If you’ve been reading the headlines over the past 18 months – from QAR reforms to AI advancements – you might get the impression that it’s all doom and gloom for the future of paraplanning.
For example, you probably heard that advice document lengths were going to be significantly reduced and could soon be completed by anyone with basic financial knowledge and a laptop. Cue the December release by the Government and it appears the SOA is here to stay.
So: for now, at least, there won't be any significant reduction to the SOA’s length or the requirements within.
Was this a massive relief for paraplanners? Not really. Are our fingers crossed that the SOA continues to be more convoluted and wordier than necessary? Definitely not. We’ve seen many changes to the industry and SOA standards over the years; the experience and knowledge required has remained consistently high throughout that time.
This is because paraplanning goes far beyond basic data entry. We don’t just tick a few boxes and edit a Word document; anyone who does is probably not going to survive in the new world of advice creation. Paraplanners possess a wealth of knowledge about financial products, compliance requirements and industry best practice that advisers are now tapping into.
A broader view
External paraplanners are especially well-placed to assist these advisers because we see a wide range of clients, strategies, products and processes that many practices don’t encounter often – purely due to the sheer volume of work we complete.
As the focus shifts from the advice document to the comprehensive client file, the demand for experienced paraplanner services is growing significantly. Any paraplanner will tell you that they have never been busier.
Why? Because advisers are leaning on our profession more and more, not simply for advice document creation but for product research, comparisons, strategy discussions and ensuring that the entire file (not just the advice document) is compliant. The level of support we can provide here allows the adviser to focus on client meetings.
Strategy-formulating discussions are the important first step. They enable advisers to hand over their client information and discuss the possible strategies they’re considering. The paraplanner can then complete the financial modelling which helps identify any potential additional strategies that may benefit the client and were missed on the first pass.
Assessing tax benefits or Centrelink entitlements can be near-impossible without completing the modelling. Once the overall strategy has been confirmed with the adviser, the paraplanner can then research product comparisons and prepare alternative strategies.
An evolving profession
Over the longer-term, a paraplanner who’s across the client’s situation (and has written SOAs for that client in the past) can facilitate more efficient and timely delivery of ongoing advice and future strategies. Not needing to provide a background to the client every time a new piece of advice is required saves the adviser time and ensures the advice is consistent and reflective of any previous goals the client has expressed.
The benefits of the paraplanning function, then, will persist even if advice documents do end up being trimmed in future legislation. In fact, as I said above, the demand for experienced paraplanners is stronger than ever.
Of course, the financial services industry is constantly evolving – and paraplanning is no exception. We must continue adapting to new legislation and technology as it arrives and adjust our service offering to stay ahead of the curve.
At this stage, though, I think it’s fair to say that the reports of paraplanning’s death have been greatly exaggerated.
Advisely Board