Featured in Financial Adviser.

My favourite book, To Kill a Mockingbird, once told me that there is nothing to fear but fear itself, though psychology tells us that (pre-Covid) the greatest worry shared among people was often money and job security, with health coming slightly further down the list. 

I imagine Covid-19 bumped health up the rankings, but it became obvious that finance worries had not been replaced by health worries; in many cases, they were exacerbated.

Through lockdown, being aware that we could not do much about the virus, or therefore people’s health worries, we focused on what we as paraplanners could do to help educate people about finance as well as help advisers alleviate their wealth worries.

As soon as lockdown hit, we spoke to as many advisers as we could, to find out what they were doing, how they were dealing with it and what we could do to help.

Finding new ways to communicate with clients, both existing and prospective, was high up the list for most.

We helped to support the servicing of their existing clients by introducing a virtual paraplanning service, whereby we would provide the video conferencing software, along with a trained client-facing paraplanner within the meeting to help smooth over adapting to a new process.

The market uncertainty was impacting hugely on people and cash flow modelling was a way to make the impact more tangible and reduce the level of fear.

We therefore rolled out a new cash flow initiative, modelling scenarios for clients – factoring in furlough, redundancy, and potentially a sooner than previously anticipated death.

These were the real fears being caused by Covid-19, and turning that into a practical model to discuss with their clients really helped advisers to reassure them.

We provided a business owner’s pack to provide hints and tips for advisers who were business owners, or who had some as clients, to help provide some clarity.

We also engaged with our community to see what we could do as a group to help the wider world throughout these unprecedented times, knowing advisers still had to service their clients, pandemic or not.

However, with many with many paraplanners busier than ever, annual suitability reports quickly became at risk of being delayed or missed altogether. We therefore offered free templates and guides to other paraplanners and advisers to streamline the process.

With everyone’s income taking a sudden and severe dip, we looked at what resources we had that we could give away, at no cost, to help others. We collated all our guides, templates, documents and white papers and put them on our website for free.

We believe now is a time for more people to get advice, and protect themselves from the volatility, but meeting a new adviser can be intimidating at the best of times, let alone when it has to be via Zoom.

So we made a video to help educate the public about how to find an adviser, why they should see one, what to expect, and how to avoid getting scammed.

It is in times of crisis that we need to look after our whole community and not just ourselves.

Supporting advice companies means helping them hopefully ride out the challenges and a stronger financial services profession for us all, and our clients, in coming years.

Now we are now in another national lockdown, I will once again be looking to see what we can do to help and support those around us. If you need help in any way, please feel free to get in touch.

Featured in Money Marketing.

I write this as England rides out its second lockdown. It feels different this time. I won’t go into the sociology or politics of why, but just from speaking to advisers and clients, it really does have a different vibe this time around.

In the first lockdown, there was a lot of furlough and hibernation, and attitudes of “Let’s sit this out and see how it goes”. This time, I think we’ve all realised the new normal is here to stay in some way or another.

So, what does this mean for financial planning?

We know that clients are more worried than ever about their finances and, therefore, need more support than ever. So I’ve spent a lot of time thinking about how we can improve our service as paraplanners.

A major part of this is communication and how we can get more from a client meeting in a safe environment. With more of us going to be stuck in the house for longer, now is the time to really embrace tech in a way you never have before.

I recently launched a virtual paraplanner service, where the paraplanner can attend a client-adviser meeting through their favoured video conferencing software. This is something I recommend for in-house and outsourced paraplanners alike. Indeed, it is helpful for all three parties involved.

From the client’s perspective, they are provided with the confidence that you have really understood what they want and how they can achieve it, plus they can take comfort in what a forward thinking, tech-savvy firm they are dealing with.

Meanwhile, the adviser is pleased they don’t have to provide meeting notes and field questions about what they meant by “plan to sell Sarah’s Dream in five years’ time”, where they had omitted the fact it was the name of a boat and not a way for the husband to hurt his wife in the future.

