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The six-step process to perfect planning

Having paraplanners as well as financial planners who are trained in core planning skills is the next step for firms as they continue their transition to a genuine financial planning model. In our experience at the Institute of Financial Planning, firms report that it can take many years for the business to embed all the changes successfully. Understanding the proposition is one thing, but having a trained team of experts with the confidence and ability to deliver it is something else completely.

There are two priority areas for businesses to address in order to accelerate the transition, assuming that financial planning is going to be the basis of the proposition. Firstly, cashflow modelling should underpin it, which, once understood and used properly, creates so many more opportunities. Secondly, given that costs are increasing and revenue generation is crucial, effective use of a paraplanner is also key to reducing risk and cost while increasing revenue and the overall quality of the service.

Trust

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A financial planning service quickly gains clients’ trust as it incorporates their entire situation and sets up an agenda of activity for years to come. Clients are very willing to pay fees for this service where they can clearly see the value it brings to them. They can relate to the process and feel empowered to engage.

For the paraplanners, their involvement in supporting the delivery of this service is essential. However, they need to have the right financial planning skills to be able to do so.

The ‘Real Financial Planning’ process is based on six steps at the heart of the certified financial planner certification. Looking at the experience over the last 30 years or so, it is clear that the process is not designed for just one person to deliver. Regulatory changes have also now virtually made this impossible, but the development of the paraplanner role has enabled businesses to take a massive step forward. Moving from a more transactional approach to integrated financial planning means adopting the following process:

- Establish and define the client/planner relationship

- Gather client data including goals (collection)

- Analyse and evaluate financial status (analysis)

- Develop and present financial planning recommendations and alternatives (synthesis)

- Implement the financial planning recommendations

- Monitor financial planning recommendations and changing client circumstances and goals

Of these steps, the first and second are the most important. Often, they are also the most time-consuming, as the service delivered is established as a result of setting out client goals. A financial planner will spend considerable time with his clients to drill down and identify short-, medium- and long-term goals. These then need to be prioritised and assumptions made about timescales and costs. This data is all captured and forms the basis of the plan.

Extrapolating this data into a detailed financial plan takes considerable skill and experience. Training programmes should be considered to ensure that paraplanners as well as financial planners and advisers are properly equipped to deliver the required outcomes.

When it comes to business processes, effective integration of the paraplanning role is a key improvement for many firms to de-risk the business further and allow the advisers to spend more time with clients generating revenue. Effective use of platforms, technology and client segmentation are others. However, all similarly require appropriate training to ensure that the team delivering the service have the skills as well as the knowledge to meet clients’ demanding needs.