Compliance and T&C – it’s just a numbers game


Over the last 35 years I’ve seen changes happen in financial services. Moving from my well paid job into FS was a shock, commission only and definitely not 9 to 5. It’s been an exciting journey, equipping me with new skills and experiences that have stayed with me.

Early in my FS career I learnt about ‘the numbers game’, how achieving these numbers I’d meet the activity targets needed to secure my income requirements. ‘You’re selling intangibles now, it’s a different ball game. It’s not like selling fridges, here we sell the sizzle, not the sausage’.

These sales techniques were a world apart from anything I’d heard or seen before. Retail sales measured footfall and P&L. Show the customer products, let them try for size and explain they looked great. Sale made!

Wasn’t long before I was introduced to a Project 100 and something called the LAPACK system. One was a tool to help gather prospects the other was some form of specialist manual accounting system known today as a spreadsheet! There were no personal computers then, we had to rely on writing it down and using calculations to estimate the various sales activity ratios. We even had to calculate how much life assurance someone could get for their agreed premium, all this information was in rate books, and we had rate books for everything.

We were soon to learn of impending regulation, in the early 90’s I became the first Branch Manager in our company to undergo a LAUTRO review. There was no procedure to call on, no branch in the company had been reviewed before!

To this day I can clearly recall meeting the man from LAUTRO. The company solicitor and regional director even joined me on the day in order to get a feel for how things might play out.  When it was all over my phone didn’t stop ringing for a month. Every branch manager and regional director from around the country was calling for information on what to do in the event of a visit from LAUTRO MAN. Back then you measured the quality of your regulator review by the thickness of the review report! These reports were prescriptive, detailed, and taken seriously. The required action completed in a timely manner. I read a report recently, they’ve not changed much. That’s a story on its own!

These early reports provided the foundation for what was to become Compliance and the Training & Competence regimes. At its heart was the importance of keeping accurate records of what happened and demonstrating best practices. Common phrase used back then was; ‘if it’s not written down it didn’t happen’.

those of us with children aged 5 and under will see at least 25% of our kids working in businesses that hadn’t been thought of yet

Around this time I attended a conference where the speaker, a very successful sales consultant in FS, suggested that those of us with children aged 5 and under will see at least 25% of our kids working in businesses that hadn’t been thought of yet. His prediction was accurate, except 3 of my 4 children are in jobs today that hadn’t been thought of back then, 75% of my kids! How the world’s changed.

Leaving corporate life at the end of the 90’s I took my experiences and skills and started my own L&D consultancy. At the same time the computer arrived, it provided us with an additional tool to record, create, analyse and find information. Provided at a speed not heard of before.

Rate books were gone and prospect lists replaced by CRM systems. These systems are simply tools for managing a company’s interactions with current and future customers. They usually involve technology to organise, automate, and synchronise sales, marketing, customer service, and technical support. Mind blowing stuff for a lad from the 80’s!

A few years ago I worked for a major bank introducing their sales teams to a revolutionary new fund. It guaranteed higher returns even when markets declined. At the heart of the fund was an algorithm, a simple yet complex sequence of instructions or rules that if followed would complete a task. It seemed the success of this fund was down to the algorithms’ clear instructions and rules, if something happened it had a knock on effect elsewhere. The algorithm called the shots, didn’t need people to operate it and it worked 24/7 globally. Some fund manager that was.

Recently I was asked to look at ways to manage and develop a new consultant’s ability and skills. I vividly recalled that; ‘you can’t manage results – you can only manage activity’. Manage activity and results come. Yet managing activity requires you to know what drives sales and by establishing sales drivers you create key performance indicators [KPIs] by which to support and guide a consultant to improved performance.

Back in time I would’ve had to explain and agree with consultants just what KPIs were. We’d discuss the activity needed to meet required targets to justify their income requirements. Importantly we’d discuss how best to achieve this. Today we overlay best advice and KYC skills and knowledge which provide the foundation on which to work from. Just like our 80’s supervisor, today’s supervisor needs to be skilled in keeping these ‘plates spinning’. They should meet regularly with consultants, analyse what happened in the days prior to their meeting and establish what’s scheduled to happen in the days ahead.

bigdataHow about creating an algorithm to record and analyse activity?
Algorithms could establish sales activity ratios, identify key performance indicators, and record the training and supervision that’s taken place. Today is just a new numbers game and we’ve a variety of personal computing, CRM systems and information from the web to help capture and shape the data.

Here’s a draft set of numbers that I’m using in the design for today’s task; ‘=SUM (‘Week 5’! N41:P41) / (‘month11’! DP196:HN251)*52’ – and that’s just part of the formula for the activity ratios. Scary stuff? But this is what senior managers should be considering in order to validate what they and their consultants are doing. Layer on to this the skill required to analyse MI, identify areas requiring attention and then take steps to coach consultants. Oh! Then record what happened……

Is this developing a balanced scorecard? It’s certainly recording activity and can capture reviewable results which can be measured against previous periods. It could also be used to measure against other consultants to establish averages or potential issues or exceptions.

Using these tools and methods in supervision help establish behaviours, values and ethics. They help create a pathway to competence and as the activity is recorded, it happened! Should the regulator come calling there’s an audit trail recording the entire journey of both the consultant and supervisor.

But a word of warning to you dear reader.
Technology advances being made now could severely impact supervisors in the future. If robots can undertake surgical operations, build cars, even drive cars, carry out security operations and run nuclear power stations, they will be able to supervise consultants in the future.

In fact consultants better shape up as well. It won’t be long before robots will be built that can ask questions, analyse answers and provide a suite of solutions for customers to choose from or be advised on a course of action that would be in their best interest to take. They’ll record the whole episode, send out confirmations and associated documentation all completed in a Nano second. They’ll record customer details automatically onto CRM systems ensuring customers actually get an annual review.

Don’t think it’s possible?
112 years ago they didn’t think we’d fly, we’ve just landed a craft on a speeding comet!

We live in interesting times, those people that will be in demand in the future will be data scientists and systems architects, those who design software that operate the systems and robots. You might have heard of the term BIG DATA, if not you soon will because many organisations are using data to analyse our buying patterns. They’ve programmes in place to identify what you’re looking at online, these sites often say something along the lines of, ‘Customers like you also looked at …..’   They have mined the information, replayed it back in the hope you’ll increase your spend.

Quantitative analysts have been used by banks for years to design all manners of sexy products. The products and solutions they design need little input from humans, in fact they usually outperform their human counterpart. Remember my algorithm that runs a pension fund?

Look at the formulae I shared earlier. It’s crude and simple but the concept is about mining data, analysing numbers and designing solutions. I’m no data scientist or quantitative analyst but I know it’s possible to collect, analyse and store information. Best of all the outputs from mining data could help supervisors to supervise and coach their staff. All you need to know are the sales drivers, key performance indicators and then apply some standards.

The future of compliance and T&C is in the hands of those with sexy roles – data scientists, quantitative analysts and system architects. Those in sales, supervision and education had better learn the basics of this new phenomena, embrace the opportunities they bring. Or you might end up being supervised by a robot based in Brazil!

The T10 Partnership challenges the status quo. If change is required we help design and implement the steps to make it happen. It’s what we do, ask the questions to seek out solutions. Above all we’re passionate about what we do, it’s what we’re known for.



About Author

With almost an entire career working with customers Kelvin has developed the knack of ‘standing in the customers shoes’ and helping organisations, executives, sales and product teams to see, feel, hear, smell and taste things they don’t experience but their customers do.

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