And for paraplaners? Well, just imagine the benefits of dealing with the client in real time. Instead of all the to-ing and fro-ing of calling, and missing them and them calling back at 6pm when you are long logged off, you’ve got them where you want them, to ask all of the questions you need.

This helps achieve a deep insight into their thought process, objectives and needs, which makes for a compliant and personal file, and robust research and report process.

We’ve heard these mentioned a lot over the last couple of years, following the introduction of Mifid II.

However, any good adviser would have been carrying out annual reviews well before this. Mifid II just brought about some necessary tweaks to those reports, such as;

  1. Clearly assessing the suitability of previous advice given, and reconfirming this still remains suitable.
  2. Confirming costs the client has incurred over the last 12 months (ex-post costs).

Over time, thankfully, providers have worked on improving their systems and knowledge to ensure the latter is easier to achieve.

Which leaves you with the rest of the admin that comes with an Annual Suitability Report (ASR), multiply this by the number of clients you manage, and you’ve got yourself a bit of a headache to manage!

Where can time be saved you might ask?

Well, providers are required to issue an annual statement, providing the client with a current valuation, as well as a backdated valuation from one year prior. The statement will also cover off point two, and provide confirmation of all costs the client has incurred in the last 12 months. If you can time your annual reviews with the client around this then there’s half of the job done for you!

By doing this you’re not only saving time, but you’re making it simpler for the client. Preventing conflicting information, should you review the costs at a different point to the provider.

These reports can support you in one of two ways, you can either use the data within them to populate the ASR or provide it alongside. The latter being another time saver as the ASR will then purely need to assess and confirm that the plans remain suitable.

What should the ideal ASR process look like?

Having a refined process could be your saviour. What we’ll look at next is the ideal process for both you and your clients. If you have an in-house admin team, you’ll probably get some thanks from them as well!

First of all you want to look at your existing clients and establish when the provider managing their holdings will be issuing their annual statement. If you can time your annual review around this then that’s a step in the right direction. From there you can look at any non-Mifid plans the client may hold and get in touch with those providers to request the same information. This will ensure you have everything needed to assess the clients position FULLY.

There will need to be a common sense approach here, certainly if you happen to have say 100 clients all on the same platform which produces annual statements on a particular month (we know of a few who can only report for a certain period, whereas others have the capability to run off an ad-hoc annual statement whenever required). In these circumstances, I can’t imagine you’ll be able to squeeze in 100 reviews in one month! However, you can still utilise the platforms annual statement but providing this to the client and referring to the output within the ASR.

It would make sense not to review the costs again in great detail within the report (assuming it hasn’t been a great deal of time since the annual statement was produced), simply to be sure not to confuse the client, as mentioned previously.

Once you have the annual statement or the requested information to hand, it may be worth running some fund performance data, we tend to advise a FE Longscan is best to give an overview of performance and asset allocation. This will likely be particularly important (albeit slightly unpleasant to look at) in the current climate, as clients’ are very aware of the impact COVID has had on their investments.

An annual statement and performance analysis will be the perfect pack to present at a pre annual review meeting. This will give you the necessary data to discuss the clients holdings at a high level and will open up discussion to any changes they wish to make and/or any annual recommendations such as using allowances or rebalancing an existing strategy.

Once you’ve confirmed the client is happy to remain as they are, you can then pull together your ASR. Again, it’s up to you whether you summarise the ex-post costs within the report for clarification (not all providers produce this in a clear easily digestible format) or whether you simply refer to this as an addition to the ASR.

Annual Advice

You’ll usually have an idea which of your clients are serial allowance utilisers! That pre annual review meeting will allow you to clarify their wishes. Any top-ups, portfolio rebalancing and bed & ISA instructions can be covered off within an ASR as part of the annual advice process. However,  should the client wish to switch funds and/or provider completely then this must be treated as a brand new piece of advice and therefore would require a suitability report. Any plans which are being switched to a new provider, no longer require an ASR as they have essentially been assessed as ‘no longer suitable’. The clock essentially starts again for those plans and they should be factored into next year’s reviews.

