As the New Year begins, Michelle Hoskin, Standards International, has paraplanners on her mind. In her latest article, Michelle reminds us not only of the value which paraplanners bring to the advice business but some of the factors involved when deciding on an in-house or outsourced paraplanning approach.
Ah, the world of financial planning! As we end another year and look forward to 2024, ours is a landscape that’s ever-changing, ever-challenging, and ever-rewarding. But let’s not forget the unsung heroes who make it all possible: the paraplanners. These are the individuals who dot the Is and cross the Ts, ensuring that financial plans are not just good, but exceptional.
So, the question arises: should you have these invaluable assets in-house or should you outsource? Let’s dive in.
The evolving landscape of financial planning
- Increasing complexity: With the advent of new financial products and regulations, the role of a financial planner has become more complex than ever.
- Need for specialisation: This complexity necessitates specialised roles within financial planning firms, and that’s where paraplanners come in.
What is a paraplanner?
Paraplanners are not merely financial planners in training; they are specialists in their own right. They are the architects behind the scenes, laying the foundation upon which financial planners build. They handle everything from data gathering and analysis to preparing financial reports and recommendations. So, what’s the best way to incorporate these specialists into your firm?
In-house paraplanners: pros and cons
As I see it, the pros of using an in-house paraplanner are:
- Seamless communication: Having a paraplanner in-house means they’re just a desk away. The ease of communication can be invaluable.
- Control over client data: When your paraplanner is part of your team, you have more control over client data, ensuring it’s handled with the utmost care.
- Company culture: An in-house paraplanner can be fully immersed in your company culture, which can be a significant advantage.
But, on the flip side, some of the main arguments against using in-house paraplanners are:
- Overhead costs: Salaries, benefits, office space—these add up.
- Training requirements: In-house staff will need ongoing training, another cost to consider.
- Limited scalability: If your firm grows, your in-house team will need to grow, and that’s not always feasible on short notice.
Outsourced paraplanners: pros and cons
It’s a different proposition but the main pros of outsourcing your paraplanning needs are:
- Cost-effectiveness: You pay for the service, not the overheads. Simple as that.
- Scalability: Need more hands on deck during the busy season? Outsourcing can provide that flexibility.
- Broad skill set: Outsourced firms often have paraplanners with diverse expertise, offering a range of skills that you might not find in-house.
When it comes to the cons of outsourcing, the main ones are:
- Communication Barriers: Emails and video calls can’t replace face-to-face interactions. Are you willing to compromise on that?
- Data Security: Outsourcing means your client data is in someone else’s hands. How much do you trust them?
- Company Culture: An outsourced paraplanner won’t be part of your daily office life, which could be a cultural loss for your firm.
Training and development: in-house vs. outsourced
Training is a non-negotiable, whether your paraplanner is in-house or outsourced. The financial world is not static, and neither should be your team’s skill set. In-house training programs can be tailored to your firm’s specific needs, but outsourced paraplanners often come with a broad range of training and skills and may require less time to get up to speed.
The role of AI in paraplanning
Artificial Intelligence (AI) is not the future; it’s the present. AI can handle routine tasks, freeing up your paraplanners for more complex activities. But can AI replace the human touch, the nuanced understanding of a client’s needs and fears? That’s a rhetorical question, by the way. The answer is a resounding “No.”
Data security: safeguarding client information
Whether you opt for in-house or outsourced paraplanners, data security is paramount. In-house may offer more control, but it also requires a robust IT infrastructure. Outsourced services often have stringent data security measures, but you’re placing trust in an external entity. It’s a delicate balance, one that requires careful consideration.
In-house or outsourced, each option clearly has its merits and drawbacks. The paraplanning route which you decide to take should align with your firm’s goals, culture, and operational needs. Training, the role of AI, and data security are not mere footnotes; they are critical chapters in your firm’s story. So, what will it be? The comfort of in-house familiarity or the allure of outsourced expertise? The choice, dear reader, is yours to make.
Recognising the Paraplanner Standard
At Standards International, we’ve witnessed firsthand the transformative power of the paraplanning profession. Recognising its significance, we’ve crafted The Paraplanner Standard™ of Excellence, a certification scheme designed to elevate the role of paraplanners within the financial planning industry. This standard not only acknowledges the critical role paraplanners play but also provides a framework for their development and recognition. To learn more about how The Paraplanner Standard™ can benefit your firm and your paraplanners, download our brochure here.
