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Cathi Harrison: Avoid blurring line between advice and paraplanning

Advice firms that use paraplanners should be careful not to blur the line between paraplanning and advice, according to Para-Sols owner Cathi Harrison.

At the Money Marketing RDR invitational in London, Harrison gave the example of an adviser using a panel of funds, where the paraplanner looks at a client’s asset allocation and finds they are overweight in equities. The paraplanner goes back to the adviser to ask which fixed-interest fund out of two on the panel should be chosen.

Harrison said: “If the adviser was to say ’pick either one, I am happy with both of them’, it could be construed as the paraplanner giving advice. If something was then to happen with the chosen fund and six months later the client complains, the adviser cannot say, ’I did not pick the fund, the paraplanner did’. It comes back to the adviser.”

Harrison said to prevent the role of the adviser and the paraplanner overlapping, advisers should have clear job descriptions in place.

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Comments

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  1. I read this a couple of times to try to make sense of it and then realised what the problem was.

    The firm being described doesn’t seem to be operating in a team based approach where working together the firm’s owners, the paraplanner and the adviser collectively take responsibility for the advice delivered to the client.

    There also seems to be a failure in systems as well. Two fixed interest funds that are on the “panel” presumably went through the same due diligence process to get there in the first place. Unless of course it is one of those old fashioned firms that believes there is such a thing as the “best” fund rather than “suitable” funds

    The story sounds to me like the adviser is abdicating his/her responsibility

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