Our Experience

At Para-Sols we’ve tackled a range of ASRs on behalf of our clients. We’ve experienced anything from a couple of wrappers on one platform to a client holding multiple products across a range of providers. Our admin team have developed a keen understanding of providers processes for ASRs, both on and off platform. They’ve pretty much seen it all! – So they know how best to obtain the necessary data.

Which is why our ASR service was a no brainer! Why not share that knowledge and experience with our wonderful clients and assist, where we can, with the whole process from start to finish. So, if you could do with a helping hand, why not drop us a line and we’d be happy to chat it through!

As part of The Verve Group’s #FYIfinance series, our very own Alex Buckle was featured to give the low down on all things being a paraplanner…

Not many people have heard of the paraplanning role in financial services, including Alex, who explains how she got into the industry below…

“I first came across the role of a paraplanner whilst applying for jobs after my degree. Having studied Psychology, where my days were full of Pavlov’s dogs and Skinner’s pigeons, it was fairly daunting entering the finance world. I was initially drawn to the role, however, by the promise of a new challenge every day and that having an analytical mind would come in handy.

In terms of an average day in the life of a Paraplanner, it’s hard to say, as every day is different. But I will usually be writing reports and/or carrying out research. The latter can range from tax calculations to provider and investment strategy research, using various software, such as FE Analytics or CashCalc. In more recent times, I have also been more involved in rebuilding our reports, making them more fun, digestible and interactive, and the feedback has been very positive so far. I am fortunate to be a part of a team who strives to be bold, confident and introduce new ways of working together within the financial sector.

A big part of being a paraplanner is sitting exams to further our knowledge. Therefore, a big challenge is being able to juggle a busy day at work with revising towards exams, all whilst trying to maintain a social life and pretending that I like going to the gym. Time management, a strong work ethic and a willingness to learn are therefore very important as a paraplanner.

I have learnt a lot over my three years in role, and the various exams – from what a pension actually is, and why it’s important to have one, and how I should approach getting a mortgage. You know, all the useful things that no one thinks to tell you in school, but can really help in the real world.

My top tip for those seeking a career in finance (and to those who may not even know they are yet) – don’t worry if you don’t think you have the right experience to work in the financial sector. I can’t emphasise enough how little I knew about finance before working at Para-Sols. In fact, it’s probably like a game of ‘Where’s Wally’ trying to find someone who did a Finance related degree in our office. There are so many life skills that are transferable to a role in finance. For example, in our office, we have roles which rely heavily on skills in terms of marketing, organisation, technical knowledge, time management, and the list goes on.”

Alex Buckle – Paraplanner

That seems to be the question now in relation to open-ended property funds. Our friends at Apricity summarised the main proposed changes under the Consultant Paper 20/15 which you can read here, including the options available to you at your firm. Here, we’ll look at some of the practical considerations.

Approach to making changes

Assuming the changes come in (or even if they don’t), you might make a decision on whether to keep or remove open-ended property from your portfolios. You may also have this forced on you if you use an MPS who can’t reconcile the rebalancing issues of a notice period. How will you approach each of the outcomes in terms of new and existing clients?

It may firstly be good practice to consider writing to all affected clients and prompting a review of their portfolio to:

  1. Outline your views and recommendations for their investment.
  2. Gather their thoughts on holding an investment with a restrictive access.

Following this, you may decide that (at least) some clients benefit from exposure to property via an open-ended fund.

If you continue to use an open-ended property fund in a portfolio

The main two that stand out are:

  • How will you manage rebalancing and portfolio drift and how will you disclose the limitations to clients?
  • How will you manage cash balances / proportional fund sales for clients with income needs?

You will need to potentially adjust your process when dealing with clients in the scenarios above.

In both the initial recommendation stage, and the annual suitability review, if a property fund is being recommended, you will need to alert clients to the fact that:

The XXXXX fund requires 90/180 days before holdings in the fund can be sold into cash. It will not therefore be possible for you to access your investment outside this notice period.

This would be followed by the risk warnings around the property fund being illiquid and more susceptible to suspension periods.

