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Regulatory changes are an opportunity to improve the experience of paraplanners in financial planning

Regulatory changes are an opportunity to improve the experience of paraplanners in financial planning
Financial Planning

In the past few years, there have been many changes in regulatory compliance frameworks governing the financial services industry that impact the experience of paraplanners.

Changes that impact paraplanners inevitably impact the client experience as well meaning that senior leaders in financial services simply must get their response to these regulatory changes right.

Financial planning firms are having to rethink how they operate, and these changes are affecting the way their team interacts with clients and produce client work.

Financial planners are certainly feeling the increased burden of this regulatory change as has been evidenced by the number of financial planners leaving the financial services industry over the last few years. However, we should not forget how the force of regulatory change impacts paraplanners. The paraplanner role is becoming something very different in terms of how it supports the financial planner.

It is the paraplanner, not the financial planner, who is asked to educate themselves in the finer points of compliance for wealth management and insurance clients.

It is the paraplanner, not the financial planner, that needs to sit in on client meetings to take more detailed file notes and then re-enter that information into other business systems and documents.

It is the paraplanner, not the financial planner, that is typically completing more research to ensure that financial planners can present a breadth of alternative options in client meetings and confirm that best interests duty has been adhered to.

It is the paraplanner, not the financial planner, who is working longer hours to ensure all the additional checks in the financial planning process are passed.

In this article, we will explore the ways changes in industry regulations impact the paraplanner role. We'll also explore what leaders in financial planning, and financial services more broadly, can do to lessen the feeling of whiplash experienced by the paraplanning team that comes with constant change.

Paraplanning process changes

The most common impact of regulatory change is the changes required to the advice process that a paraplanner is asked to follow. The most common reaction financial planning firms have to regulatory change is to add another manual step to the advice process to confirm regulatory obligations have been met.  

While some process changes certainly impact financial planners, it is the paraplanner that is asked to pick up the compliance slack in financial planning firms.

File notes, advice development worksheets, strategy papers, best interest duty statements are all artefacts of this default reaction to add more manual work to the advice process to demonstrate that a the firm produces compliant advice and to ensure the advice is in the best interests of the client. Financial planning business outcomes depend on this administrative rigour to survive.

Too often these process steps are disconnected from each other resulting in hours of additional data entry and doubling handling of the same data by paraplanners. Wherever possible, we should ease the burden on paraplanners by implementing systems that enable these new process steps to be connected and remove double handling of data from the process.

Further, leaders in financial planning should always be looking for a net gains in their total advice cycle time to get from that first meeting with a client to presenting them with a financial plan. Paraplanners may be able to absorb additional documentation requirements forming part of their job role if the financial planner requires less support in other areas.

Changing the systems paraplanners use and the way they use them

Each new process step introduced by management to attempt to comply with new regulations is often followed by the addition of new software to support this task. Either that, or changes to existing software are made to do the same.

The increase in complexity experienced by paraplanners in these circumstances can be immense. This can make it much harder to finish the business-as-usual work to keep the financial planning practice moving. It slows the practice down, putting a drag on cashflow and increasing stress levels at the same time.

If you are going to change the systems paraplanners use in your practice, make sure the new system provides a net reduction in advice cycle time. Take the opportunity to introduce something truly innovative that transforms how your practice delivers advice rather than just patching a hole.

Changes to the paraplanner role

In the course of our work we see many different manifestations of the paraplanner role. We see paraplanners who are purely focussed on documenting the financial plan and those that get really involved in formulating the financial planning strategy to be delivered to the client.

As regulations change, we are also now observing paraplanners being asked to fill  oversight responsibilities. Some are being expected to have deep knowledge of regulations in order to perform their roles and advisers are outsourcing the responsibility for ensuring the advice document is compliant to the paraplanner completely.

Most paraplanners will find it difficult to be financial planning experts AND document creation experts AND compliance experts. That is a huge role for anyone and we find this trend worrying. It's a lot of pressure on the shoulders of a paraplanner.

Responses from financial planning leaders to regulatory changes

As a leader in the financial planning industry you will be used to constant change. At times I'm sure it feels like the walls are closing in. It is very difficult to plan for the future in an industry landscape that is constantly changing.

Great leaders use changes to the financial planning experience to create an improvement in the client experience. Client experience is going to be the differentiator for financial planning firms going forward.

