The age old question of “just what is a paraplanner?” has haunted me at dinner parties, the occupation box on any application form and even within our own profession.
It’s not one that is easily answered, but the senior managers and certification regime (SM&CR) has dictated that we give it another bash.
In a nutshell, SM&CR is all about ensuring the people in your business who can impact upon the client are properly regulated and appropriate for that role. The rules break this down into two camps: senior managers and certified people.
The senior managers side of things is pretty easy to define, but the second area of certified personnel is slightly more obscure.
The relevant factors that firms have to consider in assessing which individuals should be certified or not 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 rules have been drafted in a way “that provides firms with flexibility to exercise judgement on whether a role requires certification." Which is not all that helpful.
Whether someone should be certified or not may seem quite obvious for the majority of people in your business. You know who has what impact in terms of planners and advisers, and those who have less impact such as administrators.
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 your particular type of 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 business decision making and are less likely to require certification.
The middle ground
The third category is the middle ground - the liger, if you will.
They may be the paraplanners who are in-house but make no decisions, and either perform more administrative duties or are essentially report writers.
Alternatively, they may be the outsourced paraplanners who have such a strong relationship with the adviser that they do assist in decision making and can impact upon the client.
Essentially, it will be up to advice 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 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 can find a host of useful resources on getting ready for the SM&CR here. You can also sign up to one of our masterclasses - hosted by Apricity Compliance - and register your interest for our upcoming SM&CR white paper