‘Better advice quicker’: Transforming paraplanners into ‘cyborgs’

Speaking on the latest episode of The ifa Show, co-founder and co-chief executive of Padua Matt Esler explained how technology can drastically increase paraplanners’ efficiency, becoming a “cyborg-paraplanner”.

Esler said a common misconception people make about his business is that they consider it a robo-advice business, however, he counters that this is a mischaracterisation.

“A lot of advisers say to me, ‘You guys are robo-advice’. And I say, ‘No, you’ve got that wrong. We’re a robo-paraplanner’. We’re not trying to replace the adviser. We’re trying to make the generation of the advice, which has predominantly been the domain of the paraplanner, much more effective,” Esler said.

Acknowledging that this could cause concern among paraplanners, Esler said: “Please don’t freak out, I’m not replacing you, we’re just turning you into cyborgs.”

He said that most paraplanners produce an average of three standard advice plans a week, but they want to be able to work more efficiently and effectively but most of the existing tools and procedures don’t allow them to.

“Now if you think about how many days in the year, that’s not a very efficient way to be running a business, particularly given the demand for paraplanning has gone up quite dramatically, and the cost of paraplanning has gone up quite dramatically and so the cost of advice has gone up,” Esler said.

“If you can make it more cyborg-paraplanner than manual human intervention, you increase quality, you decrease turnaround time, so you make the cadence of advice faster, and you reduce cost, which means better value.

“So if I can reduce the cost of advice, increase the benefits that I’m providing, that creates a value gap and that’s what advice is all about. If advisers can articulate that clearly to their clients in a visually engaging way, you’re going to have very happy clients for a very, very long time.”

To explain how most paraplanners are currently functioning, Esler said they have become advice writers and Word document experts, “producing an advice document out of a system that doesn’t produce the whole document or the research or the modelling or anything properly”.

He added: “They’re using Excel and various other tools to uplift the document to get it to a state that they can hand to the client. That’s why they’re only producing three a week, which means that they’re taking maybe 10 hours plus to produce each document.”

Notably, Esler said that even if the technology was able to instantly produce advice documents, relatively self-sufficiently, it would still not override the need for a human paraplanner.

“Even if you got all the way to zero and the tech was able to do all of that research, modelling, all of that heavy lifting, which I personally believe that is a state of being in the not-too-distant future, it doesn’t mean that the paraplanner won’t exist. It just means that they will become strategic,” he said.

Esler suggested that, as paraplanners are more technical-focused, rather than people-focused like advisers, they prefer to prioritise understanding the relevant legislation, rules and regulations, and strategies, allowing them to deliver quality advice documents.

“They want to devise better strategies to enhance wealth or protect wealth or find loopholes in the law and whatnot. That is an important part of the whole process, because the adviser is making the recommendations, but they’ve engaged the client, they’ve understood their objectives, they understand their needs and they’ve got to know the client,” he said.

“Then they talk to the paraplanner and the paraplanner needs to be strategic. So, they move from being an advice writer where they’re literally managing a Word document, to actually being able to produce better advice quicker. It means they can model various scenarios much faster. It means they can do the research much quicker.

“It means that they can provide a much better product without the need to become a Word document editor, which is what they’ve effectively been for the last 20 years.”

To hear more from Matt Esler, tune in here.