Career choice and salary trends
20 July 2016
Richard Cowan, senior consultant at recruitment consultancy BWD, looks at the career development options for paraplanners in the current job market
It goes without saying that in today’s Financial Services job market one of the most sought after individuals is a fully Diploma-qualified experienced paraplanner. In recent years, the majority of IFA, wealth management and restricted advisory firms have all tried with varying degrees of success to hire numbers of paraplanners. Methods used have included using direct recruitment methods, agencies, advertising, referrals and head-hunting; and when these methods have failed, they have turned to either training existing members of staff such as administrators into paraplanners, hiring trainees (graduates and apprentices) or using external services providers.
So, what has caused such a shortage, what is the solution and what do paraplanners really want to do? What makes them tick? Traditionally, there have been a number of routes for paraplanners to look at when considering their career development: those who want to become IFAs, those who are happy staying in the paraplanner role but perhaps with more responsibilities, for example supervisory or compliance, and those who are seeking to concentrate on one technical area such as investments. Whichever route is chosen, due to the basic scarcity of paraplanners, salaries are subjected to significant increases. At BWD we have recently published an extensive Salary Census, which has brought home the undeniable fact that even part-qualified paraplanners can now command significant uplifts on their current basic salary when moving roles. Indeed, the myth that only London-based individuals can command the higher salaries is no longer applicable. In recent months we have seen salaries in many other regions increase significantly to such an extent that a fully Diploma or Chartered individual in, for example, Bristol, can now just about command the same salary as one based in the capital. The range of individuals now considered by clients to be paraplanners has broadened. Previously, exBancassureres struggled to find employment in the technical market, but today (as long as they are realistic about their earnings) even these individuals are being hired to fill paraplanner roles.
So which route should paraplanners embark upon to enhance their career development chances? Firstly, let’s talk about the ‘IFA’ route. Many paraplanners appear to have a desire to become a CF30-qualified individual. This is a perfectly understandable course of action, as after all paraplanners work closely with IFAs and wealth managers. However, many individuals when questioned about their motives for becoming an IFA fail to understand that, no matter how much you dress up the IFA role, essentially it is persuading an individual to part with their hard-earned cash, or, in other words, a sales role.
Now that’s not to denigrate the work that IFA’s do; indeed, many advisers are technically very competent and use very advanced methodology when consulting with clients, especially ultra-high net worth ones. However, any paraplanners seeking to carry out this role should really question their motives and timeframes. In my personal experience, any individual who mentions that they may become an IFA (say, within five to six years) rarely do so, as the burning desire that pushes them on, is essentially not actually that burning – especially bearing in mind the targets set for advisers demand rapid completion.
Nevertheless, if you were still determined to become an adviser, I would recommend doing so as quickly as possible (ideally within two years). Be proactive (sales like!) in your approach, show that you can work to targets and be proactive in your ability to generate clients; and be selective in the employers you consider. Do they have an active track record of training paraplanners to become advisers? Do they provide clients? What sort of bonus structure do they have?
If the IFA route is not for you; what else is available? You can, of course, stay the course as a paraplanner (and the majority do) but be aware of what you actually want to achieve in your next career move. Is it purely financial gain? Is it location? Is it the type of firm you want to move to (or indeed away from); are you looking to specialise in one particular product specialisation? Are you looking for a form of management?
Other related options include looking at moving into a compliance-related positon. Many paraplanners do take this route, although initially the salary on offer may be less. However, be mindful that it can be difficult to move into a paraplanner role once you have left the technical support market.
A final note is the question of qualifications. To be Diploma-qualified or not to be Diploma-qualified? (Or indeed, chartered). While post RDR a non-Diploma qualified IFA became a thing of the past, for paraplanners (being generally a non-regulated position) the need for qualifications is not a requirement. But in 2016 a non-Diploma qualified paraplanner is becoming increasingly rare and individuals who don’t wish to take any more professional exams should consider their future career development opportunities. In fact, a number of individuals I have spoken to recently and who don’t want to take any more exams are considering taking a less technical IFA support role.
Paraplanning, like all respected professions, has certain professional educational standards and in this respect, they are really no different nowadays from accountant technicians, paralegals (the term paraplanners I believe emulates this role) and other similar roles. Indeed, paraplanners who have moved on from the Diploma and are now nearly or fully Chartered are very highly sought after by employers (and therefore command the higher salaries.)
So in conclusion: what direction will you take? As mentioned above, there are significant career development directions paraplanners can take. However, the advice I would give is to think carefully and consider all the options available, but on a positive note, and speaking as an industry specialist, the future will always be bright for individuals with the right experience and qualifications.