Paraplanning – In-house or Outsourced?

This is an article I wrote for New Model Adviser last week.

As the role of the paraplanner becomes more and more understood, and as IFA businesses develop and change, one of the challenges facing the modern IFA business particularly in this time of RDR and Treating Customers Fairly, is to ensure they are profitable but at the same time professional and produce high quality work.An integral part of this high quality work will be the production of reports for clients.  In many practices this type of work will be the domain of the paraplanner (though this is not all they will do) and clearly the more complicated and comprehensive the report the more qualified and experienced the paraplanner needed to complete it. This can cause concern for IFAs because it is not always economically viable to employ a paraplanner of this standard full time.

A solution which more and more IFAs are using is outsourcing some or all of their paraplanning requirements. This is where the report writing function, and indeed some of the other paraplanning functions, may be outsourced to a company who specialise in this type of work.

Outsourced paraplanning is not new; Richard Allum (also of TheParaplanner.com) set up the first outsourced paraplanning company in the UK, Adviser Assist, in 2002. Paraplanning Direct has been providing paraplanning services for a number of years and so has Hately Services. More recent entrants to the market have been Perceptive Paraplanning, Outsourced Paraplanning and Absolute Paraplanning. Indeed, there are a number of other companies who also provide outsourced paraplanning services and a directory of outsourced paraplanners will soon be available on www.theparaplanner.com.

Some benefits of outsourcing are:

• The ability to spend more time with your clients knowing that your reports are being written for you.
• Knowing that your reports will be to a very high standard.
• Knowing that you will receive your reports to a deadline and on time.

All of the above are vitally important when considering the TCF requirements.

There are also further benefits of outsourcing:

• The ability to pay for what you need - when you employ a paraplanner the cost is constant and though it may be advantageous to have a known cost it is not very flexible. One of the benefits of outsourcing is that you can use the paraplanner as much or as little as required (within reason).
• The ability to discuss a client case with an experienced and knowledgeable individual - having another, or possibly another two or three other highly experienced people to discuss ideas and to help create a strategy for a client is a major benefit for a small business.

Outsourced paraplanning is now a real option for IFAs and it is not just about deciding whether or not outsourcing is right for you, you are now able to select the most appropriate outsourced company for your needs as they are not all the same.

If outsourcing is something you are considering you may like to think about the following:

1. How are you going to pay for the work? Is this going to be on an hourly basis or on a case by case basis?
2. How much work are you going to give the outsourced company? Some companies require a retainer; others just work on an ad hoc basis.
3. What type of work are you going to give to the outsourced company? This is important because you need to ensure that the outsourced company are able to deal with the work you give them. If it is highly complex and technical work that requires a high degree of technical ability then you will need to make sure that the person doing the work has the appropriate skills to be able to undertake that work.
4. If you are a Financial Planner and you wish to outsource some of your report writing work you would need to ensure that the outsourced company understands the difference between a Full Financial Plan and a suitability report. Better still check whether they are CFP qualified.
5. Don’t underestimate the length of time it takes to write a comprehensive report. Too many advisers still believe that a full, comprehensive, high quality report can be written in about four hours - It can’t!!!

These are just a few of the considerations you may have, there may be others but if you decide to outsource your paraplanning work there is now plenty of choice so you should be able to find the right company for you.