisers have difficulty finding the right part of the business to contact, information is missing, or forms are incorrectly completed.

Advisers told NextWealth they have had to wait on hold for hours at a time as they try to get status updates on Letters of Authority sent weeks before.

Factors such as legacy systems, trustee involvement, illustration and application processes and requests for non-standard information can also negatively impact the length of the onboarding process.

Tech is driving change

Heather Hopkins comments: “While our research highlights some major frustrations for advisers, it’s not every provider that is causing problems. Those that have embraced technology to speed up processes are providing a much more streamlined and speedier service to advisers. In one of our other recent studies, we highlighted firms that are getting ahead of the game, naming them Digital Process Champions. However, the research we’ve carried out for Origo indicates there is still plenty of room for improvement. In my view, providers have no choice but to modernise systems and processes to support client onboarding because advice firms are increasingly voting with their feet.”

Anthony Rafferty, CEO of Origo comments: “The NextWealth research highlights that there are real personal costs and emotional implications caused by the current processes. Advisers don’t want clients to miss out on getting access to their money for retirement or to fund a child’s wedding because of needlessly slow processes. Currently, it is the advice firms that bear the greater operational and reputational costs but the overall risk is to client confidence in financial services as a whole. We need to be working together to oust the outdated and put in place solutions that deliver the prompt, efficient operational processes that clients now expect of us as an industry.”