The important part here is the impact on annual suitability reviews. In the time between reviews, clients will have potentially gone from holding a fund with illiquid characteristics, to holding a fund that behaves in a similar way to a structure product or fixed rate deposit account (without the ability to ‘give up’ returns for access). It is important clients are made aware of the changes.

In the event an open-ended property is to no longer be included as part of your overall proposition, or a client’s specific portfolio, there are some things to consider.

Removing property funds

You will need to take the steps you would take with a standard fund switch recommendation, and follow the process in terms of assessing suitability.

If property is a vital part of your investment proposition, you may need to consider a closed fund if the open-ended structure with limitations on access will not work. There are a number of investment trust options for property, but there are a wide number of additional considerations you need to make before selecting these.

Alternatively, property as an asset class is not essential to achieve a diversified portfolio and we know of many an investment proposition that does not specifically allocate for property.

Summary

The consultation period is open until November and from this point, formal plans and rules are not expected until 2021. You don’t necessarily need to make changes now, but being aware of how you might approach the proposed changes, and what you can potentially do about it, will help you be prepared in the event the proposal comes into force.

In super exciting news (if you’re that way inclined, as I am) the FCA released their 2019 RMAR data recently. I’ll be going through it in a bit more depth next week, but we’ve been quickly dissecting (awful word) some of the key points from it. We’ve even popped it into a handy little infographic for you:

The good

So, on the plus side, since 2015 there has actually been an increase in adviser firms, with an additional 5% now in the market. This shows an increase in competition (which is a good thing for clients).

There had also been an increase in the number of advisers over the previous 12 months, increasing by 3% to 27,557. This shows that the extra firms are not just being made up of the same advisers moving around, but the number of individual advisers is increasing.

A note on this is the impact of SM&CR and whether these figures include everyone that is registered as a Certified Individual, which mightn’t necessarily mean they are the equivalent of the former CF30.

The bad

Despite overall revenue being up for financial advice firms, to £5.2 billion, the total profit is down, to £808 million. This varies hugely depending on the size of the firm, but as a crude measurement that’s still only a 15% pre-tax profit margin. It is very difficult to run an efficient, profitable advice company and, from these figures is getting harder.

The ugly truth

In related news, and as a surprise to absolutely no one, PI insurance premiums had increased over the year. In total, there was a 17% increase in the total amount paid, to £110.3m. That is a lot of premiums. And, not in the FCA paper, but very timely, was the FCA’s renewal fees landing on advisers this week. I think the lowest increase I heard of was 50% (lowest!). There were 100% increases and a Twitter mention of one firm whose FCA fees alone had increased by £100k.

So, when we know profits are going down and (following the market battering of Covid are very likely to drop even lower), even if all other things are being equal (when all other things aren’t equal at all) and essential fees, levies and insurances keep rising (at a crazy, non-corresponding rate) there is only one direction for these profits to go. This can only reduce that extra competition that has been built over the last five years.

An extra thought

There’s been a huge wave of consolidators, networks and firms generally buying up other firms recently. In large part driven because of the aforementioned costs and difficulties. And I’ve written before about the sentiment that perhaps the FCA would prefer a small market of large firms, than a large market of small firms, as it would be easier to monitor. Take a look at this table:

Now, I’m not a financial services regulator, and I fully appreciate the concept of these large firms investing for growth and thus being loss-making for a certain length of time. However, if I was a financial services regulator, I would be weighing up the balance between the smaller firms (that currently make up 90% of the market by the way) perhaps being a bit trickier to keep a handle on vs the larger firms, that are in one place, and can be more easily monitored, but are not making a profit and therefore have much more systemic risks to their customers.

The average loss on these firms was £10m, with the average profit, on those that did make a profit, £2.5m. It’s just a reminder that bigger isn’t always better. I’ve always believed that financial services should be a varied and diverse industry, offering a huge range of options, to allow the end client to find the one that is right for them. And the smaller firms are the way to achieve that.

This article originally appeared in the weekly newsletter from Cathi Harrison, CEO of The Verve Group. Want to receive this every week? Sign up here.

