Your IndustryFeb 19 2015

Making the most of a paraplanner

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The greater demands placed on financial advisers means they have less time to devote to report writing, suitability letters and the research required to make sure clients are always receiving the best possible advice.

A paraplanner’s remit varies according to their experience and qualifications, but ultimately the universal theme in advertisements for this post is that they are there to assist an adviser meet their duties.

A paraplanner’s responsibilities can include anything from basic report writing and administration tasks through to undertaking more complex research and building recommendations, thus allowing the adviser to spend more time with their clients.

The value of the support of a paraplanner very much depends on the business model of the advisory firm, according to Linda Todd, head of operations at Bankhall.

Ms Todd says: “The adviser can use their time to be more client focused. There is an opportunity to discuss cases with a paraplanner and challenge where appropriate, plus more technical skills for the advising firm to call on.

“A further added benefit is that the adviser can gain second opinions on cases.”

The downsides of having a paraplanner are the additional cost and possible loss of control over all aspects of the firm’s work if relevant controls are not put in place, Ms Todd warns.

As well as drafting advice, Emma Watson, technical development and quality specialist for Towry, says many paraplanners can produce detailed cashflow planning reports to add value to your offering.

Ms Watson says this involves projecting forward a client’s wealth and lifestyle over their lifetime to assess investment risk and ascertain whether their objectives are achievable.

Some companies have large teams of paraplanners to support their advisers, she adds. For example, Towry’s paraplanning team is 80 strong and works almost exclusively with local advisers.

Other companies favour the pooled approach with paraplanners working remotely. For smaller firms, a number of outsourced paraplanning firms are available for those that would rather not bring more staff onto the payroll.

Traditionally paraplanners work in-house but over the past few years, Ms Watson says outsourced paraplanning has become an increasingly available and popular choice.

Whether you outsource or hire an individual, Towry’s Ms Watson says you should make sure that you fully integrate the paraplanner into your advice process. The best adviser/paraplanner teams work well because each person takes the time to understand the needs and potential frustrations of the other, she says.

Ms Watson says: “By ensuring you communicate well, you can streamline the way you work, gaining mutual trust and therefore being able to spend more time with clients.”

To make sure you are making the most of whatever type of paraplanners you opt for you should remember that they can get involved in much more than just conducting research.

Bankhall’s Ms Todd says some advisers have their paraplanners involved in client meetings, and allow their paraplanners to build relationships with clients.

However, Ms Todd says a paraplanner should know where the line is between giving information and giving advice, which of course they are unable to do.

She says: “In our experience some experienced paraplanners sit on investment committees of the adviser firm.”

When it comes to thinking about whether to hire an in-house paraplanner or use an outsourced service, Damian Davies, director and founder of Timebank, says neither option is “better” plus the two types are not mutually exclusive.

Mr Davies says the majority of Timebank’s clients have employed paraplanners and his staff work together with these individuals as a team.

He says what is important is to decide what the firm wants and see whether that is best served by an employee or a contracted professional resource.

Mr Davies says: “Internal resource will know the firm and the clients better than an outsourced body, but an outsourced body will have wider knowledge and skill sets and larger capacity for scale or adjusting to modulations on work flow.

“For the paraplanner themselves, you often see many in-house paraplanners getting frustrated at being distracted from their core functions purely as a by-product of being in an office environment.”