With the introduction of the RDR and the increase in the minimum qualification level for pension and investment advisers increased to QCF Level 4, the paraplanner role has become, even more than it was already, the natural training ground for those wishing to become financial planners and advisers.
Not all those who enter the paraplanning profession will want to become regulated and those that provide an outsourced paraplanning service would never be regulated so there will always be the opportunity for those who wish to, to be career paraplanners and provide the research, report writing and support functions they do already.
However, for those who wish to pursue a career as a financial planner then spending time as a paraplanner, understanding the business, studying and passing exams and learning about client relationships will definitely provide this path.
A fully authorised in-house paraplanner will undoubtedly provide the firm with a number of advantages. There will be another regulated individual able to provide advice to clients when the financial planner is away on holiday, out of the office or seeing another client.
There is someone to provide locum cover if the current financial planner is ill or away and there is someone who could provide advice to clients as part of their annual review if it was not envisaged that the advice required was too complicated.
It also allows the paraplanner to provide advice to clients when they telephone the office and ask very specific questions about their investments rather than having to caveat the conversation by saying the paraplanner can only give generic advice and any specific advice would have to be provided by the planner.
Finally having a regulated paraplanner will allow them to slowly take over the responsibility for some clients’ whilst still undertaking paraplanning duties within the firm and the transition programme can be designed specifically around the needs of the business and the paraplanner.
Of course, in order to achieve this there would be an additional cost to the business as fees would have to be paid for another regulated individual but working together in this way does provide a benefit to those businesses where it is appropriate whilst at the same time providing a clear career path for the individual.
Martin Vaughan is director of GHC Capital Markets