“What are the main differences between a financial planner and a paraplanner?” It’s almost certainly one of the most popular questions that I’m asked as part of any interview or podcast that I take part in.
Now if you’re reading this article, it’s highly likely that you are a financial planner, a paraplanner, or work alongside either. You won’t need me to tell you that there are differences between the two roles.
But what is the difference? Afterall, many financial planners and paraplanners complete the same professional qualifications and both work in the same profession. I’ve also worked with many paraplanners who have a significant amount of client contact, so perhaps client contact isn’t the defining factor that it used to be.
In my opinion, financial planning is a mixture of art and science. The art is creating a personalised, interconnected financial plan that is sculpted around the client’s financial needs and wants. The science is ensuring that there is the right blend of products, tax wrappers and underlying assumptions to support the picture that is the client’s financial plan. And that’s the major difference between financial planners and paraplanners. An individual who has become a financial planner typically enjoys the ‘art’ involved in financial planning, whereas a paraplanner would rather concentrate on the underlying ‘science’.
My career has always been revolved around paraplanning. First as a paraplanner and paraplanner manager, and now as Head of Mentoring at The Paraplanner Club and as a Consultant with The Patterson Group. I’m a firm believer that an empowered, confident paraplanner can add just as much value to a firm as a financial planner would.
So, what are two things I’d wish more financial planning firms would do to support their paraplanners?
1. Nurture long-term careers in paraplanning
According to the Embark Paraplanner Survey, 85% of the 332 paraplanners surveyed see paraplanning as a career in its own right. However in my experience with The Paraplanner Club, when asking the follow-up question “So what is the next step in your career”, mentees are often unsure on what their next step could be.
This is where I believe firms can do more to support paraplanners in many cases. The obvious response from employers when asking how they support their paraplanners is to mention that they make paraplanners aware of financial planner or management roles. While these opportunities are good for paraplanners, they do sort of miss the point that the vast majority see paraplanning as a career in its own right.
My first tip to employers is to look at your paraplanning team structure. Are your paraplanners assigned to an individual adviser or do you operate a pod approach? Both structures have their advantages and disadvantages, but the main tip behind reviewing your structure is to ensure that none of your paraplanners are effectively being ‘de-skilled’.
Over time, if your paraplanners are often working on the same sort of cases or clients, a level of frustration at a lack of progression can occur, which eventually can lead to paraplanners seeking new opportunities.
Every firm is different. Different processes, different financial planners, different cultures. I’d therefore encourage you to first look at your paraplanning team structure and analyse if you’re doing all you can to continue to support your paraplanners with their professional development.
2. Elevating your client experience through a paraplanner
Another result from the Embark Paraplanner Survey that stuck out to me was that 88% of paraplanners feel they get the recognition they deserve from advisers. However, only 29% of paraplanners feel they get the recognition they deserve from clients.
Now paraplanners at some firms I’ve worked with have a great deal of client contact, including co-signing reports and being present in client meetings. But with most firms, regular client contact for paraplanners is a rarity.
In the world of the Consumer Duty, you won’t need me to tell you the importance of demonstrating value to clients. By making clients more aware of the paraplanner role, you can help to demonstrate the additional value a firm is providing to a client, given there are at least two more recognisable faces to an organisation.
The Embark survey also found that 62% of paraplanners felt a review of their pay would help with their employers better supporting them. Giving a paraplanner the opportunity to have more client contact can enable them to demonstrate additional value to the firm and clients, resulting in an increase in pay in recognition of this additional value added. Win win!
Reviewing your paraplanner team structure and introducing client contact to some of your paraplanners are just two things to consider, to help ensure a motivated team and lead to better outcomes for clients.
