Time to become an outsourced paraplanner?

18 June 2021

Paraplanners who have been working from home during the pandemic may be eyeing up their freelance and outsourced colleagues and considering whether this is a route they should take. But is now the right time? Fiona Bond talks to outsourced paraplanners about their experiences and views of the current market

The events of the past year have turned the world of work as we knew it upside down. Businesses of all sizes were forced to adopt company-wide homeworking virtually overnight, with employees swapping their daily commute and desks for make-shift home offices and zoom meetings. But, while there have been challenges along the way, lockdown has also triggered a radical rethink about the way we work.

Many of us have seized the chance to learn new skills, gain greater flexibility and independence and strike a better work-life balance. One study discovered that fewer than one in ten people want to return to the office full-time,[1] while separate research from CIPD found that two-thirds of companies plan to develop a hybrid work model going forward.[2]

The changing landscape has also given rise to the number of people thinking about striking out on their own. A recent parameters survey from Professional Paraplanner showed that 52% of paraplanners would consider becoming outsourced following their lockdown experience (see pie chart).

The success of homeworking over the past year has opened eyes to the benefits for both paraplanners and businesses and it has also seen advisory firms explore more closely the benefits of outsourcing their paraplanning.

Michelle Wilson-Stimson, managing director at outsourced paraplanning firm eparaplan (left), explains: “In business, we want and need employees who can be not only self-managing but self-leading. Having our workforce at home has really shown that we should place more trust in people and they are able to work from outside the office walls and deliver.

“What we need to see is advisers letting go a little and having faith in their team to work from home or indeed for those firms that outsource, relying fully on the outsourced business to manage and run their business.”

Weathering the economic storm

While on paper, a global pandemic may not sound like the best time to consider starting a business, the paraplanning industry has remained remarkably resilient.

Blake Ellis (left), who launched outsourcing firm Prudent Paraplanning at the end of 2019, experienced the worry of being a new business during a pandemic first-hand.

“I think all business owners felt a level of concern when the pandemic hit. No one could predict what would happen and it was a worrying time,” he says. “However, our business grew month-on-month and we continued to build our client base throughout the year.”

Andy Schleider, who launched Haven Paraplanning in September 2019, admits to having felt nervous when the first lockdown came into place.

Andy says: “The business was very new and I distinctly remember starting to feel very worried in March/ April time about how the pandemic would affect us. However, my fears proved unfounded with April turning out to be my biggest invoice month.”

Wealth of opportunity

Demand for paraplanning has soared in recent years thanks to growing consumer awareness, greater regulatory requirements and increased digitalisation, which has created greater efficiencies within firms, enabling advisers to service more clients.

For many smaller financial advice firms, outsourcing has become an attractive alternative to employing a full-time in-house paraplanner – a trend that the pandemic is likely to have accelerated.

Blake says: “There is a great deal involved in hiring an in-house paraplanner, including the cost of salary, benefits, training and absences. As more paraplanners opt to work from home, firms will also need to measure productivity and ensure that work is being done.

“Hiring an outsourced firm, however, ensures that advisers receive a great service cost-efficiently, because quite simply if they don’t deliver they won’t get paid. As we come out of the pandemic, I expect to see more advisers using outsourced paraplanners.”

Michelle believes advisers may now realise that outsourcing can work for them, “removing the HR risk and cost in having their own team as well as the office costs,” while allowing them to outsource the management and workflow of their business to focus on seeing clients.

According to Blake, there is a wealth of opportunity available for paraplanners considering becoming outsourced.

“A lack of awareness and understanding around what paraplanning entails has meant that we now have a shortage of qualified paraplanners at a time when demand for their services is rising. In my opinion, we’ve reached a really pivotal and exciting time for the profession.”

Rebecca Lucas, founder of Lime Outsourced Paraplanning (left) , agrees that the pandemic has made the environment more favourable for outsourced paraplanners.

“I think the pandemic has made outsourced paraplanning more desirable for some advisers because many have seen their business spike and having an outsourced paraplanner allows them to top up their existing in-house provision and switch on the level of paraplanning they need as their business needs have changed,” she says.

Employee to self-employed

But while demand for skilled paraplanners is high, making the leap from employee to self-employed is no easy feat and there is no one magic formula that will guarantee its success. Paraplanners agree that preparation is vital.

As a first step, Rebecca suggests carrying out as much research as possible to find out what outsourcing involves.

“It can be very different to working in-house as you are relying on second-hand information and you don’t meet the client. You are also working for many different advisers who’ll have different preferences and ways of working,” she explains.

