Chris Smallwood Commentary for Money Marketing - 'Virtual Reality'
Nobody would doubt that AIFA and IFP, amongst others, are doing a great job at the moment in terms of helping IFAs bring some key issues to the fore in what has got to be one of the most challenging climates ever experienced. And, I for one would wholeheartedly agree with the IFP's recent comments on the 'pivotal and vital' function that paraplanning has in an RDR world. But what was perhaps missing, or mis-understood in their mantra was the fact that this does not necessarily mean that we need more paraplanners, more investment in training them or indeed any more costly human resource to achieve the very same objectives.
Whilst the role of the paraplanner is becoming more and more important, with RDR and TCF requiring more in-depth research, reporting and reviews; all this can weigh very heavily on the already growing cost burdens of many smaller IFA businesses. So what is the point of taking on more staff to do this when there are perfectly good technology-led alternatives that can do all of this work, often a great deal better and cheaper?
Choosing this route not only does makes fiscal sense, but on a broader commercial level, it also means that some of the very highly competent and qualified paraplanners can then be up-skilled to become fully qualified advisers in their own right - thereby contributing to their own and their firm's revenue, rather than unnecessarily sapping it.
Using a centralised team of chartered specialists on tap (and not requiring hefty full time salaries), along with dedicated technology which can re-use client data for all the necessary letters, reports and reviews, has got to be the better option. The technology-led alternative provides for a much more efficient, automated and streamlined way of doing business. And, with minimal room for human error, it also ensures a straight-through process which makes light work for any compliance officer or regulator when it comes to any reviews or inspections.
So whilst I totally agree with the IFP's comments that paraplanning (but not 'a paraplanner') "can make a huge impact on a business and really help an adviser focus on the client", why spend unnecessary money on employing more staff to achieve this when it just isn't necessary. Isn't that what streamlining a cost efficient business is all about?
In our business many of our advisers write lots of £100,000 plus investments, and those above £250,000 are always supported by our paraplanning team; who then work closely with the advisers after the initial financial planning meeting right through to the final recommendations. This approach provides a safe environment for the client's investment, whilst also reducing the risk to advisers and importantly, removing the need for additional and often expensive PI insurance.
And although we all must appreciate that day to day business levels vary and there are times when an extra 'pair of hands' would prove invaluable, the more savvy advisers can now do this with a 'Virtual Administrator Service'. Available on tap, this provides full administrative support to package business cases electronically - complete with suitability reports and compliance approval.
Of course clients perceive much greater value around spending time face to face with their adviser, helping them achieve ongoing goals and having options properly explained, so building a trusted relationship. But employing additional staff for the paraplanning function needed to allow advisers to do this is simply an archaic route to take. What is the point in having all the high-tech, on-tap, scaleable solutions at our fingertips if we still revert to costly and outdated methods of achieving this. This is the 21st century after all!
* Reproduced courtesy of Money Marketing