Paraplanning & technology: A love-hate relationship?

Paraplanners are warming up to the potential of AI as greater clarity emerges about its benefits and limitations. Given that 83% of paraplanners believe the technology they use can be improved (up from 64% last year), AI is increasingly cited as offering a route towards better advice firm technology along with systems integration and process automation.

64% of paraplanners now believe AI tools will be useful in their role compared to only 42% in last year’s survey. For paraplanners under 30, agreement on usefulness rises to a resounding 84%. While general sentiment has improved, actual usage has also edged up. 13% of paraplanners are now using AI tools, up from 10% last year, while 57% are interested. When we asked those using AI what they were using it for, the top answers were client report writing (35%) and the recording & documenting of meetings (35%), with data mining & analysis in third (19%).

30% of Paraplanners now see AI tools as an outright opportunity compared to 19% last year, while only 7% see them as a threat to their roles (versus 9% last year). If AI continues to develop and offer efficiencies, the much-vaunted threat to jobs is likely to be reframed on adoption. Given 83% of paraplanners are not currently using AI and 27% are not interested, the greater threat might lie in ignoring the tech and losing ground to the advice firms who embrace it.

There is another reason that paraplanners may be more sanguine about the threat of AI. There is greater recognition that it cannot, at least in the near term, replace what they currently do. When asked about their biggest concerns over the use of AI, 68% of paraplanners cited the lack of a human touch while 57% cited the risk of errors. This more grounded view is in keeping with a recent cautionary paper from Goldman Sachs ‘Too much spend, too little benefit’, which questioned whether AI will deliver on its considerable hype within the next few years given the significant costs, power demands and chip supply shortages associated with the technology.

Paraplanners are invariably heavy users of investment platforms and, as a result, have strong views on their ease of use, as well as key triggers and barriers involved in switching platforms.

The majority of paraplanners use two or three platforms and 73% are satisfied with the way in which platforms engage with them. However, for those paraplanners that use more than three platforms, satisfaction with platform engagement drops to only 59%. Paraplanners cite value for money for clients and efficient administration as the most valued platform attributes.

When it comes to switching platforms, paraplanners are clear that it would typically take a reduction in service (75%) or an increase in costs (53%) at their existing platform for them to consider switching. A due diligence review highlighting a potentially better platform (39%) was a distant third. These findings are consistent with our recent adviser research on platform selection, which highlighted that push factors are more important than pull factors in driving platform switching behaviour.

In a similar vein, the key barriers to switching are the perceived disruption it could cause to client service and the admin burden involved in onboarding to a new platform. These are barriers that are likely to vary significantly however, depending on the new platform’s ability to offer a smooth transition via back-office integrations, straight-through process automations and dedicated onboarding support.