AI will enable one paraplanner to do the job of 10, according to software vendors. What’s behind the claims for the technology and how might AI impact the paraplanning role? Rob Kingsbury writes.
At the recent FTRC Empowering Advice Through Technology conference, software vendors vied to demonstrate how their technologies can help financial advice firms operate more efficiently and cost effectively and provide better outcomes for clients.
This year, Artificial Intelligence (AI) capabilities were very much front and centre, with some impressive claims being made for its use.
Notably, for paraplanners, vendors demonstrated how AI can take data, recordings from clients meetings and voice notes to quickly deliver suitability and annual review reports.
Alan Gurung, founder of Advisoryai, demonstrated how AI can help automate suitability and annual review letter processes, saving an adviser around 240 hours a year, an estimated £30k per adviser per year.
Gurung said: “Currently, on average it is taking around two hours to write a suitability letter from the fact find, at a cost of around £300 if outsourced. We believe that is a problem of the past.
“We can create a suitability report in under 10 minutes. Now, one paraplanner can do the work of 10.”
Ian McKenna, founder of FTRC, believes AI will rapidly impact the advisory market, and be a huge enabler, creating efficiencies, reducing costs and will make it viable for financial advice firms to serve a far greater client bank.
At the conference, he issued a stark warning to the industry: “AI is going to change every single business, across all industries. Businesses who use AI will replace businesses who do not. Advice firms who don’t employ AI will work far harder than they need to, or more likely, they will cease to exist.”
There will be a need for fewer paraplanners, he warned. “If I were paraplanner, I would start becoming a data specialist, or I would become the tech expert in the business. It will become less and less not what you know but how well you can pose the right questions to get the best from AI.”
But it’s not all as the techies see it
Shooman Perry, co-founder of PlannerPal, demonstrating AI-driven systems, showed how the technology can take a voicemail from an adviser about their conversation with a client and turn it into a searchable transcript for paraplanners to use, while also creating a follow up email to the client as well as other documents. Having this richer content from the adviser, can greatly help paraplanners to know exactly what the client wants and the soft facts needed to help personalise a suitability report.
He believes technology can be used to complete simple suitability and review documents and the company will be delivering its own suitability report capability in the near future.
But he sees a continuing need for paraplanners.
“Suitability reports are more nuanced and require expert judgement to get them right, which means there will continue to be a need for paraplanners,” he argues. “I look at it like flying a 747 Jumbo jet. For most of the flight the plane is being run by technology, the autopilot, but there is always a human pilot on board and it is the pilot who takes off and lands the plane, especially when there are high winds blowing.”
Paul Miller, chief information officer at adviser network IWP, likewise sees a need for human oversight when using AI. “Certain things we need to keep control of,” he said. “We can take away 80% of the work that paraplanners do but I would want a human overseeing the process.”
Alan Gurung says he also sees the need for paraplanners. “Our system is designed to take on the ‘grunt’ work of the paraplanner, whether that is for straightforward or complicated cases. So it can analyse and cross-reference documents in a matter of seconds and produce a personalised report within minutes, but there will be a need for a paraplanner to review and sense check the final document. As is the case with any AI application, the future of AI is the human-in-the-loop,” he says.
Gurung explains how the software works. “Think of it as inputs and outputs. If we take a pension consolidation case as an example. The paraplanner or administrator will upload the recorded meeting between the adviser and the client, or the adviser’s voicemail or typed notes, and the documents from the relevant pension providers and relevant information from the adviser’s CRM system. The software transcribes and analyses the meeting notes and the fact find, identifying the client’s goals. It then analyses and cross-references the information in the documents and produces the report.
“The paraplanner doesn’t have to read all the documents anymore, they just upload them to our platform, whether that is a pdf, email or Word document. The documents will be read in seconds and a report delivered in minutes.” The software can also read and cross-reference cashflow forecasting data and include everything in the end report.
“One of the adviser firms we are working with wanted to start with a pension consolidation case. What use to take them anything from one to two days to complete, we automated in about 30 minutes. The paraplanner then had to review the output for another 20 minutes or so.
“The software isn’t speeding up your work, it’s doing the work for you. And while it’s doing that, the paraplanner can get on with other more value-added tasks.”
