Financial Planning

Para Planning: a new movement

With more and more compliance responsibilities being added to Financial Planning practices, Financial Advisors are struggling to keep up with the administrative burdens that comes with running a professional practice. Many Advisors have already appointed their own Para Planners, choosing to do the face to face client work themselves and leaving the number crunching to others. We spoke to Gian Nel at Paropix who are creating a market where more Planners will use para planning, but on an outsourced basis.

  • What is para planning? How does the process work?

It is a position within the financial planning industry that involves the performances of the administrative duties of a financial advisor. This includes the outsourcing of a client’s personal and financial information and the preparation of a comprehensive FNA.

This function was created to allow the financial advisor to focus on the sell-side by working more closely with their clients, to identify their Financial needs and Investment opportunities while decreasing the administration overhead of their practice.

The process is very simple and easy. The Financial advisor will still fulfil the function of building relationship with the client, and in the process obtain the required Personal and Financial information which they then outsource to Paropix. Paropix then compiles a comprehensive and accurate Financial Needs Analysis based on the client’s financial goals. Paropix return the completed FNA to the Financial advisor, who then assesses the FNA in order to give the client accurate advice about his/her financial status and offer solution for any possible shortfalls.

  • Is this the same service as provided by life insurance legal advisors in the past?

No, para planning is a purely financial assessment function.

  • What about the assistant in the office who has been doing this for quite some time ?

The assistant’s time spent on gathering all the product information and other information required for a comprehensive and accurate Financial Needs Analysis can now be channelled into a more profitable sales support function.

  • Is it legal for a financial planner to outsource the analysis as part of the advice process?

Yes it is legal as long as the Financial Advisor provides us a consent form duly signed by the client. Paropix or the Para planners at Paropix does not give ANY advice to the Financial Advisor or their clients. The financial services board is quite clear on this. “no advice from the Paropix or Para planners, no legal implications”. The FAIS Act 37 of 2002 covers the legal conduct of the Financial Advisor and his provision of accurate, comprehensive information and advice to the client.

  • Who takes responsibility for the analysis and the advice that is given?

The FSB has clearly communicate to us that we are only there to provide a administration service to the Financial Advisor and that the Financial Advisor is ultimately responsible for any advice given and the accuracy of any information the Financial Planner might use in reaching conclusions about his client’s financial needs and solutions. At Paropix we are all aware of the Financial Planner’s responsibilities and therefore one of Paropix’s prime task is accuracy when completing a Financial Needs Analysis.

  • Will the advisor not be seen as dodging his duties or not being competent to do an analysis?

On the contrary, the client needs to be informed by the Financial Advisor that the Financial Advisor has opted to use an independent, professional and objective team, who is not biased or attached to any product provider and does not use FNA software produced from any product provider, to compile their comprehensive FNA. By outsourcing the time consuming FNA function, the Financial Advisor will be able to focus on things that matter to the client, like giving quality advice and finding optimal solutions for their client’s Financial goals.

Over the years the long term insurance industry cultivated a fair portion of mistrust among consumers and our passion is to enable serious Financial Advisors with a professional, comprehensive and cutting edge FNA that will enable consumers to understand their financial position and the advice given by the Financial Planner.

Many successful Financial Planners employ their own para planners already, at great cost, and are not always able to utilise their time fully.

  • Are there examples of this being done in other countries?

As far back as March 1999 an article on called: “There’s Para planning gold in them there hills”, Gareth Coslett says: “Australia has followed the US in lightening the loads of administration by getting the most out of Para planners. The idea being that a financial planner with a good line in sales speak and a flair for identifying customer needs should not be tied to a desk producing reams of plans.

“Trend spotters” are also creating a thirst for Para planners by predicting that an increasing number of companies will outsource the work. “The adviser will not be out of a job,” he says. “He will just be able to deliver an even more sophisticated level of service to the client. Para planners are becoming more specialized. There’s people around with seven or eight years experience who know they are good at the technical side and are doing just as important a job as the financial planners themselves – perhaps more so just through the compliance side.”

So if these Para planners are the gold nuggets, then what happens to the dusty boulders? “They go and get a wage,” says Rosentreter, poking fun at the larger financial services groups who are yet to catch on to the trend of outsourcing.”

Para planning has also developed in to a big industry within the UK. Just Google it. Paropix is the first Independent Para Planning Company in South Africa that operates with a presence in Johannesburg.

  • How does the advisor know that the analysis is appropriate and technically correct?

Paropix chose a software program called CompolPro as our Financial Needs Analysis software. The initial software saw the light in 1980 and a user group of some of the top producers in the insurance and investment industry not only use the software in-house, they also drive the enhancement, refinement and test the software for the software development company. A software product with proud and happy users and with a 28 year tack record, is hard to beat

  • Do you know what the FAIS Ombuds opinion is on this process?

We embrace the FSB’s view point concerning our services which we provide to our Financial Advisors. I was at the 2009 Annual FPI Convention and what Mr. Charles Pillai said at the convention ratified our understanding of the goal and task of the FAIS Ombuds. We at Paropix agree with the viewpoints and the passion that Mr. Charles Pillai has for the consumer but also for the Financial Advisor, making it a more professional industry than ever before. We want to be the first choice for all Financial Advisors helping them to stay complaint by fulfilling the FAIS Act 37 of 2002 that was set out for them.

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