I first got the idea to set up an outsourced paraplanning business after looking at the Australian market.

Having lived in Australia for a while, I saw that paraplanning was really booming over there, and that outsourced paraplanning in particular was the default model. So I borrowed that idea and set up the business that ultimately became The Paraplanners in 2002.

We were the first outsourced paraplanning firm in the UK, closely followed by Damian Davies at The Timebank.

We now work with about 41 firms, most of which are smaller owner-managed directly authorised firms with one to five advisers. Our average firm relationship is over seven years, and we still have two clients that have been with us since day one – we’ve been working with those clients for 19 years now and still going strong.

The so-called ‘rise of the paraplanner’ has been going on for about 10 years, and I think we’ve gone beyond that now. Paraplanning is an established and recognised part of the advice profession, and rightly so.

No one knows for sure how many paraplanners there are in the UK, because there isn’t a register like there is for advisers.

Back when I was on the board of the Institute of Financial Planning (or IFP, as it was then), about 10% of the community were paraplanners ,which I think is pretty consistent with where we are now. So our best estimate is there’s about 3,000 to 3,500 paraplanners out there. New firms are popping up all the time as well, which is great to see.

The perfect suitability blend

When it comes to suitability report writing software, I know plenty of people who use Genovo or ATEB, and in my opinion they’re probably the best ones out there. So if you’re looking for an off the shelf solution it’s worth having a look at those.

We actually went a different route and built our own system, originally based around Microsoft Office and now based on Google. While we have a library of standard text we use, I’m never happier than starting with a blank screen. I like writing free text, and find it more personal.

The trick of good paraplanning is embedding that personalisation. That way a client can pick up a report and see themselves reflected back. They are left thinking: “This person really understands me, knows where I am now and where I'm going and what I'm scared about. And they have come up with a solution.”

Yet that doesn’t mean you should have to write about how flexi-access drawdown works every time, or a particular platform. So we try and blend the two – our library of text but with a personal touch.

Community spirit, online and in-person

Another one of my hats is as co-founder of the Paraplanners Assembly, which is all about supporting the paraplanning community. We do structured events as well more informal stuff like virtual coffee mornings and WhatsApp groups, and we’d been running online events for a few years by the time lockdown hit.

I think last year was actually the first time we had a decent content and events plan for the whole year ready to go in January – of course we had to rip it up in March because that all went out the window. We ended up doing over 30 online events last year, compared to the planned 12.

The community is still very lively and active, and we’d love to get back out and start meeting people again.

But one big thing we learned during lockdown was that by having to go online for everything, we’ve been able to reach people that couldn’t come to our in-person events previously, whether because of the time cost of being out of the office or the accessibility issues that come with teepees in the middle of a field.

We’ve had a lot of new people come to our more setpiece events, people who’ve been wanting to come to an event for years but hadn’t been able to previously. We’d like to get back to the in-person stuff, but we love the fact that online gives more access to more people.

The question is: how do you get the best of both worlds? We’re still thinking about the answer to that one.

Due diligence and PROD

The role a paraplanner plays in due diligence has definitely changed over time.

I was around when Transact launched as the first mainstream platform in the UK. It was a revelation, and then Standard Life followed and more people started using platforms.

But the concept of due diligence as we know it today wasn’t really heard of then. People figured the price and service was good, and that was that.

Over time as the market expanded, things changed. The regulator got involved, and people started to focus more on due diligence, and rightly so.

Because due diligence tends to be done at a firm level, it’s become an important responsibility for advice firms to make sure they fully understand what it is they’re recommending to clients and that the firm has looked at things other than fund selection and charges.

This falls right into paraplanners' sweet spot, because we love going out and doing analysis and research, asking challenging questions, collating stuff and doing comparisons. There’s often been a very manual process behind it – sending out questionnaires and requests for information.

It's changed in in recent years where there are resources available to help, like Platform Analyser and others. And we've had PROD come along, which has focused minds on this as well.  

