As advisories look to trim their budgets, practices are increasingly questioning how to incorporate paraplanning into their future business models.
Paraplanning is one of the biggest costs for any advice business and, consequently, a growing number of firms are now choosing to outsource to overseas teams or use compliant software.
Other practices argue, however, that having a dedicated, local paraplanner is essential to reducing compliance risk and cutting down on Statement of Advice (SOA) production time.
The paraplanner view
Paraplanners themselves have also been questioning where they fit in the future advice profession.
A survey from Tanngo and the Paraplanner Hub recently asked whether paraplanners should have to register with the Australian Securities and Investments Commission like advisers, given their role in the advice process. The survey found one in five paraplanners is registered on ASIC’s Financial Advisers Register.
The research also found most paraplanners (72 per cent) had no ambition to become a financial adviser, contrary to expectations, with two-thirds intending to continue their current role long term.
The survey into the views of 130 paraplanners also found 89 per cent said they had influence over the strategy the adviser provided. Meanwhile, 70 per cent believed they had an impact on the products recommended.
“If this is the case, shouldn’t the education and ongoing professional development of paraplanners be important?” the report asked.
The author of the report, Mel Drago, said there was an onus on the industry to give career paraplanners greater development and technical support.
“[These results] could suggest that paraplanners are critical to developing appropriate and compliant advice for our clients,” said Ms Drago, founder of Tanngo and The Paraplanner Hub.
“If this is the case, then they should have recognisable qualifications so that all who produce advice are suitably qualified, and their qualifications are transparent and easily identifiable for those who employ their services.”
Ms Drago further argued paraplanners’ role could expand in future and they could be used to double-check advice before it goes to the client.
“Using paraplanners as part of the advice review process would make sense; they understand all elements of advice – product, strategy, and compliance – and when they are not writing SOAs they could possibly be assisting with easing the compliance burden for the licensee,” she said.
Paraplanner Claire McLean said support staff are “unrecognised” in the industry’s professional evolution, despite their influence on the advice provided.
“Advisers get training days, CPD requirements, and education standards,” she said. “Paraplanners and support staff don’t technically have to have any qualifications, and there is very little training tailored to us unless you work for a giant licensee,” she said.
Ms Drago agreed: “Paraplanning needs to be recognised by the industry as a genuine role in our industry, and therefore needs to have some structured qualifications that are mandated by a higher body”.
“I think an exam to become a paraplanner would be a good start - though not as rigorous as the adviser one - but at least some way to identify who is qualified to do paraplanning or not,” she said. “At the moment, anyone can say they are a paraplanner.”
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Comments5
"The important thing to note is that most paraplanners DO obtain the same education standards as advisers, because it makes sense - in reality, there would probably be no extra study. The issue is - the qualification it is not recognised. There is no legal qualification, recognised by a higher body, that a paraplanner needs to have. And that is a concern."
Anon 09:22 on 24 Feb 22
"The issue is, that the buck must stop with the adviser. 100% every time. It is certainly nice and helpful when paraplanners make suggestions, but it shouldn't ever be expected IMO, as it is the adviser that is legally and morally responsible for the quality of the advice document and the recommendations it contains. If you need product or strategy input from your paraplanner, and if they are regularly coming up with ideas or strategies that you've missed, you either need to upskill yourself or quit being an adviser. This isn't to say paraplanners are just glorified document producers by any means - a high level of knowledge and understanding is required to accurately model and write about the recommended strategies. I'm also concerned that requiring paraplanners to have any sort of qualification could potentially allow an adviser to attempt to diffuse responsibility by throwing their hands up and say "but I had it checked by a qualified paraplanner" when this is just not relevant. I absolutely support better training and support for paraplanners, and again, it's the adviser or the employer's responsibility to provide adequate training opportunities and where using a self employed paraplanner, it's the adviser's responsibility to ensure that the paraplanner is sufficiently knowledgeable and up to date in their knowledge. Finally, adding any requirement like this will just add more regulation and red tape to an industry that's already drowning in it."
EH 18:50 on 23 Feb 22
"Please. No more exams. Especially online exams. No one really learns. What about a workshop learning process. "
Robert De Ceglie 16:47 on 23 Feb 22
"The Advanced Diploma of Paraplanning is offered by a number of RTOs"
Anon 16:46 on 23 Feb 22
"I am a career Paraplanner and have been for 17 years. I am also a qualified Financial Adviser. I will see clients occasionally but my preference is paraplanning. I review an adviser's advice, offer suggestions for alternate options. i compare products and also do a post advice compliance review. I'm not averse to additional qualifications but in my case, if already meeting all of the Financial Adviser qualifications and ongoing CE requirements, it would be unnecessary and onerous."
Non 15:17 on 23 Feb 22