“I did loads of research by looking at what others were doing and spoke with some existing outsourced paraplanners to find out the pros and cons. I also did many spreadsheets to work out costs and ensure I had sufficient money saved up to cover my salary while starting out.”

For Blake, it was important to have a clear ‘blueprint’ in mind for the business ahead of launch.

“I always knew I wanted to run my own business but it’s not something you can jump into overnight, you need to have a firm plan,” he explains. “Before I launched Prudent Paraplanning, I knew exactly what type of service I wanted to provide and the processes I would use to add real value to clients.”

Despite setting up Haven Paraplanning in January 2019, Andy (left) did not officially launch until September that year, using the time to carry out freelance work alongside his job and build up a financial buffer.

Like many paraplanners, Andy has attracted clients through word of mouth, but he also recommends using social networking platforms such as LinkedIn and the Paraplanner Directory to build professional connections.

For Rebecca, who has been running her business since 2013, building relationships with advisers has been key to the firm’s long-term success.

“We work with advisers long term rather than on a short term basis. We get to know them and their support colleagues as people and we take time to establish how they like to work. Many of our advisers we’ve had for six years or more. We never meet the end client but we write reports for them year after year so we feel like we get to know them.”

Aside from building a client base, paraplanners also need to give careful consideration to the more functional aspects of running a business, from researching competitors, to understanding the legal and financial requirements.

Andy admits that it can be challenging at the start.

“There are aspects of running a business that you simply learn as you go along, learning from your mistakes. For example, I hired an accountant when starting out but in hindsight I would have been better off with a bookkeeper.”

One of the biggest challenges Andy faced was knowing what to charge: “I knew I didn’t want to be the cheapest, nor did I want to be the most expensive so it was important to do research and understand what similar firms were charging.”

Charging structures can vary from paraplanner to paraplanner, with some preferring to operate a retainer while others charge by the hour. Knowing the right approach comes down to individual choice, but it’s important to have an understanding of the business’ outgoings and overheads to understand what’s feasible.

Rebecca says paraplanners who are considering setting up as freelance/outsourced must be prepared to take on a number of business roles that may not come naturally.

“The hardest thing was the wearing of many hats, from being just a paraplanner to becoming someone’s boss, an operations manager, marketing manager and the accounts department. When you run a small business you have to do everything that comes with that. Some bits you enjoy and some you don’t but you have to do it all and the buck stops with you.

“Ask yourself the question – do you want to be a paraplanner or do you want to run a business? You have to want to do both and you have to enjoy both. When running a business, there will be good and bad days and you have to embrace them and learn from them.”

Reflecting on his own decision to go outsourced, Blake says paraplanners need to be passionate and committed to the idea of being their own boss.

“For someone considering setting up alone, they have to really want to do it. It’s not easy and it’s certainly not plain sailing. You are effectively trialling things in the early days so you need to be creative and willing to take the initiative.”

Benefits of being the boss

For paraplanners who understand and embrace the intricacies of running their own business, setting up alone can be an extremely rewarding and positive experience.

Andy says the desire for greater flexibility was a key motivator behind his decision to become outsourced.

“When you are your own boss and need time off for personal reasons, you no longer have that worry about how you’ll make up the hours. You can choose your own working pattern to suit your individual circumstances and work-life balance.”

For Andy, no two days are the same and working with advisers across a wide range of clients hasn’t lost its appeal.

He says: “When you’re in the office, there may be days where you’re sat twiddling your thumbs waiting for work. When it’s your own business, there’s always something new to be getting on with. You get to work with a range of advisers across areas of advice that might not have been your remit in-house so it’s a great chance to gain exposure and knowledge across other areas.”

Andy says there are lots of resources available to help outsourced paraplanners build their knowledge, including CPD, provider websites and webinars, online industry events and qualifications.

For paraplanners unsure of whether to take the leap, Andy believes it’s important to follow your gut instinct.

“In my opinion, if you’re thinking about it you should just go for it,” he says. “Of course, it can be daunting at first but I have no regrets. If I had deliberated or waited longer to launch, I would not have the clients I do today.”

Blake says he too has no regrets about becoming outsourced.

“There are so many positives to setting up your own business. No two days are the same and that can be a real motivation. You have the freedom to work where and when you want with the type of client you want. It has been absolutely the best decision for me.”

Becoming outsourced: Key Pros and Cons

[1] WFH_Preliminary Findings.pdf (stuc.org.uk)

[2] More employers reporting increased productivity benefits from homeworking compared to last summer, new CIPD research finds | CIPD

This article was first published in the June 2021 issue of Professional Paraplanner.

Professional Paraplanner