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An interview with: Kim Bendall, director, The Paraplanners

ABR editor Rob Kingsbury talked to Kim Bendall, appointed today as a director of The Paraplanners, about the growth in the use of paraplanners and what an outsourced paraplanning service brings to the table

Rob Kingsbury: Paraplanning has received a massive profile boost of late – is this primarily down to the RDR or have there been other influences?

Kim Bendall: I don’t think that RDR has had that much of an influence on whether advisory firms choose to take on a paraplanner or not. The need for paraplanners has been recognised by many advisory firms for a long time but it’s taken a while for paraplanning as a profession to appear on the map. The recent boost in profile has occurred primarily because the paraplanning community has grown in numbers over the last five years, which means we’ve naturally developed more of a presence. Also, we’ve had a tremendous amount of support from the Institute of Financial Planning and Personal Finance Society, which has helped grow awareness of paraplanning among non-advisory organisations such as investment houses and life companies as well. They’re starting to recognise what we do and the differences between advising and paraplanning, which means they now tailor a lot more of their material to each individual party. Paraplanners have gained more of a profile from these things, than from any RDR-led influences.

RK: For any adviser firm considering incorporating paraplanning (whether outsourced or in-house) into their business model, what would you say are the advantages?

KB: The main advantage for the adviser is that it gives them more – and better quality – time with their clients.  For example, where a paraplanner accompanies the adviser to client meetings, the paraplanner can be the one sitting there taking notes, prompting questions every now and again, filling in fact finds and so forth.  The adviser can then concentrate on the most fundamental parts of the client meeting; gleaning the client’s objectives, communicating thoughts and ideas, talking about the ‘bigger picture’ and working out a strategy to get the client to where they want to be.

The secondary benefit to this is that the paraplanner can write up the meeting notes for the adviser as well.  Since the paraplanner will have been involved at the outset, they will know straight away what research needs doing and can simply get on with it.  In an ideal scenario, the next time the adviser needs to be involved is when all the analysis is done. The adviser and the paraplanner can then sit down and agree the next steps – including any advice that needs to be given – after which time the report can be written by the paraplanner and the adviser signs it off.

Different financial planning firms use in-house paraplanners in different ways, but this seems to be the most common working practice and, if you’ve got the right mix of people, is probably the most beneficial use of both parties’ time and expertise.

I’ve come to think about modern financial planning as being a large-scale ‘job share’ where what was traditionally the role of the adviser has now been split in half; on the one side you’ve got the paraplanner doing the research, analysis and ‘tactical’ financial planning (e.g. product and provider selections), and on the other you’ve got the adviser spending time with the client and doing the ‘strategic’ financial planning (i.e. how they’re going to get the client from point A to point B, cash flow analysis, tax wrapper choices, investment strategies etc).  In reality, the lines between advisers and paraplanners are very blurred – each firm works in their own way and paraplanners get involved to a more or lesser extent in any of these things, depending on the needs and requirements of their company.

RK: That’s more of an in-house paraplanner role, what does an outsourced service bring to the table?

KB: There are three areas where outsourcing works best. First, because of the nature of outsourced paraplanning and the broad range of clients and complex areas of financial planning that we get involved in, generally outsourced paraplanners are very experienced and highly qualified. So if you use an outsourced paraplanning service, normally you’ll get access to some of the most versatile and technically proficient paraplanners in the market. What’s more, depending on how much business you write, you might be able to access them for less than it would cost you to employ an in-house paraplanner that could be less experienced.

The second point is that if you need an outsourced paraplanner, you only pay for what you need, when you need it. That’s one of the biggest attractions because people can dip into it the service as and when required; they do not have to pay a highly qualified chartered or certified financial planner to sit in their office when they don’t need them.

The third advantage of outsourcing is that we are a little bit more at arm’s-length from the company and from the end client, which means we can look at each case completely impartially, in much the same way as the regulator would.  That’s not to say that in-house paraplanners can’t be impartial; it’s just easier when you have no knowledge or prior experience of the client whatsoever.

Also it can help that we are not physically employed within the adviser’s company.  Although we frequently develop long-standing relationships with our adviser clients, the fact that we do not physically work in their office and are a ‘service provider’ rather than an employee means that all parties are possibly more comfortable challenging each other where necessary.   One of the things our clients value most about is the fact that we are their sounding board, and can ask difficult questions of them where we feel it is in their interests to clarify something.

RK: Do adviser businesses adapt quickly to using an outsourced service?

KB: A fair answer would be yes and no. Some of our clients plug in straight away, particularly those that are used to working with paraplanners.  Quite a few of our clients already have in-house paraplanners but they work with us as well to give their existing paraplanners additional support with their workload or, for example, if they don’t have experience of dealing with certain types of products or tax arrangements and want someone to help out in that particular area.

