In this the second of a two-part series of articles looking at the role of the paraplanner, Sue Whitbread considers how effective integration of paraplanning can contribute to the success of a financial planning firm
Last month, we looked at how effective use of the paraplanner role can be a key business driver.
But what exactly does the role entail? Broadly, it can be broken down into four main areas.
- Preparing and maintaining the client file
- Preparing recommendations
- Implementing recommendations
- Review
However, the application of the role will differ from practice to practice. Also, let’s not forget there are also some excellent outsourced paraplanner businesses in existence too.
Delivering the service your clients will love
Unfortunately, many advisers operate inefficiently, typically spending too much time on tasks which they are not best suited to. Over the past decade, survey after survey has pointed to advisers not spending enough time with clients and many often focusing their time on areas that their clients don’t actually value. This compounds the problem in today’s world, where clients’ expectations are high and becoming higher still. They need to see clear evidence of real value for money – and this extends well beyond investment performance. It’s about service. And that’s where paraplanning can make such a big difference.
Traditionally, advisers have spent much of their time preparing the plan, dealing with the implementation process and researching or making decisions about products. However, on the flip side, they often fail to allocate the same time to reviews and the ongoing service and relationship management – aspects which clients typically value very highly. Many businesses have built a dependency around the adviser having to deal with all the client’s needs themselves. This is impractical, inefficient and in a number of cases simply results in poor client service.
Some businesses face challenges where revenue is perhaps staying flat or not increasing at the same rate as costs. This often coincides with an adviser spending perhaps only 30-40% of their time with clients. For a few notable advisers this might be just enough but imagine if this time could be doubled and full value of the time recovered for the business. On the one hand the business becomes more effective, whilst on the other the adviser gains too. They can focus on the areas in which they have the greatest skill and aptitude – in client relationship management – with paraplanners providing invaluable support to the process. This has the combined effect of increasing productivity and decreasing the risk to the business. It also extends the client’s contact to a broader section of the team so that the business is looking after their needs more effectively.
Breaking down the planning process
The financial planning process can be broken down into the following steps:
- Meeting the client, establishing a relationship and defining their goals and objectives
- Gathering the client’s data
- Analysing the data
- Presenting the plan
- Implementation
- Service and review the plan
When looked at in this way it becomes clear how the process can be split up or shared, depending on the skill sets and experience of the individuals involved.
As a slight aside, let’s consider psychology and the working of the brain. Each of us tends more towards left or right brain behaviours. The left brain is responsible for logical thinking whilst the right allows for more creative thinking. It is very unusual for people to be strong on both sides. Historically, the adviser role has required individuals to do just that – be strong in both disciplines. Indeed, this is has led to many of the problems encountered. Splitting the process between adviser ( arguably more right brain orientated) and paraplanner ( more left brain?) allows the business to de-risk, improves productivity and profitability. Just as importantly, it releases individuals to do those particular parts of the process which they enjoy most and where they have the greatest skill and aptitude.
A key challenge remains in changing attitudes and behaviours. Teams which specialise should flourish as they benefit from working better together and generating better results than they can do individually. They understand the benefits and excitement of delivering an effective financial planning service and are rewarded by greater profits and more satisfied clients. Finding and motivating talented people still remains one of the biggest challenges but the role of the paraplanner offers us a vision to the future.
A Paraplanner Case Study – Creative Wealth Management
To explore how the paraplanning function works in practice within an established business, we are grateful to the team at Creative Wealth Management for their help. Very kindly, they have worked with us to provide the following case study as a snapshot of how their business operates in this key area. And as a business which combines the use of outsourced paraplanning with their own internal team of paraplanners, it’s a useful insight into how they manage the different processes involved in order to contribute to overall business success.
