Attracting 79 resopnses, what characteristics can we associate with Paraplanners? Some 75 per cent of respondents were aged 44 or under, with 38 per cent aged between 25 and 34.
While there is typically little regulatory need for these individuals to have professional qualifications, it is an area that paraplanners clearly take very seriously indeed, with 60 per cent of respondents having level four qualifications, and advanced qualifications were also evident.
Paraplanners are actively involved in the due diligence/research processes when it comes to decisions about which financial products a firm will recommend. Some 83 per cent reported that they are involved either exclusively (33 per cent) in such decisionmaking, or along with the financial planners (49 per cent).
Interestingly, the majority of respondents clearly see themselves as continuing their career as a paraplanner, supporting the view of paraplanning as a strong career choice in its own right. Almost two-thirds (65 per cent) reported that they wish to remain a paraplanner, with 23 per cent indicating they aspire to become an adviser or financial planner in the future.
Proving the versatility of paraplanners, the survey found that the number of advisers supported by an individual paraplanner varies significantly. While 39 per cent of paraplanners work with just one adviser or financial planner, 24 per cent work with five or more advisers, reflecting the role of outsourced paraplanners. Some 56 per cent reported that they have an excellent working relationship with their financial planners, with 83 per cent indicating that that they feel valued as a team member.
As the role gains greater recognition, paraplanners’ earnings are rising, with 51 per cent of respondents reporting that they earn between £30,000 and £40,000 a year. This reflects the value that they clearly deliver to the business. .
Strategic financial planning tool cash-flow modelling is also strong among this young and dynamic group. The survey revealed that 79 per cent of respondents said they work in firms that use cash-flow forecasting as part of their financial planning offer to clients, with 64 per cent personally involved in delivering the service.
Cash-flow modelling not only adds significant value for clients, but also for the financial planning business . Right from the discovery meeting, it provides the basis for practitioners to help clients take a look at their financial future. Sometimes this can be scary, sometimes it is exciting. However, it forms the ideal context for a financial plan and all the corresponding decisions that hang off the back of it both now and in future. Planners regularly report that when they meet up with clients for their annual planning meeting, one of the first things they ask is: “How am I doing?” They do not mean: “How much money have I made in my Isa or my Sipp?” They mean: “Am I on track to achieving my goals in life and are the timescales still realistic?” With more and more focus on gaining clients for life, this is one way for firms to make them more ‘sticky’, ensuring such a lifelong commitment. With all the time they invest in sharing emotional and life goals with their trusted financial planner, are they really going to abandon the firm and move elsewhere?
Firms can choose whether to use a version of proprietary software to crunch the numbers or Excel spreadsheets. This is a business decision that individual firms and practitioners must undertake for themselves. Having the tools to do the job is one thing; having people with the right skills to use those tools effectively is perhaps even more important. That is where paraplanners who can prove that they have the relevant skills set are becoming a particularly valuable resource.
Following the RDR changes last year, many advisers needed to completely change their business model so that they could demonstrate the value they add right at the start of the engagement process. Cash-flow forecasting is a powerful tool for doing just that.
The dramatic changes to retirement options announced in the March Budget also make a strong case for cash-flow forecasting. Consumers across the UK will need help to make such projections when it comes to taking income from their direct contribution schemes, if they are not to risk running out of money during retirement.
With many businesses now finding that recruiting suitably trained staff is becoming a real challenge, paraplanners who are spending time developing their financial planning skills as well as their technical knowledge are very well placed to enjoy a rewarding career and thrive in the post RDR world.
Sue Whitbread is communications director of Institute of Financial Planning