I’ve had loads of questions around returning to the office and I know many business owners are struggling to figure out the best way to approach it, so thought I’d share our experiences.

There’s a lot of different views around IF a return to the office should happen. In the early days of giddiness around this new world and new way of working, I think many people thought that it might become a permanent structure for all. However, having worked from home, alone, for the first two years of starting Para-Sols, I knew first hand how quickly the thrill wore off and how difficult it becomes to maintain routine (and/or sanity).  

This recent survey from Citywire reflects this, showing the majority of firms have now decided to keep their offices, albeit with a bit more flexibility. Clearly, we all now know that working from home can work. Not only that, but we’ve also all been forced to put in place the infrastructure for that to happen (the logistics of which might have previously seemed insurmountable). And so it’s there, as an option, and I think any firms that go back to insisting their team are in the office, Monday – Friday, 9 – 5, with no flexibility at all, will find themselves at a disadvantage when recruiting in future. 

So, if we assume there may be some sort of returning to the office, how do we best do that? Well, practically, this article from Quilter talks about the logistics and legalities around this. But that is only a part of the puzzle; yes we need to do what is lawfully required, but we also need to do what’s right for our team, and that will vary from firm to firm.

Firstly, I would say, our return has been made smoother for a number of reasons: 

  • Very few in the Verve team use public transport in their commute. 
  • There’s also very few with children, meaning there aren’t too many childcare issues.
  • We moved into new, huge, offices in January. Any sort of social distancing in our previous chicken coop would’ve been impossible.
  • There’s 40 of us, which is manageable. The logistics of hundreds of employees is completely different. 

Your team structure and office set up will largely dictate your approach. Those aside, we realised that a huge part of the return challenge is the anxiety people are feeling right now. We’ve had months of our worlds being tipped upside down, being constantly fed conflicting information, and let’s not forget right at the start, when the media and communications we received instilled absolute terror in people. It was brutal seeing how extreme the fear was stirred up in some, and that level of fear doesn’t suddenly go away. So the concerns and anxieties are completely understandable. 

Our approach, therefore, has been: 

  1. All the necessary precautions around desk spacing, designated safe/private working zones, regular cleaning throughout the day, sanitiser / anti-bac etc. This stuff provides an important visual reminder, that can be regularly seen, acting as a reminder to everyone that we’re looking out for them, and they should be looking out for each other.
  2. Phasing the initial return, with half of the team back on Monday and half on Tuesday – to give that sense of coming together and have a big kick-off / catch up meeting, without it being overwhelming by having everyone back at once. 
  3. Encouraging flexible working/working from home for a number of days a week, and providing the equipment for this to happen.
  4. Arranging antibody tests for everyone who wants one (as inspired by Ray Adams at Niche. With this, we acknowledge the limitations around it and that there are no certainty antibodies result in immunity. The purpose of it comes back to the anxiety created around a lack of information and any tiny bits of extra knowledge or information we can give people can only help, albeit being a tiny part of the overall picture.
  5. Revamping our Vitality programme. This is our health and wellbeing programme, with physical (socially distanced) yoga and HIIT classes now taking place, and encouragement of the use of a counselling service we have for those who are struggling with the world as it is.
  6. All the fun stuff! Which we’re kinda known for – but making the first days back fun ones, with a New Chapter theme, pizza vans and breakfast mimosas meant that even those who had most been worried about the return quickly relaxed back into things. Sometimes that first step is the hardest one…

There’ll no doubt be many more challenges ahead for us all, but I thought it would be useful to share what we’ve done so far and why, right now at The Verve Group, we’re all very much looking forward to the future with a whole load of excitement.

Cathi Harrison – Founder and Director, Para-Sols & CEO, The Verve Group.

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It feels like we’re moving on to yet another phase of the Covid journey of fun we’ve all had the pleasure of experiencing so far in 2020; the immediate crisis is moving behind us*, and we’re now staring into an abyss of challenges and struggles as we deal with the aftermath.