In terms of reviewing the report, the software has a citation system, showing from where in the documents each piece of information has been obtained, so the paraplanner can easily check the output against the source document.
The software also uses reinforcement learning to improve what it does, through feedback from corrections or amendments and over time will adapt to the tone of voice preferred by the firm.
Currently, the platform can process around five to six reports at a time. “This can make pipelines of reports waiting to be written a thing of the past,” Gurung says.
“Paraplanners have been through rigorous exams to achieve their qualifications and get to the position they are in. So, is their time best spent writing 30 page reports, most of which may not even be read by the client? By automating the processes we can free up paraplanners to focus on where they deliver most value; assisting the adviser, enhancing the client relationship and ensuring the client gets the best outcome.”
The result of automating a large part of the paraplanner role, he says, will be that financial planning firms will be able to deliver advice faster and at lower cost to their business, increasing margins. Competition will then start to drive down the charges to the end user.
Paraplanner view
Dan Atkinson, head of Technical at Paradigm Norton Financial Planning, says the firm currently has a ‘thought experiment’ running, considering how the financial planning firm of the future might look, including AI, but overall the firm remains “cautious” on the technology.
“I’ve heard of companies who are incorporating AI into their business processes but there are clear caveats to how it can be used; entering client data into a publicly available generative AI is clearly not something anyone should be doing.”
As to how AI might impact the paraplanning role, Atkinson says: “I think it will really depend on what you do as a paraplanner. If it is simple report writing, working to templates, entering standard paragraphs and figures, and the role is measured on how many reports a paraplanner can get out in a day, then I can see how AI could be used to automate that kind of work. That role may disappear.
“But if your paraplanning role is much more technical than that, much more advice generative, then the way you view your technology stack and AI as part of that is very different. Then you’re looking at it from the perspective of what tools can I use to do the job better, seeing which elements a machine could be doing instead, so I can concentrate more on the bits of the role that add value to the client.
“A professional paraplanner should view AI as a tool that is going to help them access information, and help up their game with communications, and to get to better outcomes for clients.”
He adds: “If as a paraplanner your role is enabling financial planners to help clients live the life they want to live, and giving them peace of mind, then I don’t believe you have anything to fear, at the moment.
“Long term, AI might be able to do that, but I don’t think necessarily, that people will want an AI to do it. Some people may be happy interacting with an AI but there’s plenty of research out that that says even the more tech savvy still prefer to deal with a human being.
“So, I think a paraplanner who views their role as providing humanity across a raft of really technical and complex information, will be fine. But what they need to do is start planning for what AI can and can’t do, what are the concerns, what controls need to be in place, and how do they learn to equip themselves to be ready for the changes as they arise.”
Conclusion
There is plenty for paraplanners to consider around AI and how their role might change over the short and long term. Some key questions are:
- How soon will AI start to impact the paraplanning role? It already is.
- Do paraplanners need to look at where they sit in the value chain for clients? Yes. The nature of these changes means that administration and paraplanning roles are likely to be affected, potentially with fewer needed per firm to achieve the same level of output.
- Will paraplanning be fully completed by machine anytime soon? Commentators think not; even the software vendors acknowledge a need for some human interface.
- Should paraplanners be learning more about AI and how it will be implemented in financial services? Yes. The CISI offers the Certificate in Ethical Artificial Intelligence, a 12-hour online course ‘to help understand the fundamental ethical and management issues in the deployment of AI in financial and professional services’.
It seems fairly certain that the role of paraplanner will change as AI becomes implemented in financial advice businesses. How and when (but not if) will depend on individual firms.
Hence, paraplanners will do well to think ahead in terms of their career. Becoming the data or tech experts suggested by Ian McKenna is one route. But people sit at the heart of financial advice and as Dan Atkinson points out, it’s the humanity in the role with which people engage and on which paraplanners invariably thrive and should focus.
What happens if and when people become more used to and comfortable with interacting with AI on a more sophisticated level, will have to be seen.
For the moment it’s keep calm and carry on… but keep one eye firmly on what’s coming down the road.
What are your views? Email: [email protected]
