They may even want to be involved with financial planning for clients. But some people are more comfortable studying the detail, carrying out research and writing suitability reports than they are meeting and greeting and explaining products to clients.
For these paraplanners, a dedicated paraplanning qualification is ideal – especially if it is level 4 and therefore equivalent to a financial adviser’s diploma.
At LIBF, our experience of paraplanners is that they are very focused on studying to the highest standards they can achieve. They are extremely dedicated when it comes to keeping their studies up to date through continued professional development (CPD). And when you consider the ever-increasing demands of their role, they have to be.
The demands of the paraplanner’s role
A good illustration of this is the extra demands under MiFID II.
Just to recap: advice firms are required to disclose all costs and charges that relate to their retail recommendations since the new regulation came in. They must give an indication of the expected costs and charges. And these need to be provided before advice is given.
The actual costs and charges need to be supplied after the advice is given (ex post), and where applicable on at least an annual basis. The costs and charges need to be aggregated and shown as a cash amount as well as a percentage.
The rules state the following three points must be disclosed:
- all one-off and ongoing charges, and transaction costs, associated with the financial instrument
- all one-off and ongoing charges, and transaction costs, associated with the investment service
- all third-party payments received, and the total combined costs of these three categories.
Firms must disclose this along with an illustration that details the cumulative effect of the overall costs and charges on the return.
And on top of all this, the ‘Retail Distribution Review’ (RDR) rules on adviser charging continue to apply alongside MiFID’s costs and charges requirements – augmenting the level of complexity involved.
These rule changes have added an extra burden to the advice and review process. While some firms have turned to technology to produce these reports, evidence suggests the paraplanner’s role has grown in importance and complexity since these rules were introduced. Unlike automated reports, a human paraplanner can prepare annual reports for clients that genuinely are personalised.
Change is not new and has contributed enormously to the evolution of the paraplanner’s role. Thinking back over the last decade we have seen many changes and amendments in regulation including RDR, MiFID II, ongoing reviews by the FCA, changes to the process for pension transfers and increasing costs for professional indemnity insurance.
