Guest Blog – Insight from an Outsourced Paraplanner
By Edward Spencer DipFA – Founder & Owner at Para-dox Paraplanning
The role of the paraplanner has certainly evolved over the years, but the reliance and importance of the paraplanner has most probably been the biggest change. Amongst the vast majority of IFA and financial planning practices across the country, the paraplanner has become an integral part of the team.
The definition of a paraplanner can vary considerably throughout the profession, and I’ve witnessed this first hand having worked at three different companies throughout my career so far. Some roles can be more administrative-based, some can be a purely report-writing function, whilst others involve a more client-facing function.
There are many words that I could use to describe a paraplanner, but in my humble opinion, I think the role of a paraplanner has remained consistent throughout the years which is to be facilitators to IFAs and financial planners.
What do you mean by that?
By this, I mean a facilitator of saving the most important currency to any financial planner – time.
Of course there are many other factors that comprise a high-quality paraplanner, such as being the technical soundboard that can help negotiate the rough terrain of our ever increasingly regulated industry.
It is the very skills that each paraplanner acquires and develops, that enable financial planners to save time. Less time researching products and funds, less time scouring key features documents, and less time writing suitability reports, leading to more time spent with their clients.
That is why, as the owner of an outsourced paraplanning company, one of the biggest benefits we can provide to financial planners is saving their time. Not only by writing suitability reports, but by using our collective experience to streamline existing processes, methods of working and taking on some of the more time-consuming responsibilities.
The future of paraplanning
The paraplanning market, like any market, is ever-changing and evolving.
Demand for paraplanners is constantly growing whilst the supply of employed paraplanners is arguably decreasing. The significant increases in paraplanner salaries in recent years could be perceived as an indication of this.
With the introduction of graduate financial adviser schemes and junior financial adviser roles, these have fast-tracked a number of individuals straight to advisory roles whom would have potentially tried their hand in the paraplanning world.
Combined with a number of paraplanners working in the outsourced market, such as myself, the gap between demand and supply of employed paraplanners could grow further.
I have no doubt that research and fund selection will be automated, as we already have living examples in the industry that this is possible.
A question that I often ask myself is: Will paraplanning ever be fully automated? As an enthusiast for technology, I would perhaps like the answer to be yes. But, in my opinion, the answer is no, not entirely.
In my opinion, the human skills and input required to understand, discuss and then write a bespoke, personal and compliant suitability report are unlikely to be replicated using AI, at least for the foreseeable future.
Outsourcing your paraplanning isn’t for everybody. Some financial planners value the ability to sit face-to-face with their paraplanner and discuss matters. This model works for some, however the benefits of outsourcing should not be overlooked.
There are clear cost savings to outsourcing your paraplanning. It can alleviate paying large annual salaries for paraplanners – which, as mentioned earlier in my article, are continuously on the rise – there is no sick pay, holiday pay, pension contributions, employee benefits etc etc; you get the picture.
Despite this, outsourced paraplanning may have a reputation, for some in the industry, of being an expensive alternative.
That’s why when I started Para-dox Paraplanning, I wanted to create an approach that was built from my experience of working with financial planners in the industry and what their preferences and needs actually are.
I designed an outsourced paraplanning approach that is adaptable, on a pay-per-report basis and has low fixed-priced costs. You should only ever pay for what you need, so we wanted a service that reflects this but without sacrificing any quality.
Most importantly, I circle back to my point about time, which is where the greatest value can be added. Our service has been designed to free-up financial planners precious time, by onboarding responsibilities of obtaining client information, liaising directly with internal compliance departments, as well as the general task of writing a bespoke suitability report.
How has Covid-19 affected your business?
Pleasingly, we have maintained our high-levels of service throughout the pandemic so far and have even seen a rise in new clients coming on board, which is certainly a positive sign.
Our structure was already on a remote-basis, which meant that we could continue as usual when the initial affects started happening. There was very little adaptation that we had to make as a company, which allowed us to continue uninterrupted.
In the financial services market as a whole, we haven’t seen too much reduction in the level of financial planning activity which has been extremely positive and reflects the resilience of our profession.
Having seen more financial planners using a virtual approach to advice, I personally believe that this is one of the greatest benefits that the current situation has produced. I think the industry will benefit from these technological advancements, albeit a bit forced, not to mention some of the environmental benefits that it will bring.
For a business that aims to be run virtually, which is pertinent to most outsourced functions, it is an exciting time to be in the profession and I think it has triggered a number of firms to review their current internal systems and processes as well as allowing more familiarisation with the concept of outsourced paraplanning.