Your critical friend

Your critical friend

Twenty years ago, paraplanners were simply a figment of the imagination of many IFAs struggling with the laborious task of preparing and administering a plan or report for their clients.

Although a relatively new position within the financial planning industry, paraplanning has since grown exponentially, with a host of IFAs making room in their firms for their own in-house paraplanners, while others opt to use the depth of expertise of outsourced paraplanners.

Describing the practice as of “fundamental importance” to a successful financial planning firm, Sue Whitbread, communications director at IFP said: “Today, one of the consistent features we find within leading financial planning firms, including all of IFP’s accredited financial planning firms, is the use of paraplanners. I don’t think that this is a coincidence.

“We’d never even heard the term ‘paraplanner’. Initially it was all a bit mixed up with administration, and at best they were generally seen as people who wrote reports and dealt with product providers. How things have changed.”

With a host of sweeping changes announced in the 2014 Budget speech and the more recent pension freedoms, it is vitally important for advisory firms to adapt to an ever-changing market.

The need to make cost efficiencies, as well as to make a high level of customer service in the post-RDR environment is a timely reminder of the importance of paraplanners.

The adviser’s partner

Trained to scrutinise the most intricate pieces of information and deliver personalised recommendations, paraplanners are often referred to as ‘critical friends’ to the advisers they work with.

They come in all different shapes and sizes, allowing firms to choose the candidate with the right skill set for their current structure.

Paul Lindfield, director of wealth management at Manchester-based Sedulo Wealth Management, said that hiring a paraplanner was a fundamental part of the plan for the business, which launched in April 2013.

He said: “I often joke with our paraplanner that she does all the hard work and I take all the glory.

“Paraplanners are worth their weight in gold. They undertake work which doesn’t just simply involve admin functions, but highly specialised and complicated matters. Their invaluable behind-the-scenes work allows us advisers to concentrate on developing our professional relationship by spending more face-to-face time with clients, which is the key to good business.”

However, the role of the paraplanner is often ‘muddied’ by company chiefs who can give the title to an individual whose tasks accord with those of a glorified administrator rather than a paraplanner, according to Mr Lindfield.

He added that the role of a paraplanner is not merely restricted to research and number-crunching, but also to work with advisers to ensure recommendations are the most appropriate to their clients.

The IFP claims that the role of paraplanner has not been clearly defined but can be broken down into four key parts.

The first step is the preparation and maintenance of the client’s file, which involves the collation of qualitative information – such as client attitudes and life goals – required to compile a financial plan.