Survey Result: Adviser-Paraplanner Relationship Strengthened By RDR

 

For a role that barely existed a decade or so ago, paraplanning has definitely come a long way.  With RDR, a lot has been said about what advisers can expect but what about paraplanners? Will they become more or less valuable? What do advisers expect from them anyway?

This is why we conducted this survey a few weeks ago, which saw over 140 advisers share their views with us. A big ‘Thank You’ once again to everyone who took part.

So, the results….

 

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Our aims are quite simple; to understand what advisers really expect from their paraplanners and how they see the role of paraplanners changing in the next 12 months.  The results have given us some new insights into how can advisers get the best from their paraplanners. For paraplanners, it provides a clearer picture of what advisers expect and how they can make themselves more valuable  to the advisers they work with

 

Minority Report

There has been an ongoing debate about the value of paraplanners, with some advisers going as far as saying they don’t see the need to use a paraplanner.

Our survey shows that these advisers are in the minority as an overwhelming 89% of advisers use either outsourced or in-house paraplanners. While it doesn’t follow that every adviser needs a paraplanner, there is to be a consensus that paraplanners are a valuable part of a successful advisory practice.

In addition, many advisers who currently don’t use paraplanners intend to do so in the next 12 months and only 7% tell us they have no plans to use a paraplanner in the coming months. We hope this settles that debate once and for all (you know, so we can move on to more important stuff!)

 

Outsourced or In-House?

A clear majority (84%) of advisers keep their paraplanning in-house and intend to keep this broadly so in the next 12 months. There are lots benefit in doing this as the adviser can retain control over how and when their paraplanner works.  However, this is not necessarily right for everyone. As the reality of RDR begins to bite and firms’ margins are squeezed by increasing regulatory costs, advisers may need to re-evaluate this.

Many advisers are already recognising this fact, as we see clear trends showing a significant rise in the use of outsourced paraplanner, with 9% of advisers planning to outsourced some or all of their paraplanning, a 50% rise compared to the current level (6%)

 

Glorify Administrators or Professionals?

Another key debate we wanted to shed lights on is the question of whether paraplanners are  just glorified administrations. The best way to do this, in our view, is to understand the key aspects of a paraplanner’s work, and the level of professional and technical expertise advisers expect from paraplanner.

Off course, report writing and research and analysis stood out,  as majority of  advisers consider this key role of a paraplanner (92% and 97% respectively). No surprise there. Interestingly, many advisers also consider formulation of recommendations (67%), platform and provider due diligence (61%) and documentation/design of investment process (41%)  key aspects of a paraplanners role.  Also, more than a quarter of advisers tell us that than paraplanner sit on their investment committees.

Clearly this is a reflection of how advisers are currently using their paraplanner but are these activities you would leave to an ‘administrator?’

In terms of technical skills and qualifications, 68% advisers expect paraplanners to be as qualified as the adviser, while 18% say the would accept less qualified paraplanners. Interestingly, 10% of advisers expect paraplanners to be more technically qualified than the adviser.

To cement the professional stance of paraplanners, majority of advisers consider paraplanners as either professionals (59%) or semi-professionals/technicians (35%).

 

A Much Brighter Future

So what does the future hold for paraplanners? It appears that advisers are very positive about the future of paraplanners as 74% of them tell us that they expect the role of paraplanners to become more valuable in the next 12 months. Only a tiny 2.2% expect paraplanners to become less valuable.  While there is clearly a brighter future for paraplanners, the real winners are those who are able to take pressure off advisers, especially regards to documenting investment process, platform due diligence as well as other traditional research and report writing.

As RDR and a  fee-charging regime puts pressure on advisers to spend more face-time with clients, they are going to be relying more and more on paraplanners to ‘watch their backs.’  This gives paraplanners are really opportunity to show that they are indeed up to the task.

 

I hope this piece has given you much to think about. Over the next few days, we’ll share some ideas of how advisers and paraplanners can get the best out of their relationship and how providers can support them in delivery great client outcomes in the post-RDR world

 

 

 

 

 

 

Abraham Okusanya
Director
Abraham is the founder of FinalytiQ, a research consultancy for platforms, asset managers, and advisory firms. Recognised as one of the country’s leading experts in retirement income, platforms and investment propositions, Abraham has authored several papers on these subjects and delivered talks to the Personal Finance Society, The FCA and several conferences across the country.

He holds a Master’s degree from Coventry University and an alphabet soup of qualifications, including the Investment Management Certificate, Chartered Financial Planner, CFP and Chartered Wealth Manager designations. He was one of 5 finalists for the Professional Advisers Personality of Year Award 2015 but the award went to a more deserving winner, obviously!

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