Paraplanning: The myths and misconceptions

Paraplanning has developed immeasurably over the last decade, embracing ever more aspects of the advice value chain and taking in greater levels of technical focus and layers of responsibility within advice firms. However, the fast growth of the role and the diversity within it means there are still misconceptions around what it means to be a paraplanner.

What do paraplanners think are the biggest misconceptions about paraplanning? The top answer (69%) and biggest gripe of most paraplanners is the cliched myth ‘that paraplanning is a stepping-stone role to becoming an adviser’. This is backed up by the fact that the overwhelming majority of paraplanners see themselves in a paraplanning role in five years time, with only 17% seeing themselves in an advisory role. The message is clear: most paraplanners do not want to be advisers.

The second big misconception about paraplanning is that all paraplanners are the same. In reality, the definition of ‘paraplanner’ differs greatly from firm to firm, landing anywhere on a spectrum spanning administrative support, product research, report generation, to shared advice responsibilities. Paraplanners have embraced the ability to build out their roles to suit how they and their advisers work at different firms.

Paraplanners are also tired of hearing about how technology is going to replace them, with 40% of those surveyed highlighting it as one of the biggest misconceptions. Is this perhaps a function of the simplistic view that paraplanners are all the same, doing a process-heavy, report writing role that can be entirely replaced by generative AI? As we shall see in the next article, paraplanners are actually less fearful about AI replacing them outright and more positive about the ability of AI based tools to help them automate certain aspects of their roles.

So, what separates paraplanning from the adviser role? Paraplanners believe the main difference is that they require a different skillset, reinforcing the idea that paraplanning is a complementary technical support role to the adviser. A brief scroll through paraplanning recruitment openings confirm this view, with some roles offering the chance for paraplanners to help build financial plans, while other roles require a technical, research or report-writing focus.

Interestingly, paraplanners see the level of client interaction as one of the key differences between their role and advisers. Given that 58% of paraplanners think of themselves as more introverted (with only 18% saying they were more extroverted, 22% saying neither and 2% unsure), this suggests that, generally speaking, the division of roles is a function of different strengths and personality types. This finding is borne out by the fact that when asked if they would like more client interaction, only 37% of paraplanners said they would. 63% reported they either had enough interaction already or that they would not like more interaction with clients.

While there may still be some lingering misconceptions about the paraplanning role in the broader industry and particularly outside of it, paraplanners remain well recognised for what they do within their advice firms. A 79% majority of paraplanners agree that advisers appreciate their role more now than in the past, albeit this proportion has dropped slightly from previous surveys. Similarly, 89% of paraplanners said they have either a good or excellent relationship with their advisers (51% said excellent).

One key bellwether signal of the strength of paraplanner relationships with advisers can be measured by the willingness of paraplanners to challenge their advisers on a client’s advice recommendations. A resounding 91% of paraplanners feel that they are able to challenge advisers’ recommendations, with 88% reporting that they have actually challenged their advisers in this way within the last twelve months; this proportion rises to 93% for those paraplanners with over 10 years’ experience. This is a clear indication of the distinct value that paraplanners are adding to the robustness of the advice process.