In a recent parameters survey, we asked whether paraplanning should be a compulsory stepping stone to becoming a financial adviser? You gave us your opinion.
The results of Professional Paraplanner’s latest Parameters Survey have shown that the majority of paraplanners believe the experience and knowledge gained in a paraplanning role offers vital ‘grounding’ to those seeking to move on to a career as an adviser.
More than three quarters (77%) of paraplanners said they consider paraplanning to be an essential step in the route to becoming a financial adviser. By contrast, just 13% of those surveyed did not deem it necessary, while 11% were unsure.
Among those who felt experience as a paraplanner was crucial, the leading reason was gaining a deeper understanding of all the different aspects of the advice business and the processes involved.
One paraplanner told Professional Paraplanner: “I wholeheartedly believe that the UK Financial Advisory Market would be better placed if the route to becoming a financial adviser was a stepped-route, meaning anyone who wants to become an adviser should work through the ranks of being an administrator first, then paraplanner, then adviser. Anyone can take exams but it takes experience and knowledge to become a fully rounded adviser and surely that can only benefit clients.”
While respondents noted that some of the specific aspects of the role, such as report writing, were not a requirement to becoming a great financial adviser, knowledge around the structure, compliance requirements and different products was vital in being able to present a recommendation report to the client.
One respondent commented: “I think paraplanning solidifies the technical knowledge needed to provide good advice, for example bond/ pension calculations, knowing how different products work and the tax structures.”
The results of the survey showed that taking a hands-on approach to compliance and research requirements can also help advisers better understand timelines and recognise the pressures that paraplanners face. Advisers who have not had this experience can sometimes overlook or forget certain requirements, which means processes and timescales can be unnecessarily elevated, respondents noted.
One paraplanner commented: “Some advisers struggle with the whole concept. Training as a paraplanner would help reduce adviser queries regarding the needs of a paraplanner to make a report compliant. Not only is it good experience but it reminds of the necessary caveats and service around advice.”
The sentiment was echoed by a fellow respondent, who told Professional Paraplanner: “Advisers who have not been paraplanners do not often understand the processes and compliance requirements and so cannot have a realistic view or expectation of the time it takes to produce research and reports. It provides a vital link between administration, technical competence and client service.”
Advisers who have gone from paraplanner to adviser also have a better understanding of what paraplanners need from their advisers to be able to do their job, such as detailed notes and specific client information.
One paraplanner commented: “Paraplanning is not simply an admin role, there is much more to it than that and I think sometimes advisers undervalue the importance of paraplanners and the job that they do.”
Another said: “I think it would certainly help if advisers understood the paraplanning role as well as understand exactly how the paraplanner can assist and provide support. It’s important for them to understand their strengths as well as the paraplanner’s and work together as a team.”
One paraplanner pointed out that if advisers had to go through the route of becoming paraplanners first, it would help reduce the small number of rogue advisers who continue to give bad advice to clients and create distrust in financial services.
Two distinct roles
But while the majority agree that experience as a paraplanner can be invaluable in building up the knowledge and technical expertise to ensure a better client experience, some respondents cited different skill sets required by both roles, while others were keen to highlight that paraplanning should not be viewed as a ‘stepping stone’ to an adviser role.
One commented: “They are two distinct roles. I do think you need some kind of admin or back-office experience prior to the IFA route but not necessarily paraplanning. One should not be seen as stepping stone to another.”
This sentiment was echoed by fellow respondents: “If somebody wants to become an adviser, paraplanning is a great stepping stone for technical skills and gaining an eye for detail but it should not be viewed only as a stepping stone and is a career in itself.”
Another told Professional Paraplanner: “I am not absolutely certain it is necessary but it undoubtedly is a good stepping stone on the journey and helps to cement technical knowledge and compliant behaviours before having to add the extra pressure of giving the advice face to face. At the same time, the two roles are very different and can be said to need different skillsets to be successful. A good paraplanner will not necessarily make a good adviser and vice versa.”
Others said the ability to become a great adviser centred far more upon personality than paraplanning experience and warned that if paraplanning were to become a necessary step in the route to adviser, it could come to be seen as a box-ticking exercise and the quality of work may suffer.
The survey revealed that nearly seven out of ten (69%) paraplanners see their role within paraplanning as their long-term career, compared to just 16% who say they will move into advice. The same proportion (16%) are undecided.
Yet despite the majority of paraplanners planning on remaining within their role for the foreseeable future, 60% admitted that not enough is being done to showcase paraplanning as a career in its own right rather than as a stepping stone into advice.
One paraplanner said: “I wish anybody outside the industry understood the term paraplanning and equally, those in the industry would stop assuming paraplanners want to be advisers.”
The findings of the survey showed that although paraplanners are largely in agreement that recognition of paraplanning has evolved greatly over the past 5-10 years and emerged as a valuable resource within firms, a discrepancy in financial reward between paraplanners and advisers could pose a barrier to further progress.
One paraplanner told Professional Paraplanner: “The respect for the role has increased in recent years, however, given the knowledge and value of an experienced, technically knowledgeable paraplanner, the discrepancy in financial reward between some advisers and some paraplanners is concerning.”
Another called for the salary of paraplanners to be “more competitive” in order to make it more appealing as a career.
One respondent said: “The role of Paraplanner has become more appreciated over the years within the industry, however, I feel it is still overlooked in terms of pay & benefits, and if you do not want to become an adviser there are still very few opportunities to progress in other ways.”
Another added: “Our voice is getting louder and there are people going into schools and careers fairs, which is fantastic, but I think more people could be taking part. When assessing whether enough is being done, it makes it sound like it’s someone else’s job, but this is something we can all be doing.”
Parameters is our monthly survey of the paraplanning community. All registered readers of the Professional Paraplanner daily email are sent an email once a month inviting them to take part. On average the surveys take around 8 minutes to complete. And every month we randomly select the name of one person who has completed the survey to win £50 in Amazon vouchers. Please keep an eye out for our mail and take part.