However, with most new adviser clients the first few cases will be adapted more than any subsequent ones, while both parties are working each other out and getting absolutely the right fit.  It depends how relaxed they are about the process, the look and feel of the reports etc. Some firms are completely happy with our process and templates, while other firms require something more bespoke with a particular kind of wording or style.

RK: What typically will you do for an adviser firm?

KB: The majority of the work that we do is around pensions and investments; either new capital or switching existing capital.  We also do a lot of protection, inheritance tax planning and corporate client work. It’s very interesting and no two cases are ever the same.  I love that about the job; the fact that I never know what I’m going to be working on next. One day I could be doing a pension switch, the next I’m doing due diligence on a couple of different providers, and the next I’m helping an advisory firm define its service position.

Unusually, IFA firms are only a part of our client demographic, we do quite a lot of work for life and investment companies as well. They use our services for due diligence, not only on themselves and their own products but also on the wider market. We are able to produce unbiased research for these companies with regard to how their products compare to their main competitors’ products, which helps them work out how to improve their propositions in the future. We also do due diligence for our adviser clients, helping them with things like choosing the best provider, platform, and the best investment strategy as well as defining their proposition.

The majority of our work is paraplanning, but we get involved in a lot of different things.  We have an outsourced Administration Service and frequently sit on industry panels, committees and take part in workshops and training sessions to help ‘give something back’ to our profession.

RK: In your paraplanning work, do you work on a fixed fee basis or hourly rates?

KB: We normally operate a regular retainer and modular charging structure for our paraplanning services.  We can also work on an hourly charge basis if required.  It’s important that we offer a variety of pricing strategies so we can try to find a solution that works best for each client, according to their needs and the level/type of work we’re doing for them.

RK: Invariably you’re located remotely from the adviser’s office, so how does that work in practice? Do you get to meet the adviser?

KB: We like to try to meet our clients at least once, where practical to do so.  When we meet a client we get a good measure of how they tend to articulate things, and how they like to work, which helps us tailor the ‘language’ of their reports to their personal style.

We often have a closer relationship with the advisers we have met, and they tend to be longer-standing clients as well. Fortunately we’ve met the majority of them, and have every intention to get out and see those that we haven’t yet had chance to visit in person.  In the meantime, we use Skype, telephone and email to keep in touch on a regular basis and provide a human touch to the business.

RK: Generally, how much detail do you get from the advisers on which to work?

KB: We work side by side with our clients because every case is completed on a step-by-step basis. They will bounce ideas off of us and we will give them a lot of input on a case as well. They won’t necessarily give us all the details of their client and say “This is what I want”.  A lot of the time our clients will say “Here’s the information, here are my meeting notes, these are my thoughts, what do you think?” Therefore, a lot of the time we get involved in designing the actual financial plan for the client, as well as writing the report. Other advisers will do this part of the work themselves and simply want us to write up the report. It’s very individual and comes down to how they prefer to run their business.

The best thing an adviser can do when working with any kind of paraplanner, in-house or outsourced, is simply to make very concise meeting notes. I’ve seen some very good and very poor examples over the years but to my mind if you have really good meeting notes that give clear instructions on what the client’s objectives are, their attitude to risk, what’s been recommended and why it was recommended, often you don’t necessarily need much more than this.   Too much information is just as dangerous as too little, though.  If you leave a paraplanner to find a needle in a haystack that’s comprised of years of factfinds, meeting notes and quotes done on various bases that weren’t actually recommended, you’ll find that mistakes are just as likely.  Make it simple and give a good, accurate summary of what’s happening now – your paraplanner will thank you for it.

RK: You spoke earlier about helping clients write their business propositions. Can you expand on that please?

One of the things our clients like about us is that, because we work with so many different adviser firms throughout the country, we have a very good idea of what we think ‘best practice’ looks like and have knowledge and experience of using various different platforms and software.  For example, we are frequently contacted by clients asking whether we have any opinions on ‘XYZ Software’.

We can also help people to create or redesign their service documents and proposition for their clients. We get involved with so many different elements of adviser businesses. We also have some very good contacts, so if ever there’s something we can’t help with, generally we’ll know someone that can.  Referrals to other ‘tried and tested’ specialists is a valuable service for many of our clients.

RK: Finally, what does your new role as director entail?

KB: In short, I am responsible for managing the team at The Paraplanners, for the day-to-day operations within the paraplanning side of the business and for taking care of our clients.   This gives my colleague Richard [Allum] time to spend on developing the business and seeing where the opportunities lie for The Paraplanners going forward.

Click here to visit The Paraplanners website

 

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