Your IndustryApr 24 2014

Good staff offer the key to profitability

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Last month, the Institute of Financial Planning carried out a survey of its accredited financial planning firms, lifting the lid to see what these leading businesses looked like inside. A key factor with most firms, it found, was their number of support staff. More than a third of firms reported employing two or more support staff for each financial planner. All the firms used paraplanners to support the provision of a comprehensive financial planning service.

As well as hiring great people, the firms also used great systems and processes. The use of high-quality software for back-office customer relationship management databases, risk profiling and cash-flow modelling were all evident.

So is it a coincidence that those firms that were well resourced with both people and processes also tended to have remarkably low levels of complaints from clients? I would argue it is not.

At the heart of any great business are its people. Outstanding administration and back-office functions are also crucial.

When I first joined the financial services industry as an adviser back in 1986 – I use the word “industry” on purpose – support staff generally consisted of one administrator for a dozen or so advisers. We had never heard of the term “paraplanner”. As I recall, I first encountered the term in the early 1990s, although it tended to be mixed up with administration. At best, paraplanners were generally seen as people who wrote reports and dealt with product providers. How things have changed.

Today, paraplanners are of fundamental importance to a successful financial planning practice. But how good are they at selling themselves, and what are the key attributes and skills that ensure they provide the right level of support to financial planners and clients?

It starts with having appropriate qualifications and experience. Sound technical knowledge is essential, but so too is having the right skills to apply that knowledge effectively in different client situations. This is where qualifications such as the Certificate in Paraplanning and even advanced qualifications such as Certified Financial Planner are a real differentiator, as they test the application of knowledge.

Many paraplanners are both certified and chartered financial planners, which sends the clearest sign to any adviser, firm or client that this is an individual who takes his career very seriously – and is capable of much more than report writing. Another strength is competence in creating financial plans, using software such as that provided by Truth or Voyant or other bespoke packages, including those used for risk profiling.

Once acquired, knowledge and skills must be kept up to date. Paraplanners have not always had the same continuing professional development opportunities as financial planners and advisers, but thankfully this is changing as paraplanners are recognised as key decision makers in the business.

Dealing with product providers is part of day-to-day life for most paraplanners, and it can still be a challenging and frustrating task. When it comes to implementing a financial plan, putting the recommended and agreed financial products into place should, in theory, be a painless process. In practice, however, the follow-ups and checks can take up much valuable time.

A paraplanner provides a planner with a useful sounding board and another pair of eyes. Having someone alongside you who is working on the same cases, who can challenge thinking, suggest alternative approaches and work with you to get the best results is a great asset. This also frees up the adviser or planner to concentrate on client liaison work, which means the business can maximise its profitability. Many firms, advisers and planners, though, remain to be convinced that working with a paraplanner will boost their productivity and profitability.

Sue Whitbread is communications director of the Institute of Financial Planning