What’s the difference between paraplanning and financial planning?

If you’ve ever been on the receiving end of well-timed expert financial advice, you’re in the know. Financial planning is not just a nice-to-have for the already-wealthy, it’s an essential service for people who want to make the most of their wealth and income. The right help and guidance can change people’s lives. If you’re looking for a career that combines the satisfaction of helping people with the challenge of working with finances and the rewards of compensation and security, financial planning could be for you.

Within this rapidly changing industry, there are two main roles to choose between: paraplanning and financial planning. Not too many years ago, there wasn’t much of a difference between the two. Paraplanning was often just a stepping stone for financial planners in training. However, with the direction of industry regulation and the push for professionalisation, the two jobs are becoming more distinct. This means for new entrants, there’s an important choice to be made. To make this choice, it helps to understand the actual differences between financial planning and paraplanning as jobs, and pathways to each.

Paraplanning vs financial planning

In general, financial planners are the face of the business. They meet with clients, do the work of interviewing them and presenting plans to them for approval, hold the license/are the representative, and it’s their name on the paperwork.
Paraplanners do all the behind-the scenes work. This means they get the client information from the financial planner, research and select options designed to meet the client’s needs, and pass these back to the planner. Paraplanners may also be responsible for filling in paperwork and getting proposals ready and polished for presentation to clients.

It’s important to note that the balance of responsibilities can vary between different practices. For example, some independent financial planners lean heavily on their paraplanners for product research, whilst authorised representatives may direct paraplanners in more administrative and marketing tasks. To see for yourself, try searching for ‘paraplanner’ and ‘financial planner’ job ads online, and scroll straight to the ‘key responsibilities’ or job description section. You’ll see that some require a variety of general administration and filing tasks in addition to core paraplanning duties.

Financial planners do most of the meeting, communication, interviewing, negotiating, and other face-to-face client interaction. They need not just extensive working knowledge of financial products and services, as well as a positive and proactive attitude towards legal compliance and ethics, but also great people skills. The most successful financial planners form strong positive working relationships with their clients lasting many years.

 

Paraplanner Financial planner
May occasionally speak to clients on the phone, or not at all Usually meets clients in person
Takes interview information from financial planner Interviews clients to understand needs and goals
Conducts specific financial product research Gives direction/guidelines on product category research
Prepares proposal for planner Presents proposals to clients
Some administration and filing work Manages and delegates administration tasks to staff
Administrates implementation of advice Directs implementation of advice
Monitors review timetables Undertakes review appointments per timetables
Employee of license holder Authorised representative/license holder

 

Becoming a paraplanner vs becoming a financial planner

New financial planners are now required to hold a relevant degree, a year of work experience, and pass a national exam. This is a much more onerous standard of education and qualification than the previous RG146. These changes to regulation are aimed at improving professionalism and public confidence in this industry.

The changes help bring financial planning closer to the standards of related professions such as accounting and property law.
What this means is that the pathway to becoming a financial planner, from scratch, is now much longer than it was. Approved degrees may take years to complete, whether it’s a full-time undergraduate degree or one of the approved graduate qualifications. That’s not necessarily a bad thing, because those years of study result in deep understanding of the financial systems and ideas that underpin great advice. But it’s something worth considering for those who aren’t even sure they want to become a financial planner.

The standard for new paraplanners, as of late 2020, is the Advanced Diploma of Paraplanning. This is a nationally recognised VET qualification that’s designed to take under a year of study (or up to two years part-time, self-paced). It’s packed full of essential finance theory for paraplanners, but it’s also aimed at getting you job-ready – even if you don’t have any current paraplanning experience. It’s similar (although a bit more comprehensive, and not exactly equivalent) to what was previously required to be RG146 compliant.

Introducing the Advanced Diploma of Paraplanning

The new Advanced Diploma of Paraplanning is designed to get paraplanners job-ready for a variety of possible working environments, from smaller firms to larger practices where the specific tasks may vary. It focuses on the specialist technical skills and knowledge required to do all the behind-the-scenes financial planning work that they need to do under the direction of the planner or adviser. Each part of the course focuses on a different aspect of complex situations and issues that can arise, from compliance monitoring to developing plans for clients with specific circumstances.

There is no particular entry requirement for this qualification; you don’t technically have to have another qualification to get in. However, it’s highly recommended that you have a relevant qualification such as a Diploma of Financial Planning, an accounting qualification, or significant work experience in the industry (even if not all in a paraplanning role). Learners are expected to already be familiar with basic financial terms and concepts. If you don’t already have an Advanced Diploma or higher qualification, you’ll be required to take a brief test (including a numeracy test) to make sure you’ve got what it takes to work your way through this course effectively.

