More to paraplanning than meets the eye...

To many in the financial services industry, the title “paraplanner” conjures up an image of a quiet techie beavering away behind the scenes on the lesser tasks of financial planning. But restricting a paraplanner’s services to this is wasting the valuable resources of both the paraplanner and the financial planner.

The dictionary definition of the prefix "para" is "beside"; thus a paramedic works beside a doctor and a paralegal beside a lawyer. However "para" also means "beyond" or "outside the normal sphere of a discipline".

So by definition, a paraplanner is someone who works beside a financial planner but also contributes skills beyond those of the planner. These extra skills should be valued, utilised and nurtured to achieve maximum efficiency and productivity in a financial planning practice.

The role of a financial planner is essentially one of relationships: sourcing clients, determining financial and personal needs, identifying their risk tolerance and finding the best strategies to meet their needs. However, once the strategy is determined, a financial planner with good paraplanning support can step into a background role of overall supervision and occasional client contact as needed.

The paraplanner then takes over management of the client: researching the best way to meet their needs and preparing a detailed plan and portfolio for the planner to present to the client. Once the plan is approved the paraplanner organises the allocation and purchase of assets, monitors the portfolio and assists the client with any questions or day-to-day problems.

The planner can limit ongoing client contact to a needs and portfolio review once a year or if circumstances change, thus freeing time for more client sourcing and initial contacts. You could say that the financial planner takes the macro-perspective and the paraplanner the micro.

Some financial planning organisations are already making good use of their paraplanners in this way. But many still stick to the old way and these firms will need to change their thinking to keep up with the future directions in the financial planning sector.

Already we are seeing a significant increase in the number of clients seeking professional financial advice, due partly to the Government's superannuation initiatives and the expected introduction of member choice.

Share floats have also increased awareness in investing as a means of providing for the future.

This has resulted in the demand for financial planners outstripping supply, and the shortage is likely to increase in the future. So making better use of the skills of paraplanners to enable financial planners to direct their expertise to the most profitable areas of the business makes a great deal of sense.

However, a large number of so-called paraplanners do not have the required skills to undertake an expanded role. This is not through any fault or lack of ability on their part but because they haven't been given the opportunity or training to develop the necessary skills to be a true partner to a financial planner.

A paraplanner should be more than just a "back office" person with administrative skills, although these are certainly necessary. Research and analysis, good oral and written communications and strong customer service skills are also required.

A good paraplanner should have at least a basic industry qualification, such as DFP 1 and 2, and be studying other DFP or Securities Institute subjects.

They should also have two or three years practical experience in the industry, preferably with knowledge of investment and funds management, superannuation, taxation and social security. A business, finance or research-based degree is also very useful.

A well-trained and experienced paraplanner is also ideally placed to undertake further professional training and progress to becoming a financial planner. This means that the paraplanners in an organisation can become part of its succession planning strategy and fill the gap when a financial planner leaves. Planners who have "come up through the ranks" in this manner are extremely successful due to their extensive knowledge of the industry and the needs of clients.

So having whetted your appetite for these "paragons of virtue", where do you get one?

Like financial planners, good paraplanners are in very short supply. I've been speaking to dealer groups and large financial institutions daily as the demand increases, and many are doubling and tripling their planning areas over the next few years to take advantage of the boom.

The future of financial planning is rosy, but success depends on having enough high-calibre planners and paraplanners to service the growing client base. There are some excellent paraplanners on the market at present, but they are being placed very quickly and becoming harder to find.

So the message for dealer groups and financial institutions is to snap up the good ones now and start finding, training and mentoring potential stars.

If you are a paraplanner, financial planner, or considering a career in planning, make sure your skills are up to the mark to take advantage of future possibilities. Then just "follow the yellow brick road" - it looks as if it will be paved with gold.

Chris Emery is manager of human resources, Paul Resnik Consulting Group