By Kimberley Malin DipPFS Cert CII (MP)
I really wanted to answer that question with a big fat ‘YES’, but in reality, I think the answer has to be a ‘NO’! But why?
You may feel that the process you have within your financial planning firm is ‘perfect’, and that may be true, but there are factors beyond our control that make it not so perfect – let’s explore that a little further.
Here at Plan Works, we do our best to make the LOA process as smooth as possible. By that, I mean that we ensure as much detail as possible is entered onto the LOA we are sending in to the providers; we follow their process for the submission of the LOA; we obtain the existing plan documents where possible, so we even know the plan type, department it needs to go to and the contact details to follow up the LOA. And this is where the ‘but’ comes in… We all have those ‘dreaded’ providers where we take a deep breath before we pick up the phone because we know that the timescales to process the LOAs are high, the telephone wait times are extensive, the LOA has been rejected, and they wont tell you why, as you don’t have authority. There are a whole host of problems we encounter along the way when trying to obtain policy information to create an ‘Arrangement Review’ for a client. However, this is where an experienced paraplanner can add value and make the process as smooth and efficient as possible.
Most of the factors are beyond our control. However, there are things that can be done to ensure the LOA process goes as perfectly as it can:
Thoroughly check LOAs for any missed data, incorrect data and, if possible, against the plan information, if you have it. I recently had a LOA rejected because the middle name of the client was missing off the LOA, although every other piece of information was correct. They were insistent that the middle name needed to appear on the LOA – it can be that simple for a LOA to be rejected. I also had a situation where client’s LOA included the married surname and signature, but I spotted that the plan statement had a maiden surname. In such cases, to avoid the LOA being rejected, I usually ask the client for a copy of the marriage certificate and ask in the cover letter to update the surname too. It is important to thoroughly check all the information on the LOA against AML documents and any plan information to avoid any delays.
If the LOA is to be submitted to a provider that is what we call a bit ‘quirky’, and by that, I mean not one of our usual big companies – the smaller, lesser know schemes / providers or a very specific pension department. It may be a good idea to ring ahead and find out their specific LOA process if you cannot obtain this from anywhere else, such as the Intuitive LOA guide, which is updated monthly. Questions like where we send the LOA and would electronic signature be accepted are crucial. Some providers will accept a scanned LOA via email, but the signature can’t be electronic – it needs to be wet-signed and then scanned. Some providers will accept electronic signatures via DocuSign, and others will require original LOA wet-signed and posted. By pre-empting the potential problems that may occur, you may be able to avoid any potential delays in the process.
Diligent chasing – so you have submitted the LOA, and you are now making your first call to the provider to ensure it has reached them and confirm the timescale for them to process it. Although we ask the provider to reply to the emailed LOA request with the timescale for processing this and to provide us with the info, I will let you guess how many times we actually get a reply! Make yourself a really clear file-note document so you can record every detail, as required. It is a good idea to keep a note of the phone number you called and any further numbers you are given during the call to ensure when you chase next time, it will hopefully be direct to that department, and quicker (dare I say?!). I always make a note of the department I am speaking to as well, so you have a good idea of what type of plan you are dealing with, if you don’t already know this information. This can sometimes be your first indication of what type of plan you are dealing with, and you may start thinking of any potential ‘quirks’ you need to consider with this type of policy. Noting the date of the call and who you spoke to is always a good idea too, as you may need to use this information in future calls to explain what you’ve been told before.
Once the LOA has been accepted and information issued, the job does not end there either. Although we send a list of specific questions to the providers with the LOA, very rarely do we receive all the information we have asked for. Some standard information packs are better than the others, but further information gathering is always required. For example, many providers don’t confirm if the trustees have the discretion to decide who the death benefits can be paid to, and therefore, whether the pension will form part of the estate. Or they don’t mention what happens to the pension after the age of 75 – is it going to be automatically annuitised or sold and held as cash? Or is the flexi-access drawdown they offer really that flexible? Can the client set up regular monthly withdrawals?; is there a limit on how many withdrawals they can take a year? etc. When obtaining the information, we like to dig deep and really understand if the product is suitable for the client, both now and in the near future. And, an experienced paraplanner will know what further questions to ask following some of the answers provided: ‘The pension is invested in the lifestyle strategy? Okay – where can I find the information about how the asset allocation changes?’. ‘The pension consists of AVCs? Okay – are these free -standing AVCs or are they connected to the DB scheme, and can they be used to buy additional TFC or commuted for a larger pension?’.
We can only do so much to help ourselves make it the ‘perfect LOA process’. However, many of the factors that ‘interrupt’ this process can make it not so perfect in reality. This is where an experienced paraplanner can add a lot of value, as having the knowledge and experience of what to ask for will make the process a lot smoother and more efficient. Not taking a ‘no’ for an answer and really challenging the providers on the information they give us can go a long way to ensure accuracy and suitability of the product.
I guess from an outsider’s perspective, namely ‘the client’, they don’t understand the time it takes to obtain all of this policy information, so it is important equally that the Financial Planner puts the client in an informed position and ensures they are kept up to date on a regular basis. An informed client is a happy client – I can vouch for this from experience!
