The technology-enabled paraplanner

Paraplanning and technology go hand in hand; it’s no coincidence that both have become ever more critical parts of the advice value chain as growth in one has reinforced growth in the other. Paraplanners are invariably the principal users of technology within advice firms, with the majority using two or three platforms regularly, as well as several systems or tools.

The most popular applications are cashflow modelling tools and research tools for pensions & investments, followed by risk profilers, CRMs and automated fact finds. However, the more interesting finding is that much of this tool use still happens off-platform, where the manual rekeying of data can introduce the risk of errors. This suggests there is scope for firms to make greater use of platforms that offer integrated apps with data integrity assured by automated transfer.

In fact, it turns out that “better integration” is exactly what paraplanners want, these words coming out as the most popular free-text terms when we asked paraplanners exactly how the tech they use could be improved. And, given their use of a range of often unconnected systems, it is not surprising that the majority of paraplanners (64% agree, 25% neutral) believe the technology they currently use could be better. Interestingly, the proportion is higher for larger firms (71%) suggesting their tech may be in greater need of updating.

91% think paraplanners should have influence over the choice of technology, compared to 89% in 2022, but only 9% feel they have direct influence, with a further 55% exerting some form of influence.

However, the decision on whether to bring in new technology is one area where paraplanners feel they are being short changed. While 91% of paraplanners would like a say on tech decisions, only 9% have direct influence while a further 55% feel they have some measure of direct influence. This is a material mismatch given paraplanners are not only the main users of technology, but also, invariably, the technical experts on the calculations and outcomes that tools are trying to achieve. Paraplanners report that cost continues to be the top barrier to investing in new tech (68%), but in large firms this is also felt to be complicated by resistance to change and the fact that decisions are often taken on a group basis by one individual.

Artificial intelligence has been a big talking point since the release of generative AI tools like ChatGPT. Despite some concerns over job security, AI has mostly been talked up for its promise of making advice firms more efficient. But what do Paraplanners think? The short answer is: the jury’s out.

While awareness is high – 89% of paraplanners have heard of AI tools – usage is low with only 1 in 10 reporting they have used AI tools in their roles. Although, for younger paraplanners under 30, that proportion doubles to 2 in 10.

Our survey reveals that 42% of paraplanners believe AI will be useful in their role, while 40% are neutral. Similarly, most paraplanners (54%) feel AI is both an opportunity and a threat. These results are most likely a reflection of both the current lack of direct exposure to AI and its early stage of development. Use cases and dedicated AI tools have yet to be developed for the financial industry.

Encouragingly, when paraplanners get their hands on AI tools they become significantly more positive on their value. An overwhelming 92% of paraplanners who have used AI tools believe they will be useful in the paraplanner role.

The development of industry-specific AI-use cases and tools will take time. In the meantime, paraplanners are firmly on the fence. 71% of paraplanners believe AI needs to undergo further development and testing, while 54% believe that AI may need regulation, before it allows them to add value. This scepticism is consistent with the fact that while AI tools offer great promise, they are not infallible; they produce credible answers based on patterns learned from large language models. As such, they can be prone to errors and limits in their application to individual cases. This also helps to explain why AI is unlikely to replace paraplanners anytime soon.