The recent research conducted by The Pension Lab and highlighted in their #LogYourLoAPain campaign sheds light on the inefficiencies and costs associated with the Letter of Authority (LoA) process. Here are the critical findings:
1. Volume of LoAs
Annually, 3.9 million LoAs are sent.
Financial advisers send an average of 6.5 LoAs per month.
2. Follow-ups and Chases
Each LoA requires an average of 2.4 follow-ups.
3. Time to Completion
The completion time for an LoA ranges from 7 to over 59 days*.
The time spent on each LoA varies between 35 to 94 minutes.
4. Cost of LoA Process
The average cost to the adviser, per LoA, is £55.51.
The annual cost of the LoA process to the industry is estimated at £442 million.
5. Human Resources
The process consumes approximately 985 years of time annually.
This time equates to about 5,541 full-time equivalent human resources.
6. Environmental Impact
The LoA process generates 56 tonnes of CO2 emissions annually.
To offset these emissions, 2,800 trees need to be planted every year.
7. Inconveniences and Risks
The requirement for wet signatures adds to the inconvenience and cost.
The process heightens security and fraud risks due to reliance on paper and signatures.
8. Comparison with Other Industry Issues
The cost of the LoA process is nearly double the losses from deferred small pension pots, which are under Government review.
Implications and Need for Improvement
The research underscores the significant inefficiencies and costs of the current LoA process, highlighting its impact on client experience, adviser productivity, and industry costs. The delays and manual processes involved in handling LoAs are major barriers to timely service delivery, potentially leading to lost business and financial harm to clients.
Timeline's Solution
In response to these challenges, Timeline has introduced an automated LoA process in collaboration with The Pension Lab's LoA service. This solution aims to enhance efficiency, reduce costs, and improve the overall experience for advisers and clients alike.
By automating the LoA process, Timeline aims to address the critical issues identified in the research, ultimately contributing to a more streamlined and secure method for handling LoAs. This innovation not only aims to improve the operational efficiency but also significantly reduce the environmental impact associated with the traditional manual processes.
To read more about the research, you can visit The Pension Lab (https://www.thepensionlab.co.uk/homepage-blog/59 )