A recent study has found that financial advisers are less aware of their Y2K than they ought to be. John Desmond outlines the findings of the survey and the impact of the millennium bug on advisers who are operating their own small business.
Y2K is being talked about everywhere. There are the doom merchants who predict that we are heading for a worldwide crisis and those at the other end of the spectrum who say that it won’t impact us much at all.
Computer consultants working with the major banks have found situations where bank balances would have gone to zero. An Australian hospital spent months reprogramming one of their expensive pieces of life support equipment to get it operational again after someone decided to see what impact the Year 2000 changeover would have. So there is some demonstrated support for a cautious approach.
Industry leaders like Telstra will spend in excess of $500 million, BHP $85 million, Coles Myer $90 million, CSR $20 million and the federal Government is spending in excess of $600 million. Australian listed companies have publicly acknowledged spending more than $1.7 billion on Y2K which demonstrates clearly that Y2K is being taken seriously. Within our industry NAB expects to spend $255, Lend Lease $75 million, Colonial $40 million and MIM $20 million.
So what?
As an industry, financial advisers are heavily reliant on computers and electronic systems. Many of these systems have date dependencies even if we are not aware of them.
If you are not Y2K compliant your computer may not start up; calculations involving dates and dates in general may not be true; and software that refers to dates inbedded in the computer may malfunction.
Almost every single adviser business which responded to research recently conducted by THP Computer Services, have Y2K issues of some description.
Disturbingly, most of those involved in the research thought that Y2K would not impact them.
The research, undertaken in more than 1,000 small businesses, shows that only 2 per cent of computer hardware tested was fully Y2K compliant. One in five operating systems and less than 25 per cent of software are compliant.
These results reflect Australian small businesses across the board. Given that we are already half way through the year the research is of particular concern, the issue is becoming urgent.
What to do
Recognising the potential impact of Y2K on financial advisers’ businesses, some of the major life companies are taking this lack of Y2K compliance very seriously.
AMP, National Mutual, Colonial and Lend Lease are among those companies taking action to support or sponsor advisers in the quest for identifying Y2K risk in time enough to address the issues.
If you are offered an opportunity for a sponsored or subsidised Y2K program think carefully before turning it down. It will take time to conduct the assessment properly but it could prove to be time extremely well spent.
When conducting your Y2K Risk Assessment program the following areas should be considered:
The compliance of your computers, the hardware, operating system and software
The compliance of other business systems
Suppliers and customers Y2K status
Action plans for fixing any problems identified
Contingency plans for foreseen possibilities
Clean management practices to ensure ongoing compliance
When selecting a Y2K solution, make sure the process is easy for you to use and the output lets you know clearly what your next steps should be. Make sure any computer tests you run look at your computer hardware and software.
In order to service your customers and generate business, you need to make sure your technology systems are functioning correctly. You are also required to demonstrate a Y2K plan to renew personal indemnity insurance and, in some cases to continue with bank overdraft or loan arrangements. So Y2K is a very serious issue.
Failing to plan in this instance can see you planning to fail. Producing illustrations or quotes manually and working with a manual customer database would see huge inefficiencies, at the very least. Why not work towards a happy and prosperous New Year.
John Desmond is business development manager at THP Computer Services.