Markets bouncing around quite giddily have created a bit of a false sense of bounce back for some. Each recession has its own characteristics, and I think this one isn’t going to be characterised by the performance of the markets, but by the human impact. 

It wouldn’t matter if the stock markets were back at their pre-Covid levels on Monday, the fallout is far more systemic. As we start to think about a rebuild, the challenges are far more nuanced than economics. As business owners, some of the problems we’re currently facing are: 

  • What impact has any furloughing had on staff, and how do those who have been on furlough restart their engines and get back up to speed?
  • What impact has redundancies had on remaining team members?
  • How do you begin to rebuild an office environment, albeit a new style one, when people are so used to being at home now?
  • How do staff balance their work lives when a lack of childcare is still problematic for many?
  • What about morale and team spirit? How do you rebuild that when Zoom quizzes have just about been milked for all their worth? 
  • Most people’s work focus comes from having plans and goals; what do you do when they’ve been effectively ripped up and the future is still looking so uncertain and unsettled for us all?

These are more emotional issues, but ones that will still have very tangible impacts. Most firms have done their absolute best to look after their staff and clients and guide their way through the choppiest of waters. But none of us have got it exactly right, as we didn’t know what on earth we were dealing with, and unexpected repercussions are starting to creep in and I believe will become more and more apparent in the coming months. The immediate health risk may be starting to fade away, but the shockwaves that it has created in individuals and therefore businesses (and therefore the economy) have barely got started.

But – it’s not all doom and gloom! Firstly, everyone is in the same boat. So it’s a great time for sharing and supporting one another (and a lot of good can come from authentic collaboration, and not just for commercial purposes). Plus, a new level of resilience will be borne out of this, whether emotional resilience (realising that the end of your tether is a bit further away than you expected) financial resilience (discovering that a huge amount of expenditure can be very easily cut back with little impact on the daily joys of life) or business resilience (discovering how to flex, adapt and innovate) and these will open a whole world of opportunity. Just as soon as we get out of the current mire. 

Anyway, speaking of the end of Covid, Jo and I optimistically recorded a podcast episode on this last week, as we begin to look back on lessons learnt, and I discovered what a sneaky little minx that girl is. I’ve also linked last week’s Apricity DB webinar, which was a busy one given the recent FCA updates. And, again with one eye on the post-Covid world, we’ve had requests to get our Suitability events back up and running, and so need your help for how these look / where they’re held. If you have 10 seconds to complete the survey below, it would be much appreciated. 

Have a wonderful weekend all. We’ve been working new courses from The Art of Finance and decided The Art of Cocktail Making is an essential one and so I’m kicking my weekend off by doing some essential background research… 

Cathi

*potential second wave / beach madness aside

Episode 10

Listen to: our post-Covid giddiness. And listen out for the post credits chat… weeeeeeee…! 

Suitability

Tell us: how you want our courses, and where. And we’ll be there with bells on.

Talk: Webinar

Watch back: Paul & Christian updating you on the evolving saga of DB transfers

Our Founder and Director, Cathi Harrison, recently took part in The Lang Cat DEADx event and spoke on the panel – she made some important points about value, specifically around MiFID II and investments. Catch up on what Cathi had to say below…

“The question of value, and the role of active and passive management within that, is something that came up at one of our recent training academy events.

At one of our sessions earlier this month, the point was made that when you compare a passive investment with an active one, why would you not be choosing the passive strategy in order to deliver the best outcomes for your client?

This was argued not just on the cost front, but in terms of performance as well.

Schroders were representing the active side of the debate, and they accepted that if you look over the past 10 years, passives were a good place to be.

But they also argued the value they add is when the market turns and we find ourselves in another downward market cycle. In that situation, they argue, active management has an important role to play.

What I think is interesting is when that turn does happen, which it inevitably will in the not-too-distant future, the speed at which markets change is very different now compared with even what we saw in the financial crisis.

The message we give to people who are new to the profession is there’s no single right answer when it comes to active versus passive.

But there is a potential advantage that active managers have in that when they are tested by tough markets, that could well be their chance to shine.

