Is This Why Networks Are A Dying Breed?

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 Outdated business models, crippling PI costs due to past errors and their tendency to become distribution channels for product providers, just to name a few.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!

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10 thoughts on “Is This Why Networks Are A Dying Breed?

  • Abraham

    I agree, the above scenario is pathetic (and that comes from a compliance man!!).

    You can certainly see where the term ‘business prevention unit’ comes from!!

    It is an unfortunate consequence of the tick box mentality adopted by many networks compliance departments.

    They are more concerned about complaints and FSA sanctions than they are about the client.

    They never meet the client and very few give any consideration to the client’s needs let alone the commercial aspects as you mention above.

    Reply
  • Yes, Networks have had lots of problems and many well publicised ones. Your experience Abraham sounds pretty awful.

    Networks will survive though. I think we will see, the larger provider owned ones becoming restricted and smaller privately owned ones staying independent. Both are likely to flourish for different reasons.

    Some new networks are emerging that wish to stay small, allowing them to work as a partnership, comprising of partners who share same values and visions, which are far removed from your experience.

    Reply
  • I’m in a good position to comment having just left a network, my reasons have been well publicised.

    The experience Abraham had is not uncommon. I’m surprised you weren’t expected to have illustrations showing ongoing advice and no ongoing advice as I was.

    I don’t think the networks will exit in their current form. Friends Life are looking at offloading Sesame and my previous network is in big trouble judging by all the members that have contacted me with a view to going directly authorised. I think the smaller, more selective networks can flourish. the larger, ‘bums on seats’ networks will inevitably suffer.

    Reply
  • Yes, Networks have had lots of problems and many well publicised ones. Your experience Abraham sounds pretty awful.

    Networks will survive though. I think we will see, the larger provider owned ones becoming restricted and smaller privately owned ones staying independent. Both are likely to flourish for different reasons.

    Some new networks are emerging that wish to stay small, allowing them to work as a partnership, comprising of partners who share same values and visions, which are far removed from your experience.

    Reply
  • I’m in a good position to comment having just left a network, my reasons have been well publicised.

    The experience Abraham had is not uncommon. I’m surprised you weren’t expected to have illustrations showing ongoing advice and no ongoing advice as I was.

    I don’t think the networks will exit in their current form. Friends Life are looking at offloading Sesame and my previous network is in big trouble judging by all the members that have contacted me with a view to going directly authorised. I think the smaller, more selective networks can flourish. the larger, ‘bums on seats’ networks will inevitably suffer.

    Reply
  • Abraham

    I agree, the above scenario is pathetic (and that comes from a compliance man!!).

    You can certainly see where the term ‘business prevention unit’ comes from!!

    It is an unfortunate consequence of the tick box mentality adopted by many networks compliance departments.

    They are more concerned about complaints and FSA sanctions than they are about the client.

    They never meet the client and very few give any consideration to the client’s needs let alone the commercial aspects as you mention above.

    Reply

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