If the burgeoning sector evolving around employing and outsourcing paraplanners is to be believed, there’s a gold rush going on. “Good people” are talked of in hushed tones and are rare nuggets — causing everybody to head for the hills.
Australia has followed the US in lightening the loads of administration by getting the most out of paraplanners. The idea being that a financial planner with a good line in sales speak and a flair for identifying customer needs should not be tied to a desk producing reams of plans.
Trend spotters are also creating a thirst for paraplanners by predicting that an increasing number of companies will outsource the work. Roger Rosentreter has spent the last year-and-a-half creating Sydney-based IFP Solutions, a company with a pool of nine paraplanners which both major institutions and one-man financial planning companies can lean on during overflows.
He believes the demand for specialist CFP-registered paraplanners can only grow. “By our estimates, there is only one paraplanner for every 10 financial planners right now. This ratio will undoubtedly come down – probably to around one in five,” he says.
But this does not mean paraplanners are taking the jobs of financial planners.
Rosentreter says demand is such that the industry can effectively fashion jobs out of thin air.
“The adviser will not be out of a job,” he says. “He will just be able to deliver an even more sophisticated level of service to the client. Paraplanners are becoming more specialised. There’s people around with seven or eight years experience who know they are good at the technical side and are doing just as important a job as the financial planners themselves – perhaps more so just through the compliance side.”
A quick glance at the recruitment pages shows these career paraplanners can demand up to $80,000 a year. Rosentreter says some paraplanners who have invested in their own IT and administrative systems can earn $100,000 without breaking sweat.
So if these paraplanners are the gold nuggets, then what happens to the dusty boulders? “They go and get a wage,” says Rosentreter, poking fun at the larger financial services groups who are yet to catch on to the trend of outsourcing.
But the experience of Melbourne-based Forefront Financial Services, which offers a similar outsourcing service to IFP Solutions, shows the days are gone when group-based paraplanners could expect a salary of no more than $35,000.
Forefront director Justine Brooks admits it is increasingly difficult for her company to compete for quality paraplanners.
“When we started the business 15 months ago, we presumed we could find someone pretty good for $40,000” she says. “But finding staff has been a real problem as paraplanners have been getting higher and higher wages in the offices.”
Brooks refers to the recent example of a graduate from the Royal Melbourne Institute of Technology walking into a $60,000-a-year job as a paraplanner.
“That’s pretty impressive considering a first-year accountant can usually expect around $25,000,” she says.
And she dispels the old argument about office-based paraplanners sitting twiddling their thumbs during quiet spells.
“Paraplanners are not just pumping out plans any more. They are becoming increasingly multi-skilled, taking on roles such as client control, customer service and the technical side.”
Rosentreter agrees that there will always be a role for the corporate wage-earning paraplanner as it is difficult to turn independent.
“If I was a paraplanner going out on my own, I could probably expect to earn around $400 per plan. But I could work flat out for the first six months just to get 10 or 15 plans. It’s difficult to get the contacts quickly enough to survive.”
Tanya Thomas, recruitment consultant at Morgan & Banks, says the majority of paraplanners she places are still looking to use the job as a first step to becoming a financial planner.
“It’s a terrific training ground and paraplanners are beginning to know their value.
As well as the bright graduates on the move, we also have paraplanners looking to do a similar job but move up from a medium network to a high network. We also have those looking to get into managing other paraplanners.”
But Paul Resnik, principal of the Paul Resnik Consulting Group, says would-be financial planners need not assume they must serve their time as paraplanners before stepping up.
“A paraplanner and an financial planner have completely different skills,” he says.
“Instead of using it as a stepping stone, some paraplanners can get stuck in the job. Spending all that time crunching numbers means they lose the social skills necessary to be a financial planner. Likewise, having any actual knowledge about the how the job is done can be a bad thing for a financial planner!”
But with an estimated 12,000 plans and reviews produced in Australia each week, both self-employed paraplanners and those working for the big financial services groups can be sure of plenty of work.
So what makes a gilt-edged paraplanner? Justine Brooks suggests an ability to “think outside the circle” is important.
“It’s not an exact science like accountancy, so a self-starter who can be creative in different situations will go far.”
And in the current climate going far can mean a lucrative journey where, compared to five years ago, the streets really do seem to be lined with gold.
