Paraplanners say provider admin and disconnect with advisers are blockers to getting the job done. In this article, Jenny Hunter, Senior Financial Journalist at IFA Magazine looks at the findings from The Lang Cat report, focusing on specific questions asked only of the paraplanning profession.
This year The Lang Cat launched its sixth annual State of the Advice Nation (SOTAN) report, and earlier in the year, it shared for the first time, findings relating solely to the paraplanning profession.
We bring you the topics and results, that really shine a light on a core profession within financial services, that, at times, can be overlooked and potentially undervalued.
The paraplanning role
The role of a paraplanner has been historically so difficult to define that the following questions around the role of a Paraplanner were always going to yield important results. The Lang Cat really got to the core of the burning questions that Paraplanners ask themselves, not just when they start out in the industry, but throughout their career. The value of Paraplanners is undeniable and those in the role itself, often consider themselves the glue that holds firms together.
It is always an interesting exercise to find out whether the internal perspective matches the external view, as the following questions demonstrate.
HOW WELL-DEFINED DO YOU THINK THE ROLE OF PARAPLANNING IS WITHIN THE SECTOR AS A WHOLE?
The Lang Cat said: “We can clearly see a significant proportion of paraplanners in our cohort believe there is an important issue with the way paraplanning in general is defined within the sector. This talks to both the adviser/paraplanner dynamic and the provider/ paraplanner dynamic and is probably the most significant message to come out of this section.”
“The findings reveal that half of paraplanners (49%) believe their roles are poorly defined. And, when paraplanner respondents were asked what they see as the main blockers to doing their jobs effectively each day, a disconnect with advisers on what they should be doing, was the second most common response (for 42%). It’s apparent that a clearer role definition on the back of open conversations, therefore, may help to address this significant challenge. Even allowing for some inflation of opinion that one would expect in a quantitative study, this is a concerning statistic for the sector as a whole and one we should collectively work to address.”
“Ultimately, we have over 80% of paraplanners stating they believe their role to be averagely defined at best and poorly at worst. Even allowing for some inflation of opinion that one would expect in a quantitative study, this is a concerning statistic for the sector as a whole and one we should collectively work to address.”
IN WHAT REGARD DO YOU FEEL THE PARAPLANNING ROLE IS HELD?
The Lang Cat said: “We had one suspicion walking into this set of questions, based on our regular qualitative research where we always look to seek a balance of opinions from across the profession irrespective of what it is we are testing. This suspicion was that the paraplanning profession felt it wasn’t held in as high regard or esteem as advisers or planners throughout the industry.”
“We tested those preconceptions against four distinct segments. What we uncovered was that, surprisingly, paraplanners broadly feel they are in fact held in the same esteem among those running the advice profession as they are among platforms and providers. But we can see the paraplanning sector believes it is held in a net negative regard by the regulator, and a neutral regard by the investment arm of the financial services industry.”
What is standing in the way?
The blockages to getting stuff done in the day of a Paraplanner are substantial, but the leader of this particular race lands squarely with third parties – and more importantly providers.
The seemingly ‘computer says no’ attitude of some providers and the standardisation of information packs causes headaches for Paraplanners and Administrators everywhere regularly.
The follow-up calls do nothing to alleviate the pain in most cases, being promised the information in writing in 25 working days for it then to be lost in the post or the email ether.
WHAT IS THE BIGGEST INHIBITOR OF YOU DOING YOUR JOB TO THE BEST OF YOUR ABILITY ON A DAILY BASIS?
The Lang Cat said: “No surprise in that first segment, with provider administration leading the way on blockers to daily paraplanner life. Our in-depth look at servicing throughout 2023 set our expectations for that one.”
“What did surprise us is (a) how closely this was followed by the disconnect between adviser and paraplanner understanding, and (b) how far ahead of technology provider admin was.”
“Aside from better representing a cross-section of views across role types, which is clearly the right thing for us to be doing, this type of insight is exactly the kind of validation we need to keep refining the way we look at the sector. When we observe 40% of paraplanners stating that the biggest inhibiter of their day-to-day working life is clarity of how best they should be working alongside their adviser colleagues (and in the case of the outsourced model, clients), there is clearly work to be done.”
The qualification question
Being in a highly regulated industry means the requirements for qualifications are usually a pre-requisite, and even if it’s not a requirement, it is usually good practice.
In my opinion, all areas of financial services should go through standard examinations, training and qualifications, both initial and ongoing, from new administrators to experienced advisers. A combination of theory and practical is always best as sometimes those CII textbooks can cause more confusion than clarity, but no matter what it looks like, it’s clear that qualifications are important in a Paraplanners career. This is important for their current role, yes, but also it provides flexibility and knowledge should Paraplanners want to transition into other roles within the profession.
The Lang Cat said: “Reinforcing business owner recognition of paraplanners’ contribution – as well as paraplanners themselves – both believe that as a minimum, diploma level qualifications are vital, as well as for those in client-facing roles. There is agreement too that for client-facing roles, a higher level of qualification is needed.”
“We’ve talked a lot about disconnects thus far in this section, but one aspect that does approach a consensus is a view on qualifications needed across the profession. We asked the same question of both paraplanners and advisers/ planners.”
“The majority of business owners and paraplanners believe that as a minimum, diplomas are needed for both paraplanner and client-facing, advice roles. There is also agreement in client-facing advice roles needing a higher level of qualification versus paraplanning roles.”
“Where no qualification needed was stated, these only referred to paraplanning roles and only in a significant minority of cases.”
Will there be robot Paraplanners?
The hype around AI has really accelerated, and rightly so, as the advancements that have been made are quite astounding.
Opinion is divided on whether AI developments will be a threat or an opportunity, but the best way to look at it, is that it could potentially be anything we want it to be.
Will there ever be AI Paraplanners – in some form perhaps? But will they make the human touch and interpretation redundant – that’s probably quite unlikely.
The Langcat said: “The findings show the paraplanning community feeling confident in the face of technological change and in particular, around the emergence of AI . Just under 40% are bullish that it is not a concern or if anything they welcome it and believe it will help their role. The findings suggest this might be in the form of doing some of the heavy lifting around data aggregation and report writing.”
“While other questions in this study hint at an identity crisis of sorts, the paraplanning community exhibits a greater degree of confidence in the face of technology changes, specifically the emergence of AI, with only 3% exhibiting real concern. Over half treat it as a watching brief, with an associated healthy scepticism, with just under 40% bullish that it is either not a concern or, if anything, it’ll help their role. We suspect this is in the form of doing some of the heavy lifting of data aggregation and report writing. The robots aren’t coming for us yet.”
Steven Nelson, insight director and the other co-author, commented on the research: “A deep dive into the profession is long overdue and the fact that findings are split out for different roles including paraplanners, advisers, and business owners is reflected in the report’s new name.”
“The fact that so many paraplanners believe their roles are poorly defined, is a real concern and one that the whole sector must work together to address. There is a clear need for open and honest conversations to ensure firms are making the most of valuable skills and expertise. This is a no-brainer, given that one of the main findings relating to advice firm owners is that workload is keeping them awake at night.”
“On the flip side, it’s reassuring to see so many embrace the potential of tech and AI – particularly if they see it as freeing them up to focus on other priorities.”
Listen up
Steven Nelson kindly joined us on our recent podcast to dive a bit deeper into this research and allowed us to ask him some more in-depth questions.
It was an illuminating discussion, focusing on what could be considered the engine room of financial advice.
To listen in to what he had to say, you can find the podcast on our website here!
