Our recent Parameters survey shows that the majority of paraplanners see automation of suitability reports as a boon, when used in the right context, Fiona Bond writes.
Technology has had a significant impact across all industries in recent years and the paraplanning industry is no different.
Four fifths (80%) of paraplanners expect to see suitability reports become more automated as firms increasingly embrace new tech, compared to just 15% who disagree, the findings of Professional Paraplanner’s parameters survey have shown.
A large number of paraplanners surveyed agree that technology and automation can help to release the industry from its administrative burden, with more than a fifth (21%) describing automated reports as “advanced paraplanning.”
As one respondent explained: “I am always being told I can add value in other areas to my advisers and administrators but I don’t have the time given I am doing so many generic tasks. So it would free me up to focus on other things, which would improve me, my team and paraplanning in general to focus on clients and advice.”
Despite this, three quarters (75%) of firms do not currently automate their annual suitability reports, a much higher percentage than the 21% who do so.
One respondent said: “I wish they were (automated) as I currently have 20 to write. Around eight are No Change reports so if we could automate it would save a lot of time but currently it is a lot of checking for money in, money out, fund risks and charges.”
Another said their firm currently uses template-based reports, which are amended by paraplanners based on regulation changes or guidance from the compliance company the firm uses.
Among those firms that already have automation in place, the most popular approach was bought-in software, which was cited by 55% of respondents. This was followed by proprietary software, which was used by 36% of paraplanners. Interestingly, none of the firms surveyed by Professional Paraplanner currently use bought-in AI systems or generic AI such as ChatGPT.
When asked how they feel about reports becoming more automated, 43% of paraplanners described the shift as “inevitable”, however 28% admit they are wary of the development and the same number said they believe reports need to be written bespoke for every client.
“I understand the need to streamline processes but I think there’s so much risk in automating something so important,” explained one respondent.
The sentiment was echoed by a fellow paraplanner, who commented: “Suitabilities have so much room for error if you allow them to be generated by something other than a human being. They should be personal to the client, written by someone who knows the client and their circumstances.”
More than two fifths (42%) of those surveyed said that while automation is acceptable for some clients, it should not be used for high net worth and more complex cases.
According to one respondent, automation is “great for the repetitive, simple advice but more complex advice will inevitably require personalisation.”
The survey also showed that while more than a third (34%) welcome automation they are wary of artificial intelligence.
One respondent commented: “As in many industries, technology and AI is replacing us. I think many firms may well start to use, or increase their existing use of, automated processes and reports. I’m not convinced that this will be in the best interests of the client and you could well argue that fees should be reduced to reflect the lack of bespoke documentation.”
Another added: “I see the potential and would welcome ways to make report writing quicker but I’m aware we have privacy and accuracy issues around AI. The adoption of even basic tech in advice businesses with legacy assets seems fraught with issues so I’m not optimistic it will be useful for anything other than very small or new firms any time soon.”
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