Explaining charges, and what is reasonable

There are many layers to the cost of investment, from advice charges and platform fees to various investment management costs. It’s easy for us to forget how difficult this can be for clients to understand.

Costs and charges disclosure is much clearer now than it ever used to be, particularly as the breakdown is now given in pounds and pence.

Yet it can still be quite hard for clients to really ‘get’ what it is they are paying for. And if they can’t really understand what charge covers what service, then how can they truly understand value and what good value looks like?

Given the adviser or planner is the one who’s closest to the client, arguably the advice charge is the easiest part to explain as it’s where firms can articulate their value.

It’s not about markets, or complex things that clients don’t necessarily understand.

It’s about the relationship, and sitting with that person through challenging times and helping them plan. That is intrinsically what value is all about.

The funds and the platform should offer value too, but that can be harder to explain.

Of course, there is then the issue of how you define what is a ‘reasonable’ total cost of investing.

On the paraplanning side of our business, you do still see some total charges that make you take a sharp intake of breath.

It’s not for us to say what’s right or wrong, but sometimes we do suggest alternative approaches.

Equally, there are some advisers where we’ve argued an increase in fees is justified for the amount of work they are doing.

There are people who are so scared of being seen as ‘overcharging’ their clients that they are not making any profit, and don’t have a viable business model as a result.

Value is subjective, but I think there are clear lines around where certain levels of charges aren’t viable.

The role of regulation and Mifid II 

We are well versed in the reality of costs and charges, and just how complex these can be.

Our admin team spends a huge amount of time on the phone to providers trying to get an accurate picture on costs, and having to deal with the fact that every company calls charges something different.

We’ll get a headline cost figure, but then when we double-check this and ask further questions, it can take a lot of work to get to the true cost figure.

So what chance has the client got in understanding this, or taking any kind of interest in financial services more broadly?

Whether more regulation would be helpful here, or even whether the regulations we have now are working, is debatable.

Take Mifid II as an example.

Mifid II was undoubtedly well-intentioned, and if its aims of greater transparency had actually been delivered as a result of its introduction then that would have been great to see.

Unfortunately, so far it’s been a mess and has just caused more headaches.

I’ve seen a whole load of extra work for advisers and paraplanners, and presumably the same goes for providers. But I haven’t really seen any positive outcomes for clients.

If there was a way we could cut through all of that, and get to one clear, all-in total charge, that would be much more meaningful for clients than whether one particular product, recommendation or strategy offered value over another.”

Just how does our Director, Jo Campbell, manage our growing team of paraplanners? She spoke to Professional Paraplanner to explain all… 

Click here for the article.

This really is an age-old question, alongside legends such as “why is the sky blue?” and “in the land of Cinderella, why did she have such unique feet that she was the only size in the village, yet the shoe was such a perfect fit, it still managed to fall off?”. I digress, sorry. So, the question of “just what is a paraplanner?” has haunted me at dinner parties, the occupation box on ANY application form and even in my own industry. It’s not one that is easily answered but SM&CR (Senior Management & Certification Regime) has dictated that we give it another bash.

For those not familiar with the new SM&CR proposal, in a nutshell, it is new FCA legislation around ensuring the people in your business who can impact upon the client are properly regulated and appropriate for that role. Senior Managers and Certified People. (Learn more about how our sister company, Apricity, can help you in your SM&CR preparations here).

The Senior Management side of things is pretty easy to define, but the second area; the Certified personnel is slightly more obscure. The relevant factors that firms would be required to consider in assessing individuals include whether the role is simple or largely automated, or involves exercising discretion or judgement.

In essence, the FCA has said it is up to advice firms to conclude whether paraplanners should be considered to hold the Client Dealing Function. The FCA rule has been drafted in a way “that provides firms with the flexibility to exercise judgement on whether a role requires certification” Helpful.

Therefore, it may seem quite obvious for the majority of people in your business. You know yourself who has what impact (planners/advisers) and those who have less impact (administrators etc), but what about that weird hybrid we call the lesser spotted Paraplanner?

