As paraplanning has evolved from report writing to a more collaborative role working alongside financial planners, it has become more and more challenging – especially when dealing with more complex or unusual cases.
With more and more clients finding themselves subject to restrictions on pension contributions and inheritance tax on the wealth they have worked so hard to create, we are now seeing a huge increase in the need to recommend more complex financial planning arrangements.
Depending on the company a paraplanner is working for, this can be a huge challenge – although a great way to gain new or further knowledge on solutions that are covered very little in the diploma syllabus.
Not every company will be comfortable providing advice on more complex solutions like the Enterprise Investment Scheme, venture capital trusts, business relief-qualifying investments or trust planning as they might not have the experience of advising in these areas.
However, every company is likely to have some high-net-worth clients that need these solutions.
There are three main challenges a paraplanner faces when a company wants to provide advice in these areas:
- Lack of knowledge of products both for paraplanner and financial planner.
- No process in place to recommend complex products.
- Understanding which clients best suit complex products.
Although the paraplanner can gain the knowledge required, they may find that they are one of a limited number of people in a company that really understands the products and implications, which places a lot of responsibility in their hands.
As the financial planner will be the one recommending the product to the client, of course they must understand the products and who they are best suited for, however, this is where a paraplanner can really be of assistance, as long as they have the time and the resources to undertake the research.
There are a number of great resources that are invaluable.
As with any research, the good stuff comes at a cost as free resources are very likely influenced by sponsors or contributors paying to be included.
Before starting to look at providers and solutions currently available, it is important to understand the products out there.
I have found that providers of these products generally deliver the best resources when it comes to understanding how the products work, as well as clients who are most suited to them.
The benefit for paraplanners of dealing with cases that involve complex products is vast.
The increase in knowledge and how to apply that to various client scenarios is more likely to involve working with a company’s highest net-worth clients, which will provide a much wider variation of the paraplanner role.
As someone with that knowledge and experience will be invaluable to a company that wants to recommend complex products, they will also find themselves in demand both working on cases but also to partake in groups such as investment committees where a specialist is required.
As defined benefit pension transfers are decreasing in number, I firmly believe that complex products will require specialist paraplanners, and this is a huge area of growth.