In the first of a two part series looking at the role of the paraplanner, Sue Whitbread looks at how effective integration of paraplanning can contribute to the success of a financial planning firm, and Damian Davies gives practical tips on how to work with an outsource paraplanning firm.
With autumn here, most firms will be thinking about preparing a strategic review of activities. Now is a great time to consider what makes your business tick and how you can make it even better for you and your clients into 2018 and beyond.
One key factor is having an effective team in place – and this includes the use of paraplanners and support staff. Most advisory firms will recognise that the delivery of an effective, integrated financial planning service means having a great team in place which has a complementary skill set and works well together. Gone are the old days (thank heavens) when advisers would typically carry out most of the elements in the business process themselves, with the lucky ones having just one or two support staff to help with the admin tasks. It is now well accepted that embracing the paraplanner role has a positive impact on a firm’s ability to innovate, on reducing its overall business risk, on boosting profitability and on enhancing clients’ experience too.
The paraplanner role
Paraplanners are very much involved in the delivery of the financial planning service, whether it’s carrying out cash flow modelling or due diligence/ research, using the specialist skills of a paraplanner whether in-house or outsourced. This helps the adviser to streamline the service proposition and focus their time and effort on building and nurturing the all-important client relationships
Perhaps not so obvious are the benefits which paraplanners provide by establishing a valuable sounding board for advisers and planners. They can challenge proposals, clarify technical issues and discuss alternative planning solutions, all of which really help to improve the quality of service and advice which the client receives. Creating financial plans and client reports, conducting research, analysis and due diligence are time consuming tasks that require a specific skill set. Knowing that these tasks are being handled efficiently and effectively by team members or outsourced experts who have that skill set, can help to reduce business risk and is great for advisers too. It means that advisers can maximise their time in direct client facing work. This is all positive for client retention and business profitability too.
A powerful resource
Across the UK, paraplanners have been building an impressive and dynamic community where they share ideas and best practice in the same way as planners and advisers have done for many years. No longer is paraplanning simply seen as a route to becoming an adviser, rather it is a strong career choice in its own right. More and more paraplanners are gaining level 6 qualifications such as Certified Financial Planner or Chartered Financial Planner titles and many have more qualifications than the advisers they work with.
However with many firms finding that good paraplanners are in short supply, it is difficult to recruit suitably skilled and qualified individuals. One option gaining in popularity is the use an outsourced paraplanning solution. This can be very attractive for those who decide that an in house facility is not feasible within their business for whatever reason. However, what are the practical considerations of using an outsourced solution? Whether you are already using one or considering it for the future, we’ve asked Damian Davies of the Timebank to explain some of the steps you can take to ensure that the relationship runs smoothly and that you get the best possible results for your clients and your business. Next month, we’ll take a look at in-house paraplanning and get the practitioner view on how your team can improve the way you work together for optimum success.
Outsourcing Paraplanning – A guide for advisers and planners – Damian Davies, The Timebank.
This is going to be the most thrilling article you have read on anything to do with financial services, so fasten your seatbelts.
I am going to outline things to think about before engaging an outsource paraplanner as well as give some useful tips on how to manage an outsource relationship successfully.
In short, I am going to change your life. Firstly, I want to bust some myths:
- “Outsource Paraplanning is cheaper” – The cost is about the same, the difference is you pay for what you use, so it is probably a bit more efficient.
- “Outsource Paraplanning is better” – Outsourced paraplanners tend to have wider knowledge, as they come into contact with so many firms, but they will not know the nitty gritty that makes your firm unique.
- “Outsource Paraplanning is easier” – this depends on how you engage the paraplanning business, but it could end up being a lot harder than employing someone!
Things to think about before engaging an outsource paraplanner:
Decision 1
- OPTION A – Do I want an outsource paraplanner to do things the way I do them?
Or
- OPTION B – Do I want an outsource paraplanner to do things the way they do them?
Your natural instinct will be Option A, but it is worth being open minded about Option B too.
Think about it this way; a business delivering financial advice has so many disciplines that are already outsourced similarly to Option B; investment, compliance, book-keeping, marketing, HR.
Paraplanning businesses only do paraplanning so they should be pretty good at paraplanning. If they have a view on best practice it is always worth listening to it.
For Option A to work well, a firm needs to commit to the same levels of training and management as they would with an employee, and sometimes more if there isn’t strong documentation around processes and procedures, which is why I said it could be harder work to outsource than to employ.
Decision 2
Option A – Do I want to outsource to a freelance individual?
Or
Option B – Do I want to outsource to a paraplanning business?
Whichever way you go, create a checklist of things to confirm with the potential partner:
- How do the fees work?
- What coverage is there in the event of illness or absence?
- What PI[1] is in place?
- Where do responsibilities between the paraplanners and the advisers begin and end?
- What qualifications or specialisms are held?
- Is there compliance with appropriate data protection and information security requirements?
Paraplanning businesses tend to have more resources than freelancers, but freelancers tend to be more flexible to pop into the office regularly or take on more responsibility like talking to clients.
Useful tips on how to manage an outsource relationship successfully
1 – Manage the relationship.
Treat the outsourced partner as part of your team. It is the only way to make everyone go in the same direction.
2 – Monitor targets
Set targets for productivity, turnaround times and quality. When people work to targets, there can be no discrepancy in expectations from either side.
3 – Communicate with your existing team.
If you bring in an external resource you need to talk to your team and engage them in the decision. Think about it from their perspective. You may decide to engage an outsource paraplanner as you want to free up your employed paraplanner to do more exciting things. If they don’t understand the reasoning behind the decision, however, they can find themselves feeling threatened and thinking you want to replace them. Also, think about the impact on advisers and administrators and talk about any potential changes to the dynamics of the team.
Done well, outsourcing can give you the additional resource to achieve your business goals more quickly than you could do yourself.
1] Remember to check if the PI includes regulatory functions or not. At the very least, there should be a policy to cover the services delivered.
About Damian Davies
Damian established The Timebank in 2003 after being an adviser and discovering the need for outsourced paraplanning first hand. Since then Damian has directed The Timebank to be the largest Paraplanning provider in the UK and is starting to grow the business internationally.
