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.