Revealed: The five-point test we use for better and better paraplanning

There’s no doubt that advice process has come a long way in the last few years. Most of us are also still striving to improve quality, reduce risks and provide an ever increasing level of service to our clients day by day.

However, whether you do your own report writing or use a paraplanner’s help with it, here are a few useful ideas for ‘raising the bar’ of quality in paraplanning that work really well for us and might be worth thinking about if you don’t already do them.

1. Always get your reports peer-reviewed – that’s proof-read – before you send them to a client

Ideally this should be done by someone who doesn’t know your client and hasn’t been involved in your client’s case. They need to be able to understand the advice that’s been given and check it for readability. Where possible, the proof-reader should also be technically proficient enough to question the technical content of the report for accuracy, know when something they’re looking at doesn’t stack up, and be able to spot any gaps where risk warnings or other compliance-related wording needs to be added.

2. Welcome and embrace feedback – good or bad

We can probably all see the benefit of someone casting a second pair of eyes over a report before it goes out to a client. When involved in a particularly large, time consuming or complex case, it is easy to become ‘blind’ to what you’re looking at after a while.

I often refer to this as the ‘can’t-see-the-wood-for-the-trees’ part of the process. Any report writer that has ever experienced this will know what I mean if they’ve ever picked up the same report a couple of days later and given it another read through. It’s amazing how different something looks after you’ve stepped away from it for a while.

The important thing to bear in mind in the proofing process is that the proofer is not there to criticise the work but to suggest things that could make it better for the client and to protect you. We mustn’t take it personally or feel disheartened when things get picked up that we didn’t spot, or forgot to include. It’s not a blame game or one-upmanship – we’re doing it to safeguard each other, our company and our clients from ‘human error’, which is perfectly normal and inevitable in any walk of life.

3. Keep a good audit trail

Sounds obvious, but an amazing number of firms do not have sound audit trails on their files to track the progress of how we got from what was discussed in the client meeting to what was ultimately recommended in the suitability report.

I’m talking specifically here about the paraplanning audit trail, rather than the advisory one (i.e meeting notes), as it is not always easy to see how the report writer has calculated certain numbers, what assumptions have been used, what rates have been used, and the actual mathematics behind the calculations themselves.

There are ways we can make it easier to demonstrate how the calculations were arrived at.

A simple Word document on the file with a few bullet points summarising the assumptions used in the calculations would often be sufficient. However, I like to undertake all my calculations through an Excel spreadsheet rather than on a calculator, as I then have a permanent record of the audit trail for my calculations and can clearly show my workings when questioned. This is also pretty useful if you ever have to re-visit your numbers at a future date (e.g. at the next annual review) and re-run the calculations again, as the structure is already in place within the spreadsheet and you simply need to update a few of the numbers.

We particularly like this approach when proofing each other’s reports. It is clearly not commercially viable for a proofer to re-run all the calculations in someone else’s report just to make sure the person that wrote it didn’t get the maths wrong. Therefore, for large or complex reports we might use audit-style ‘random sampling’ – e.g. we pick a sample of the figures in the report and re-run them to check the maths.

Where the information is in an Excel spreadsheet and we can clearly see the formulas that have been applied, it makes this part of the process even quicker and easier, as well as enabling us to test a larger sample of the calculations.

Another benefit of Excel is that you can add ‘notes’ to the cells in the spreadsheet. We often use this facility to summarise where the figure in the cell came from (e.g. from the valuation dated xxx, or as confirmed verbally by the client in the meeting dated xxx).

Again, this simply means that if we need to evidence the figures at a future point (for example in a worst case scenario of a client complaint), then we should have no problems in demonstrating what information we’ve used, where it came from, and how we’ve used it in our calculations. This really doesn’t take much time but may be incredibly valuable to a number of businesses.

4. Be clear and definitive in your language.

A lot of us do this without thinking about it, but try to avoid language like ‘I would recommend that’ and ‘you could either do this or do that’.

Our clients rely on us to be clear and direct in our recommendations as much as possible, although there will always be times when you’re going to have to let the client make a decision if it’s an emotive matter, or one where they’ve got to make a choice between two or more valuable things.

This falls within the FCA’s guidance of using ‘clear and plain English’, so it benefits everyone if we can avoid being non-committal in our tone and language.

5. Take guidance on best practice from other successful firms.

There are a number of paraplanners and business owners in the market that are happy to share their knowledge and experience for free when it comes to the advice and report writing, research, compliance and due diligence processes.

The Institute of Financial Planning (IFP) should be able to point you in the right direction if you’d like some good contacts. If you’re not sure whether your current processes are correct or robust enough, then there’s no harm in asking how other people approach the same problems.

Our business has grown and evolved in this way – asking other people to look at our established practices and tell us what they think. A fresh pair of eyes is often more valuable and honest than trusting ourselves to provide a totally arm’s-length, rational critique of our own processes. We should welcome change – it keeps our thinking fresh and makes sure we stay ahead of the game.

Wanting to continually raise standards is a noble thing to do in business, but you need to be good at implementing it; and once you’ve done it, to stick to it.

Part of the process does involve being pretty tough and accepting any negative feedback. None of us are perfect, but if you’re committed to walking down a long path of trying to raise your game and be the best you can be, then I’d say you’ve already made it past the first hurdle.


This is the original version of Kim’s latest column for Professional Adviser and was published in its October edition