Paraplanners still largely undervalued compared to advisers

8 July 2024

Paraplanning as a career has gained traction in recent years but despite this, many paraplanners still feel that their role is considered less important than that of an adviser.

Professional Paraplanner’s latest Parameters Survey revealed that three fifths (60%) of respondents believe paraplanners are not valued in the same way as advisers and planners, double the amount (29%) who feel they are viewed in the same way. Tellingly, no paraplanners said they believe their role is more valued than an advisory role.

Many paraplanners cited the inability of paraplanners to bring in new business versus advisers as the key reason why they are considered less important.

One explained: “As we are not directly revenue generators we can be seen as  a cost to the business versus a benefit.”

Another said: “I feel as they don’t bring in the new business they will never be viewed in the same light as those who bring in the business.”

The sentiment was echoed by another respondent who said that despite having the same qualifications and technical knowledge as advisers, paraplanners “are in the main not client facing and not seen as the ones who bring in the business” so are considered as “less important to the overall business.”

Others said that despite the varied responsibilities of paraplanners, the view that they are an extension of an admin role persists.

“Financial advisers are the fee earners and paraplanners are seen as higher level admin,” one paraplanner told Professional Paraplanner.

Another commented: “It does sometimes appear that we are seen as beings who churn out reports. We are not often involved in the advice process, more as a report writer to confirm the advice already given.”

Technology as paraplanner

The survey also highlighted the rise in the use of technology, which could simplify the processes used by paraplanners and reduce their value.

“One of our office directors has expressed publicly a clear interest in AI and ChatGPT and whether these can be used to do our reports and analysis, thereby requiring far less paraplanners,” one commented.

Another said: “Because our report structures now use a lot of templates the need for linguistic expertise has diminished and as paraplanners we are now viewed as interchangeable which makes us expendable.”

Respondents also cited a lack of client understanding around the role, with paraplanners largely working behind the scenes, while advisers are focused on building relationships and growing the business.

Turning tide

However, one paraplanner told Professional Paraplanner that the tide is turning.

“Broadly speaking the number of people that view paraplanners are being valued in the same way as advisers is increasing all the time. It still has a way to go and there are some people who will never accept this as being the case,” they noted.

Despite the majority agreeing that their role is considered less valuable, seven in 10 (70%) paraplanners would like to see paraplanners viewed in the same vein as advisers and planners. In stark contrast, just 14% disagreed.

The survey showed that the vast majority consider their input to be a valuable resource when creating and reviewing financial plans, often as a result of their detailed knowledge.

One said: “I think they should be highly valued as they do the majority of the technical research and put the overall recommendations together. They challenge the advice if they see issues and are a very valuable part of the advice process.”

Another commented: “We are a crucial part of the advice process and many paraplanners are just as, or more qualified, than the adviser giving the advice. They are able to sense check advice and ensure that it is in the client’s best interest and suitable, therefore adding a layer of protection for both the client and adviser.”

However, among those who said they did not believe the profession should be valued in the same way as financial advice, one pointed out that advisers take on more professional and client risk than paraplanners. Others pointed out that a good paraplanner is likely more replaceable than a good adviser, with a “strong, loyal client base” and the ability to generate “high levels of income” for the firm.

Paraplanner career paths

The survey also explored potential career paths for paraplanners. It found that the most popular route is adviser, with more than a third (35%) of paraplanners citing this option, followed by outsourced paraplanner/ owner (31%).

Among those who would pursue a role as financial adviser, the ability to utilise their skillset and knowledge and take on a more specific role were the main attractions.

Meanwhile, those considering an outsourced role said that owning their own business would provide greater freedom and a better work/life balance as well as the opportunity to enjoy a variety of work and the chance to work with different advisers.

Just over a quarter (27%) said they might consider pursuing the role of compliance officer, while 21% opted for operations/ business manager. The least popular routes were becoming a financial advice business owner, with just one in 10 considering this and fund manager which was cited by just 1% of respondents.

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Professional Paraplanner