It is important for leaders to shield their paraplanning teams from being buffeted by these winds of change. Here are some practical ways you can achieve this:

Reduce the extent of process change affecting paraplanners

It can be really tempting to just add a new document to your process to tick a compliance box. Be aware that every time you do this your paraplanning team has to learn how to produce that document effectively, where it fits in the process, what information it requires and what the expected turnaround time is.

Examine whether your financial planners can collect client information in a different way or complete their file notes in a different way so that it doesn't increase their time to serve but does reduce the processing time for the paraplanner.

Whenever you do need to introduce a process change that does impact the paraplanner role, make sure that you introduce this change in the right way. Hire a professional to train your paraplanning team on how to complete their new tasks. Introduce the change to your paraplanning team gradually, one paraplanner switches to the new process first and then the other paraplanners follow later.

Incentivise your paraplanning team to make the switch to the new process as smooth as possible. Paraplanners are typically a helpful bunch anyway but it never hurts to show people what is in it for them. Demonstrate how learning new compliance tasks is a way to develop their skills and advance their career. Make it a stepping stone for them on the path to becoming a financial planner.

Introduce systems that provide a net reduction in time to get advice to clients

Often as leaders we invest in a new system or process step to increase our sense of control. We want to know that something is 'handled.' Unfortunately, each time we do this we also add to the time it takes our paraplanning team to conclude the process and the stress on our team. We also lessen the client and employee experience.

It's fine to change a process but if you're going to do it really innovate and see if you can use technology to add the new process step while simultaneously reducing the time it takes a paraplanner to finish other steps in the process so they can deliver for clients. Customers who run their business on Nod have experienced this net reduction in advice cycle time again and again.

To do this you need to have good data on how long the processes within your financial planning firm take to finalise today. You should also chart those processes and create before-and-after charts that estimate how the introduction of a new system will impact the daily experience of paraplanners and financial planners working at your firm.

Achieving a net reduction in advice cycle time in your business requires the tasks your paraplanning team perform to be connected. The major contributors to the time in takes a business to get financial advice back to a client are manual data entry and manual document editing.

Ensuring information flows automatically between documents and forms is the number one thing a business can do to create a net reduction in its financial planning process.

Your paraplanning team will thank you for it.

Look after your paraplanning team so they can do their job

We've made a lot of progress in the financial planning industry to make it easier for paraplanners. But, that doesn't mean change isn't coming at us fast and furiously. Financial planning firms are experiencing changes across many different aspects of their business including changes to regulation compliance frameworks. It feels like there is a new bill introduced to Parliament every year that impacts on the way the industry needs to operate.

Shield paraplanners so they can better serve clients

Financial planners are certainly impacted by constant regulatory upheaval but no one feels these changes more that paraplanners. When the process needs to change in response to a change in regulation it is paraplanners who are often asked to figure out how to adapt the approach to clients, the document or the advice process. Paraplanners are often the ones to step up and figure this stuff out.

As a leader in the financial planning industry, you can alleviate the pressure on your paraplanning team when these changes need to occur. Doing so will mean they can focus on the important task on producing advice for clients.

Invest in key areas to empower paraplanners to do their job

Invest in some temporary compliance consulting resources to help you innovate on your compliance practices rather than adding that task to your paraplanner's workload. Have these consultants examine your entire process, from the work your financial planners do to your research and modelling, to how your paraplanner prepares documents.

Invest in software to handle the process changes rather than adding another another manual step for paraplanners to complete.

Make sure you have a clear career development framework so that your people understand what professional development they need to under take to build their skills and qualifications to the point where they can become a financial planner.

Maximising the impact of paraplanner process changes

The paraplanner role is bound to change over the next few years as governments change regulations. It will become more professional, just as every financial planner working in financial services as had to demonstrate their knowledge with every additional qualification they've been asked to undertake.

Being a paraplanner will mean getting an education in how to be a person that is adaptable to change. Being a paraplanner will mean becoming a successful process engineer as much as demonstrating technical knowledge in wealth management or insurance or preparing an investment proposal.

Paraplanners should see the way they respond to regulatory change as a stepping stone to a promotion.  Helping senior business leaders in financial services to navigate the required changes and show the path to putting changes into place can be the difference in gaining a promotion to financial planner.

Financial planners should collaborate with paraplanners on how they can maximise the impact of paraplanner process changes to deliver better outcomes for clients. A process change should deliver better quality advice for clients, better turnaround times for clients and better experiences for clients.

If you are going to change the way your business operates, make that change as impactful as you can. Use the time to connect tasks together, reduce manual work, reduce double handling of data and create a net reduction in the overall time it takes your team to deliver advice to clients.

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