The past five years have seen a considerable transformation in financial advice, particularly in their back office operations with the introduction of new technologies as they chase greater efficiency.
As such, paraplanning industry veteran Hayley Knight said paraplanners have seen a considerable decline in demand for their services, leading her to believe that paraplanners need to evolve and seek out new ways to add value to advisers.
“Paraplanners, I suspect, need to really become specialists in the back office. I feel like that’s where the true demand is going to be. They could be the specialist tech person for really technical strategies or something like that,” Knight told ifa.
“What advisers really need is someone there who they can lean on to say, ‘Hey, can you have a look at this whole process and figure out the most efficient way for me to do that, to be able to scale, or to be able to bring in another 50 clients this year’, that kind of thing.
“That’s where I feel like they need to start moving towards. It is figuring out what’s actually where the demand is moving towards in terms of what advisers really want and starting to transition into that.”
With statements of advice (SOA) slated to undergo significant reductions with the next round of reforms, Knight argued that paraplanners will need to shift gears as this change will only further deplete their current value offering.
“Paraplanning hasn’t really evolved over the last 10 to 15 years. It’s just kind of sat where it is and advisers have just dealt with what the situation is,” she said.
“If this reform and regulation comes in and we find that SOAs no longer need to be 30, 40, 50 pages, I think what that’s going to do for paraplanning is it’s going to force paraplanners to think outside the box.
“We’re seeing a decline in the demand for paraplanning already and I think that’s primarily because of tech, but aside from that, if the main thing that they produce no longer is necessary, the demand is going to decrease even further.”
Though she doesn’t believe the current responsibilities of a paraplanner will disappear entirely, Knight suggested that, in order to maintain their value, paraplanners should consider additional roles they could take on within an advice business.
“Over the last decade or so, there has been a really huge demand for paraplanners, but we’re seeing that dropping off, and there’s more of a demand for really experienced, great practice managers or [chief strategy officers] who can support advisers, so they do need to evolve,” she said.
“There will always be a place for advisers who do want that kind of traditional document, and that’s fine, but I don’t think the demand is going to continue rising for paraplanning. I think we’re going to see it stagnate and start to drop off.”
Knight further noted that paraplanners are ideally positioned to become internal technology specialists to help advisers enhance their advice process and back office operations.
“That’s where their true demand is going to be moving to. So, if they can position themselves now and start really educating themselves on tech and processes and what advisers need from them, they will remain relevant,” she said.
“They just need to evolve.”
From my perspective, the demand for competent paraplanners has never been higher.
If paraplanners become obsolete, where will experienced advisers come from??
They didn’t say obsolete, lesser reliance on pumping out 50+ page SOA’s…. They’re role will adapt to be more associate adviser based to assist with volume of doc prep and strategy research to allow the adviser to see and service more clients. Also the thought that advisers come from para planning mainly is incorrect, if anything that is where someone ends up if they don’t want to be a client facing adviser.
Existentially they will still exist as people just not in the existing role.
Likely in the form of having to do 3 years study, 1 year PY and an ethics course – it’s alot more than the traditional pathway of CSO>PP>Adviser