In general, there are three species of paraplanner.

The in-house paraplanner.

Usually found around the same watering hole and highly skilled in client relations, business models and specific investment propositions. They tend to have the larger impact on your business and depending on the genus of your particular paraplanner, are the most likely to be needing certification. This is especially important if they are involved at any decision level of the advice process or if they contribute to any investment proposition choices.

The outsourced paraplanner.

These tend to roam around the habitat and are curious creatures. They taste a lot of different foods and specialise in a number of different providers, investment strategies, tax areas and financial planning solutions. They tend to be less involved with the client, interacting more with the adviser and thus tend to have less impact upon the decision making of the business and are less likely to require certification.

The third is the middle ground. The Liger, if you will. Those paraplanners who are either inhouse but make no decisions and perform more administrative duties or are just essentially report writers; or the outsourced paraplanners who have such a strong relationship with the adviser they do assist in decision making and can impact upon the end client. 

Essentially, it will be up to adviser firms to decide whether your chosen paraplanner should be considered a certified employee and whether or not they should be included in the second tier level of the SM&CR rules. My advice is to use discretion, but to err on the side of caution. If you think they may have any impact, have them certified. It can’t hurt. Unlike Ligers which apparently can hurt you. (I appreciate I’ve stretched this metaphor really far now and am going to leave before I turn full Attenborough and start preaching about how we should recycle paraplanners to stop turtles getting their noses stuck in them).

Jo Campbell – Director of Quality & Operations. 

On 1st June, we turned the grand age of ten! Below, our Founder and Director, Cathi, shares her reflections on the last decade…

“Well – 10 years – that went fast!

The official birthday for Para-Sols is 1st June, as June 2009 is the month I did my first freelance paraplanning work and was able to do a huge invoice at the end of the month for around £40…  

I had, however, been working on the business for 3 months by this point. I had quit my employed paraplanning role, sold my car, and figured the proceeds from the car were sufficient to pay my mortgage and basic expenses for those 3 months, by which point I would surely be living the freelance dream.  

In reality, I hadn’t factored in things like needing to eat, and so by the end of the 3 months (end of May), I was completely broke. Literally the most broke I’ve ever been in my life. I was recounting a story the other day of, around this time, feeling depressed that my new business wasn’t going how I wanted, I dug around and found 20p in my flat. Literally the only 20p I had left in the world. And I went to Greggs to treat myself to an iced split which I recalled being 17p. But, when I got there, I discovered that, thanks to the wonders of inflation, they were now 25p, and I couldn’t afford one.  

I walked down to my Mum’s (obviously couldn’t afford petrol) and sat and cried at the fact I couldn’t even buy a cream cake. She gave me 10p, told me to go and buy one, and then to go and get a job, as I obviously couldn’t carry on like this. I suspect the majority of new businesses go through similar struggles and lows at the beginning, and I can easily see why many people would choose to stop at this point. I almost did.  

Fortunately for me (not so fortunately for the people who have to deal with me on a daily basis), my intense stubbornness wouldn’t let me quit just yet. I managed to get a repayment holiday on my mortgage, did some part-time waitressing (terribly) to feed myself, and, at the end of that month, was able to do my first invoice… and away we went.  

And what a ten years since! So many highs, so many challenges, so many lessons learned, and the ability to meet and work with so many wonderful people along the way. I’ll be forever grateful to those who have taken a chance on me and Para-Sols; the team, especially the early employees (I’m looking at you Jo Campbell) for taking the risk of joining a fledgling company. And the clients that give us the opportunity to support them and their businesses, and understood when the inevitable growing pains hit and things sometimes got difficult.  

There’s an old adage that ‘overnight success’ actually takes 10 years to achieve… and I have felt every day of those 10 years to get to where we are now! But where we are is somewhere phenomenal, with a huge amount to still look forward to as we build out the businesses within The Verve Group over the coming 10 years.  

So Happy Birthday Para-Sols; thank you to everyone that has supported us, and roll on the next 10 years! Time for an iced split or two I think…”