The product governance rules (PROD) have been in place now for three years, and they are rules. It’s probably fair to say there were people that didn’t follow PROD to the letter in the first couple of years – there may still be a few people catching up now.

Speaking with the clients we work with, PROD has been embedded in what they do anyway, they just haven’t called it that.

What they’re trying to do is get to great outcomes for their clients that are suitable for them based on their objectives, where they are now and where they want to get to. What was probably missing was something formalising that.

It’s about having a segmentation exercise, something tangible, which sets out how you see your clients now, in the future, and how you determine great outcomes for them. Then there’s the due diligence that sits behind that to select a platform, the investment providers and so on.

I’ve often heard comments along the lines of: “We only ever deal with people that are 60 and over so they’re going to be suitable for this particular platform and investment process.” PROD isn’t that.

Not every client is going to fit your default model, so any good PROD segmentation process should have an exceptions policy in there. That’s possibly the most important part of any PROD work I get involved in.

It’s just about getting to a place where, if an adviser disappeared off the face of the earth tomorrow, when their locum walks in the next day they can pick up a document and say: “Okay, now I understand why these people are [invested] here, and why new people are going to go there too.”

The professional bodies’ report card

My personal view on what’s happening with the professional bodies is “could do better”.

While we run our business as if we were regulated, being a paraplanner means we’re not. So we don’t need a statement of professional standing (SPS) for example.

But for advisers, there’s a bit of a monopoly situation because they have to be a member of a body to get an SPS. That could create lazy thinking.

One of my big frustrations is that I’ve achieved certain levels of qualification, and certain badges I can wave around if I want to, but only as long as I’m prepared to keep paying money for membership.

I was on the board of the IFP, and was asked to join as the first paraplanner board member.

The IFP did wonderful stuff for paraplanners, really pushed things forward with a great community of like-minded people that were prepared to help each other get better so they could all help their clients.

When the merger with the Chartered Institute for Securities & Investment (CISI) happened, unfortunately I think the planning community kind of dissipated.

The plus side was that people started doing things for themselves. So we started to see things like the Paraplanners Assembly, NextGen Planners, Back to Y and others.

There's such a range of development and community events, which is really good. But I don't think the professional bodies are covering themselves in glory at the moment. How they fix that I'm not entirely sure - I think it starts with staying in touch with the community and listening to what people really want, and reacting accordingly.

Outsourced paraplanning, and the planner/paraplanner dynamic

In-house paraplanners make up the majority of the community and do a fantastic job.

Where they have an advantage over us lot on the outsourced side is they are intrinsically embedded in the firm. They know the clients and the service and investment proposition inside out.

But what our clients tell us is that if you’re a small financial planning or advice firm, even if you can afford to go and hire a good paraplanner, trying to find one and tempt them away is really hard at the moment.

If you outsource, you instantly plug in to a team of say five highly qualified, highly experienced paraplanners. So you’ve boosted your capacity many times over, and you’ve got access to that pool of expertise.

I often hear people talk about outsourced paraplanning in terms of: “What crap can you get off your desk and give to me?” And I hate that.

It's not about that, it's about what can we bring to what you're doing. So a good paraplanning firm will actually add to the service the adviser is delivering, it'll add to their process and make things more efficient and more robust.

When it comes to planners and paraplanners working together, at a very simple level it works well when it’s a partnership. It doesn’t work very well where there’s a hierarchy. That can often mean there’s egos involved. Traditionally it’s been seen as adviser at one level, and paraplanner a level below.

With all the clients we work with, we've got strengths when it comes to technical analysis and reporting while they've got strengths on client relationships, and we work together as a team to get the best outcome.

So if you're just looking for someone that's going to be a bit subordinate that you can just bark orders to, that relationship won't work very well for very long. It's coming together as partners that really makes a difference. Collaboration is a big word for us.