Here’s an intriguing question for some of your more historically minded colleagues during a quiet lunchtime, suggests Michael O’Toole, external communications manager at Canada Life UK: what has been the biggest change to the industry over the last 20 years?
By way of an answer, you’ll probably get some mix of:
- Retail distribution review;
- Pension simplification;
- Regulatory body changes
- Pension freedoms;
- The rise of platforms.
But will anyone mention paraplanners? Probably not.
Yet, it’s reasonable to argue that few things have changed the industry as much in the last two decades as the introduction of paraplanners.
There’s also a good chance that some of the biggest changes are yet to come.
Becoming indispensable
Paraplanners, largely, didn’t exist as a group 20 years ago – or, at least, they weren’t called that. There’s always been someone in the back office helping, of course, though for many years it was (and maybe still is) an adviser wearing a different hat.
There was, however, a relatively slow realisation across the industry that there are benefits to having a specialist behind the scenes to do that part of the job. But the subsequent rise of paraplanners has gone largely unremarked, occurring quietly in a way that belies the scope of what they’ve actually achieved.
Recent research by Canada Life provides the evidence. In a survey of some 200 advisers, only 8% saw paraplanners as not adding any value. That’s a tiny figure – and one that has fallen by a third in the last year alone.
You could hazard a guess that many in this minority have had little experience of using a paraplanner anyway – and it’s possible they are converts just waiting to happen.
According to the same survey, paraplanners have made themselves indispensable by helping advisers focus more on their actual job.
- Nearly two-thirds (65%) of advisers say paraplanners free them up to concentrate on more valuable activities;
- Just under half (47%) say they add value in non-financial ways. For example, by researching different options for the adviser to consider;
- Three in 10 (29%) believe that paraplanners add significant value to a client’s financial strategy.
Put another way: on any given day, a paraplanner could, among many other duties, be researching which bond works best in which international jurisdiction, crunching numbers on the overall inheritance tax strategy and keeping up to speed on the latest regulatory changes, thereby enabling advisers to focus on retaining and increasing their client base.
Expanding the role
This is a key moment in time for paraplanners. While much of the hard yards has already been done in terms of establishing themselves as a credible, authoritative voice in the industry, what we are seeing is a big opportunity to redefine and expand their role even further.
But the most interesting part of this is, it’s the advisers who are often the ones keen for paraplanners to do more – be it taking on a greatly increased planning role or even to start meeting with clients (if they haven’t already).
These opportunities are already being reflected in the workplace. Some firms are reporting a ‘split’ in the roles paraplanners are performing, as the job moves away from being entirely back-office based.
By the way, we should also be clear that it’s time to finally put to bed the idea that being a paraplanner is just a stopover on the road to being an adviser. For many, being a paraplanner is the goal.
They’re happy in the back office, bringing their planning and analytical skills to a financial strategy (and, like advisers, grappling with the requirements of life-long learning as the rules and opportunities change).
Others will grasp this opportunity to further blur the lines between themselves and advisers – and enjoy a hybrid role that brings out the best in their skills.
In demand
Perhaps unsurprisingly, demand is outstripping supply, with several firms reporting difficulties in recruiting paraplanners.
Currently around half of financial adviser firms employ at least one paraplanner. That may not seem like much, except that a further 30% of firms are expecting to employ a paraplanner (or a paraplanning service) in the near future.
For paraplanners this could be a golden opportunity – in demand and in the driver’s seat, when it comes to defining what their role should be.
Time will tell how many grasp this chance.
