Working towards a career as an adviser is not the only option for new entrants to financial services.
Advice firms also need people in other roles, such as paraplanning – which has become a career in its own right in recent years.
The beauty of paraplanning is that each advice firm is unique, meaning the role can vary greatly depending on where and how the paraplanner works.
If your plan isn’t to become an adviser, more paraplanners are turning to outsourced paraplanning because the rewards are so much higher
This variety is particularly apparent in outsourced paraplanning, where specialist firms provide services to a wide range of advice firms.
So, what makes outsourced paraplanning an attractive occupation and what does it take to build a successful career in this field?
In demand
A key point about outsourced paraplanning is that it is in demand. Advice firms need to manage the costs of running their business, and, because many firms are small, it can be more cost-effective to outsource their paraplanning than to employ paraplanners in house.
New apprenticeship standard unveiled for financial planning and paraplanning
“If an advice firm needs a piece of work done, they would only pay the outsourced paraplanner for that report or bit of research,” explains Stuart Stanford, founder of outsourced paraplanner Root Paraplanning.
“One-man bands cannot afford a £60,000-to-£70,000 salary for an experienced chartered paraplanner and they don’t have the time to train them in house.”
Your qualifications and experience tend to speak for themselves
Some advice firms may hire diploma-qualified paraplanners. But, says Stanford, outsourced paraplanning can give them affordable access to chartered paraplanners, who have a higher level of knowledge.
Getting paid as an outsourced paraplanner inevitably depends on the volume of business you receive from advice firms. That, in turn, may depend on how services are offered and priced.
Outsourced paraplanning firms can provide services to advisers on either a retainer or a contingent basis. Root provides both to attract a wide range of advice firms.
“You have outsourced paraplanners that are retained, which is a little more expensive,” says Stanford.
“The adviser would pay a flat fee for the month and then pay an additional cost per report in the hope that the retainer would subsidise some of those costs.”
If you’ve got the desire for interaction and a bit of communication, that’s probably a good sign
In contrast, Stanford describes contingent outsourced paraplanning as a service that advisers can pick up when they need it.
“So, if you’re a small IFA and you’re doing only two or three bits of business a month, a contingent outsourced paraplanner is probably your best bet as you’re not having to pay a retainer,” he says.
Earning potential
In Stanford’s experience, outsourced paraplanning provides the potential to earn significantly more than in-house paraplanning. This stems from advice firms’ difficulty in paying competitive salaries for permanent chartered paraplanners.
Pay for outsourced paraplanners is commensurate with the work they do and, for Stanford, this is an important distinction between the career progression of outsourced paraplanners and that of in-house staff.
“Working as an outsourced paraplanner gives you access to advisers anywhere in the country, so your career progression is about building your technical knowledge,” he says.
An advice firm that needs a piece of work done would only pay the outsourced paraplanner for that report or bit of research
“If you want to be working with numerous advisers, the incentive is that you know you’re doing a good job and you’re getting paid commensurately with the effort you put in.”
Paraplanners who are employed in house, says Stanford, are probably not paid commensurately with the work they do and are more likely to be climbing the career ladder as an aspiring adviser.
“If your plan isn’t to become an adviser and you want to be a career paraplanner, more paraplanners are turning to outsourced paraplanning because the rewards are so much higher,” he says.
Starting a business
As an experienced outsourced paraplanner, it is possible to start your own business in much the same way as advisers do. But, says Stanford, you have to possess some sales skills.
“You need to establish relationships with advisers. That is not as hard a job as [being] an adviser who goes out and gets clients – that’s a very tough gig,” he says.
“As an outsourced paraplanner, your qualifications and experience tend to speak for themselves. So, we often get direct enquiries from advisers asking for support – but you still need to forge those relationships with advisers.”
Working as an outsourced paraplanner gives you access to advisers anywhere in the country
To do this, advice firms must be able to trust you and know you will deliver the reports they need, and when they need them. They must be able to understand the information you give them so they can explain it to their clients.
“You have to engage with people,” says Stanford.
“Some people aren’t very comfortable with that. But, if you’ve got the desire for interaction and a bit of communication, that’s probably a good sign for becoming an outsourced paraplanner.”
Amanda Newman Smith is features writer for Money Marketing
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