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Paraplanners and technology key to adviser business success

21 December 2018

Paraplanners and the introduction of new technologies will ensure the long-term success of advisory firms, says Mark Harman, CEO at cashflow modelling provider i4C

It is not news to the profession that the numbers of advisers in the UK is relatively static but that the number of people needing financial advice in the next 5, 10, 20 years is set to grow significantly. This leaves a substantial advisory gap, which we believe will be partly filled by automated advice, but also by the adoption of enabling technologies that will allow firms to provide a richer and deeper client experience more effectively and efficiently.

At the same time, clients are going to need true lifetime planning and not just the traditional investment advice of the past.

When clients seek out a financial adviser for the first time, often their primary focus is how to invest money wisely and ensure they secure good returns over the course of their lifetime. While investment returns are important, the planning process is taking a more holistic, lifestyle-led approach, considering all aspects of the future resulting in the longer-term financial wellbeing of clients and their families. This isn’t just about having enough money, but rather about clients having the confidence to live the life they want, even when things may not go to plan.

Using skills and software

The firms that are succeeding in light of these changes are those that are embracing technologies and using the whole range of skills within the advisory firm to optimise the client experience and the quality of advice. The role of paraplanners in this new environment is crucial and this role increases in importance as firms evolve. While the adviser will sign off on the advice, often it is the paraplanner who is constructing the advice, supported by technology as a key enabler.

The paraplanner’s involvement, particularly at the research and planning stage before client meetings, allows the adviser to focus more of their time on ‘softer’ client engagement activities. This will include building relationships, establishing goals, educating the client on the pros and cons of a course of action and demonstrating the value of the service.

By using financial planning technology to build and stress-test planning options in advance of client meetings, paraplanners are in a strong position to pre-empt possible points of conflict and decision points within these plans. It allows the firm and adviser to confidently provide a range of options for the client to meet varying goals and aspirations.

Armed with this upfront thinking, advisers are in a much stronger position to answer a large proportion of the client’s questions. By working with the client to build a projected life plan and examine potential ‘what-if’ scenarios, the firm can ensure that clients are fully invested in the process and understand the reasons behind the advice given. Cashflow modelling should be a live and interactive part of an adviser/client meeting and the role of the paraplanner in building models in advance is crucial.

By using paraplanners’ skills in this way, firms are able to free up advisers’ time to service an increasing number of clients. In addition, with pressure on financial planning fees, using a firm’s full skills base is an optimal way to allow firms to deliver long-term profitability.

While financial planning technology also has a vital role to play in the process, its evolution has often been accompanied by warnings that it will have a damaging impact on the roles within firms. However, the use of enabling technologies helps firms move to a model where the paraplanner contributes to a much larger proportion of the advice process. As a result, the number of paraplanners needed by the industry is rising.

It is again nothing new that firms should invest in their paraplanning teams and always be on the look-out for new recruits to enable growth. But they also need to make sure those paraplanners are armed with the best tools available to optimise the quality of advice that they are able to contribute to the firm and their clients.

First published in Professional Paraplanner January 2019 issue