What is Paraplanning?

The financial services sector relies on the assistance of paraplanners, with the role being more in demand than ever before.

While most people will be familiar with the role of a paralegal, very few will have heard the term “paraplanner” before, let alone know what they do.

Paraplanners are a vital part of the financial planning team and the role is a career in its own right. They carry out essential work that helps to facilitate the smooth running of a financial planning company.

If you’re considering a career in the industry, here is some more information to help you understand what the role might look like.

Paraplanners working on a client

The History Of Paraplanning

Over the last 20 years, paraplanning has become recognised as a financial services career in its own right.

The profession has started to realise just how much of an impact they have on easing the pressures on a financial planner. They help to drastically reduce the time planners spend on admin tasks and report writing.

The role came about when it was realised just how much time this was taking out of a financial planner’s day. Time which could otherwise be spent face-to-face with clients.

The admin and report writing work was traditionally passed over to a financial services administrator.

Colleagues holding this role were finding themselves frustrated at the lack of progression and were looking for a way to use the skills and experience they were picking up in their day job.

Many of these financial services administrators had held these roles for many years, picking up lots of valuable knowledge along the way.

Born out of this was the paraplanner role. It gave administrators a career goal to aim for.

Like a paralegal, it is difficult to define the job as the role will vary depending on their organisation and what they are asked to do. Some paraplanners will hold more administrative roles and others will be more technical.

What Is Financial Planning?

Financial planning is the process of understanding working with a client to understand what financial goals they have over both the long and short term. This involves looking at, and planning for, any income, assets, savings, investments, and pensions they have. Once this has been calculated the financial planner can help the client to put together a financial plan that is both realistic and achievable.

A financial planner may also advise and recommend clients about pensions and investments.

It is important for a financial planner to have a good, long-term relationship with their client. This will help to make sure any goals set are on track and to continually assess that they are still appropriate for the client.

What Tasks Might A Paraplanner Do?

Preparing Reports For Clients

This involves researching appropriate products for clients and analysing their existing financial arrangements.

This might include carrying out a cash flow analysis.

The organisation will generally have software to use that will help with this process.

When the research is completed, the paraplanner will then pull it all together into a suitability report. The financial planner will review the report and then pass it on to the client.

Implementing Report Recommendations

Once the report containing recommendations has been sent to the client and the client has agreed to it, the paraplanner will then be responsible for processing the business. This is integral to making sure things run smoothly for the client.

Making Sure The Client Files Are Kept Up To Date

It is the responsibility of the paraplanner to make sure the client files and records are all maintained properly and are compliant with regulatory obligations.

This means making sure a comprehensive history of advice is kept throughout the lifecycle of the client’s journey.

Carrying Out Annual Reviews

Paraplanners are crucial to supporting advisers providing annual reviews. Whether it be preparing information, crunching numbers or developing the advice document.

Other Tasks

Other general tasks might include:

  • keeping up to date with the relevant rules and regulations around financial planning and taxation.
  • attending client meetings alongside the financial planner.
  • preparing cash flow forecasts which show what income and outgoing a client might have and how this will affect what plans they can make.
  • responsibility for drafting and maintaining a suite of template client letters.

Why Does Paraplanning Matter?

Paraplanners are essential to the smooth running of any financial planning business.

The work that they do means that financial planners can concentrate their time and efforts on an ever-increasingly demanding career.

Paraplanners ensure that the service a client receives is the best that it can be. It relieves some of the administrative pressure off the financial planner, which in turn moves things along a lot more quickly and smoothly.

Put simply – financial planners don’t have enough time in a day to do everything.

The report writing part of the job that paraplanners take on is time-consuming. It requires considerable research even before writing.

Taking this away from financial planners gives them so much more time and flexibility to be more available to clients.

Man smiling at a woman in a meeting

Why Are Paraplanners In Such Demand?

After the changes in regulations in Australia have forced some advisors out of the industry. This shift in the industry has created a new pathway for Paraplanners. If you want to help people change their lives by helping them reach their financial goals, chances are paraplanning is on your list of career options.

Paraplanning teams are growing all the time; so much so that the candidate pool of potential employees is shrinking.

Some reasons why they are so in demand include:

  • Financial planners need help keeping up to date with all the laws and financial products on the market as these are changing all the time. It is too much for them to keep on top of this and meet clients while also looking for new work
  • Regulation has made it more burdensome for financial advisors to do their job. This means that they need help more than ever to make sure their work is in compliance.

Average Salary Of A Paraplanner

The demand for paraplanners helps the profession to command a higher salary.

They tend to average around $74,40 per year.

The salary will largely depend on both the qualifications and experience of the paraplanner.

What Skills And Qualifications Does A Paraplanner Need To Have?

Skills

Some of the pre-requisites to succeeding in a paraplanner role are:

  • A great working knowledge of Microsoft Office, Word and Excel
  • Excellent organisational skills
  • Great communication skills
  • The ability to think analytically

Qualifications

There is no specific qualification that you need to become a paraplanner. However, the more dedicated you are to becoming as good as you can in your job will help to make you more attractive in job applications.

Monarch’s Advanced Diploma of Paraplanning qualification was finalised in August 2020. It’s purpose-designed to fit the needs of industry stakeholders (especially employers) looking for highly skilled paraplanners with the technical ability and transferrable skills to take on a challenging role within a practice team

Do Paraplanners Need Specific Training?

As with any role, there will always be a process of training you need to go through to tell you what you need to know.

The first training that will be essential to the role is learning about the Australian financial services industry itself. You will need to familiarise yourself with the terminology, products, and regulatory rules.

When you start your paraplanning role, you will learn what is expected of you in your role, any systems you need to be familiar with and understand who the business operates at a higher level.

Once you have been in the role for a while and are up to speed with what is expected of you, you will be in a position to build on your technical knowledge.

If there is any specific area of financial services you are interested in, you can always ask for more training or work in this area to help you grow your expertise.

What Are The Career Opportunities For Paraplanners?

There are many paraplanners who are happy in this role without any aspiration to become a financial planner in their own right.

On the other hand, there are people who use this role as a stepping stone into a financial planning career.

Career Paraplanners

Many professionals holding this role will have worked their way up to it from an administrative position. For those who would still like some room to grow there is the opportunity to take on more responsibility and even be involved in different areas of work.

Experienced paraplanners may be asked to be involved in training new starters or even take on senior roles within the team. They may also be given particular project work to be involved in or work to be considered a specialist in a particular area of their expertise.

Financial Planner

Becoming a financial planner in their own right is often the goal of a paraplanner. This makes sense as they will already have built up some on-the-job experience and have knowledge of the subject area.

Many financial services organisations recognise that this is the ultimate goal of their paraplanners and will help to put in place a path for them to work their way up to this. It will give them the opportunities and responsibility they need in order to prove themselves as having the right experience to take on the financial planning position.

Other Roles In The Finance Industry

The skills learned and used in the paraplanning role are highly transferrable to many other positions, especially within the financial services industry. The role involves carrying out a lot of product-specific research and being knowledgeable in all aspects of financial planning/advice. These analytical skills can easily be used in many other positions.

In the finance industry, paraplanners have a good reputation as being incredibly valuable. As a result, great paraplanners with good experience are looked on favourably when applying for other roles.

Your next step

Paraplanners are an integral cog in the financial planning machine. They keep things moving which makes for happy clients and happy financial planners.

To find out how you can kick start your paraplanning career in Monarch’s Advanced Diploma in Paraplanning, get in touch with a friendly course consultant today.