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.”