What is NIGO and What Does It Mean for You?
The financial world has a plethora of acronyms that can sometimes seem overwhelming. One in particular to pay attention to is NIGO. NIGO stands for “Not In Good Order,” a reference to financial, insurance, and other paper documents submitted by customers and investors before initiating transactions. As the name implies, these documents are typically lacking in important information — or, in some cases, have inaccuracies — that need to be corrected before processing.
On average, a surprisingly high amount of documents submitted to back offices can fall into the NIGO category and can significantly slow down processing times. Many documents contain sections that only pertain to certain investments, account types or registrations and having the wrong fields filled out can cause major confusion and errors.
Wealth management and investment firms need to understand how to quickly and efficiently mitigate the submission of NIGO documents. This post examines the major problems caused by NIGO paperwork and strategies for combating its most negative effects.
Mitigate Errors with Better Document Preparation
At the bare minimum, NIGO documents require back-office staff to fix errors. Setting out on what can feel like a “wild goose chase” of information-hunting from investors and customers can be tedious and time consuming. There’s no doubt that NIGO documents cost companies in fees and employee time significantly more than those submitted correctly in the first place. Sometimes, really problematic NIGO forms can require multiple rounds of revision and fact-checking for firm staff.
Even the simplest mistakes can cost businesses in creating NIGO documents. Key punch errors, typos, and putting information in the wrong form fields can create significant backlogs and result in incorrect recommendations. These errors have the potential to multiply when workforces are largely remote or hybrid. PWC found that 69% of financial services companies reported that a majority of their employees would continue to work from home at least once a week. A scattered employee base means that automation, accuracy, and consistency are even more important in a post-pandemic business world.
Administrative costs related to reprocessing can also be high in manpower hours. Instead of completing other tasks, a good chunk of staff members’ time can be spent reprocessing NIGO documents. Not only is this work redundant, it can also potentially lead to further inaccuracies as employees are increasingly unable to pay attention to other important logistical details of their jobs.
These issues cause frustration on a one-off basis, but when NIGO documents are coming in consistently to reviewers, it can have a substantial effect on a firm’s bottom line. Finding innovative tech solutions to these problems can help shore up firms against future NIGO impacts.
Recognizing How NIGO Impacts the Customer Experience
High NIGO rates also have repercussions on the customer experience. Although the cost of updating NIGO documents is high from an administrative standpoint, it’s even more costly to not invest in error correction.
Incorrect documents lead to bad recommendations and financial decisions, which ultimately risks the trust between investors and clients. This negative experience can cost a firm otherwise loyal clientele and result in high investor abandonment rates.
Having a trustworthy advisor is the single most important factor for customers considering long-term relationships with firms. Breaking that trust – or failing to cultivate it in the first place – can push customers to competitors and result in negative word-of-mouth. Although the retail world is very different from that of finance, the same principles apply for both shopping behavior and the strategic selection of investors. Thirty-two percent of consumers reported that one bad experience is all it takes to abandon a company for good, even if previous brand interactions had been positive. When it comes to personal finances, it’s a good bet to think that negative experiences – some of which are undoubtedly caused by NIGO errors – can cost firms customers.
Strategies to Prevent NIGOs
High NIGO rates in particular have the potential to truly hurt customer relationships. The good news is that several strategies exist for mitigating NIGO documents from being submitted in the first place.
One way to cut down on NIGO documents is to eliminate physical paper trails whenever possible. It’s far easier to misplace hard copies or have missing pages when documents aren’t stored on a digital cloud or software platform. Across the financial industry, issues with paper applications accounted for 60% of firms’ total NIGO rates. Moving towards an online storage solution can help cut down on the risk of losing documents and also provide a more secure experience for customers.
Similarly, transitioning to electronic signatures instead of manual ones can help expedite processing and make sure that customers are signing in all the right places. Many digital e-signature applications don’t allow users to submit documentation until all required fields have been filled in. It also allows customers to easily store and print their documents electronically.
Ultimately, the adoption and implementation of digital solutions can help eliminate or reduce errors by automatically populating documents, correcting typos, and performing security verification checks. Recent research from the Harvard Business Review reports a 65% reduction in costs and 90% reduction in turnaround times for firms with strong digital processes. Perhaps most importantly, digital solutions around the proper handling of documentation can increase trust between advisors and clients. This goal more than anything else can help firms cultivate long-standing professional relationships with customers that result in better investment advice (and increased profitability) for the long-term.
Interested in learning more about how digital operations technology can help your firm? Contact Docupace today for a consultation and get customized tips on how to process and digitize data, increase efficiency, and become more profitable.