This qualification is made up of 12 units (subjects). Nine are core units, and then there are three electives to round it out. The core units are:

  • FNSCUS516 Record and implement client instructions
    ‘record’: the actual process of getting the client instructions, however it’s done in your particular organisation, including the advanced communication and organisation skills to record everything in one place.
    ‘implement’: what you have to do once the decisions have been made or approved, from going through Ts & Cs with a fine-toothed comb, to taking actions (orders, contract administration etc.) in accordance with the agreed plan.
  • FNSFPL614 Develop financial plans
    The five detailed steps from establishing the objectives and scope of the plan, right through to developing the preliminary financial plan ready for the planner.
  • FNSFPL615 Present and negotiate financial plans
    Exactly how to show and explain your prepared plan to the authorised rep (financial planner) so they understand and appreciate the research. Includes sections on how to negotiate the plan effectively, finalise the plan ready for the client, and keep comprehensive records along the way.
  • FNSFPL616 Implement financial plans
    The three most important parts of putting the plan into action: develop an action plan with priorities and schedules, and get those actions done, all according to procedure.
  • FNSFPL621 Comply with ethical and operational guidelines, legislation and regulations in financial planning
    All about staying on top of compliance requirements, including regulations, record-keeping, and ethical behaviour standards.
  • FNSFPL622 Conduct financial planning analysis and research
    How to systematically discover, analyse and evaluate every strategy, product and market that might be right for the client.
  • FNSPRM611 Monitor and review organisational system compliance with legislation and regulations
    How to keep up to date with compliance requirements, and develop systems and procedures from scratch to manage compliance.
  • FNSINC411 Conduct work according to professional practices in the financial services industry
    Handy for those with experience as well as new starters, this unit is all about formal rules and unspoken standards for financial service professionals.
  • FNSINC511 Conduct financial product research to support product recommendations
    Building on the previous research unit, this one focuses specifically on product research. You’ll learn how to thoroughly research products, uncovering the details and stats that the planner (and clients) need to know.

In addition, Monarch’s Advanced Diploma of Paraplanning includes the following three challenging and dynamic electives. These units were hand-picked by experienced financial planners and planning educators for their potential to contribute to your future career outcomes.

FNSFPL609 Prepare advice in managed investments

Managed investments is a broad category that includes a variety of products designed for various needs and levels of investor sophistication. There are ‘mainstream’ managed investments, and niche funds specialising in particular industries or technologies. The range of managed investment products is changing all the time, so it’s important to know how to research and analyse strategy options afresh for each new client file. Even for paraplanners working for authorised representatives, it’s important to have the basic skills to understand the documentation associated with standard managed investment products, in order to know why they do (or don’t) fit with the client’s long-term needs.

This unit will guide you through the five big steps of preparing unique, effective and efficient advice for a client, from gathering the relevant needs and risk profile information, to administrating service contracts.

FNSFPL610 Prepare advice in superannuation

As more Aussies become acutely aware of their superannuation needs and goals, there’s a growing demand for quality advice and assistance with superannuation strategies. From pre and post retirees, to young people looking for a solution that’s not just out of the box, you will find yourself preparing advice for a variety of superannuation strategies and products. This may include anything from selecting the right fund and product type, to determining actions to maintain compliance with regulations on draw-down and reinvestment. Whilst the strategic option of self-managed superannuation is noted, this unit is about superannuation in general.

This means you’ll get a great big-picture view of how super works as part of a client’s whole portfolio.

This unit covers the five steps of preparing comprehensive super advice, from strategies that meet the client’s risk profile, to the documentation needed to put the superannuation services in place.

FNSFPL619 Prepare advice in life insurance

Life insurance is an incredibly important yet misunderstood aspect of clients’ overall comprehensive financial plans. It’s something that can be hard for planners to discuss with clients, due to the emotional aspects of its purpose. As a paraplanner, your role is to identify client needs, select appropriate product options, and communicate them back to the client (via the planner, of course) in a way that makes sense in context. This supports the financial planner to have well-informed, sensitive yet positive discussions about their life insurance needs.

This unit will help you confidently undertake your part in the life insurance advice process, from understanding the implications of the client’s needs and risk profile, to effectively administrating and executing the actual insurance contracts.

Choose Monarch Institute for your Advanced Diploma of Paraplanning

Monarch Institute has a long history of helping financial planning professionals get confident and job-ready for this fast-changing industry. Founded by financial planners who wanted to give learners the real-world education they wanted as students, Monarch has specialised in nationally recognised financial services qualifications for several years. We’re trusted by leading employers to deliver training for their financial services staff, and graduates can take advantage of Monarch Institute’s great professional network.

As a future financial services professional, you deserve a learning experience that leaves you confident and excited for the line of work you’re about to get in to. You’ll love your time learning with Monarch . It’s not just us saying that; check out the reviews from hundreds of real graduates over on Trustpilot. Students love the combination of independence and freedom to study at their own pace, with the personal support from trainers with decades of experience.

Still not sure whether paraplanning is for you? Want to find out more about our Advanced Diploma of Paraplanning? Register your interest or chat to one of our friendly course consultants today on 1300 738 955 or info@monarch.edu.au.