Your IndustryJun 24 2015

Paraplanners prove their professionalism

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For the fifth consecutive year, the Institute of Financial Planning has conducted its annual paraplanner survey, designed to provide continuing insight into this increasingly important role within the financial planning profession.

As a group where 75 per cent are not registered with the FCA, paraplanners are very well qualified. As many as 86 per cent of respondents have level 4 qualifications compared with just 60 per cent in the 2014 survey. Advanced qualifications were also evident, with more than 30 per cent having a university degree and more than 30 per cent having level 6 qualifications such as CFPCM certification. These are clearly individuals who take their professionalism very seriously.

With the role gaining greater recognition, paraplanners’ earnings are rising, reflecting the value they clearly deliver to the business. More than 30 per cent reported that they earn more than £40,000 a year with 75 per cent of respondents earning more than £30,000 compared with 51 per cent in 2014 and 46 per cent in 2013, as the demand for their services grows.

Recruitment is a growing problem. Financial planning firms are regularly reporting that they are finding it difficult to recruit good paraplanners with the credentials they need to run effective, client-focused businesses. A quick look at social media will show you that recruitment consultants have lots of paraplanner vacancies they are struggling to find the right people to fill. Outsourced paraplanning firms are growing in number and also report challenges in getting enough people capable of delivering the service in the face of strong demand.

Looking ahead, 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. Two-thirds reported that they wish to remain as paraplanners. Just 16 per cent indicated that they aspire to become advisers or financial planners in future compared with 23 per cent in the 2014 survey and 29 per cent in 2013.

Taking a closer look at the role itself, what activities take up most time for paraplanners? On a day-to-day basis it is not much of a surprise to hear report writing is the primary task with 55 per cent saying it takes most of their time. It is followed by carrying out research and analysis at 20 per cent. Helping advisers decide the most suitable recommendations for clients came in third with 12 per cent. Interestingly, administration came in last with just 4 per cent saying it took up most of their time.

When it comes to which skills are most important, strong technical knowledge is seen as by far the most important with 45 per cent rating it number one. Good planning skills came in second with 15 per cent and technical analysis ranking third with 13 per cent rating it top. Despite report writing taking up most time, it ranks 6th in terms of the most important skills needed.

The results reveal that to help with strategic financial planning the use of cashflow modelling is also strong among this young and dynamic group, with 84 per cent saying they use the process to map out clients’ financial plans.

It is clear that as a profession we need to encourage highly skilled entrants into a career in financial planning. One key initiative that is already making headway is the new paraplanner apprenticeship scheme currently under development. Firms should be encouraged to consider different ways to cover the skills gap and this exciting new scheme will be met with interest across the profession. Find out more details here: www.gov.uk/government/publications/apprenticeship-standard-paraplanner

Sue Whitbread is communications director of the Institute of Financial Planning.