Paraplanning refers to the administrative and clerical duties that a financial advisor is responsible for and delegated to junior members of a financial planning group.

Paralegals at law firms are similar in scope. The paraplanners function was created to enable financial planners to focus on clients and to help them identify their investment goals. Paraplanning is the process of analysing clients’ needs, researching and recommending products that meet their needs.

Understanding Paraplanning

Paraplanners do the bulk of the work, such as preparing financial reports and financial plans for financial advisors. Paraplanners are often assigned to departments within larger companies. Paraplanners are expensive, so smaller firms may not have the option of hiring them.

Paraplanners have little to no client interaction. Instead, they create and implement plans as outlined by the financial advisor. Financial plans are updated as clients change. Paraplanners help gather information and update financial planners. Other duties include the management of financial planning software, billing clients and other administrative tasks.

Paraplanners are often in the same job for many years. They might also have to train new employees after they have gained experience. They might specialise in venture capital or estate planning. Others might see the role as a way to progress in the financial industry and could go on to become financial planners or advisors.

Paraplanning Vs Financial Planning

Paraplanning is functionally distinct from financial planning. The most significant difference is how they interact with clients.

Financial planners have regular contact with their clients. Paraplanners are not allowed to speak with clients. They can provide advice and guidance about people’s investment goals, plans, strategies and other matters. A financial planner also has more education and qualifications than many paraplanners.

Paraplanning qualifications

Paraplanners must have a bachelor’s degree in finance or accounting. Paraplanners can help college graduates get into the financial planning profession. Paraplanners get valuable work experience, skills and a network of financial planning professionals. They work towards becoming financial planners.

Types of Paraplanners

There are two main types of paraplanners. One is in-house, and one is outsourced to a third party. Let’s take an overview of each:

Paraplanning for In-House

Internal paraplanning is a way for financial advisors to get to know their staff’s specialised skills and knowledge. A financial planner can call upon a paraplanner proficient in reading bank statements to help them.

The risk of confidential client information being leaked to other competitors is reduced by hiring internal paraplanners. The downside to hiring paraplanners in-house is that they may elevate themselves above the rest of the staff to earn a promotion or to a higher level within the firm.

Outsourced Paraplanning

Some financial planning firms may provide paraplanning services to independent contractors or companies. Outsource paraplanning Services can benefit small businesses with tight budgets who need extra help during busy periods. Firms looking to grow their business may also find it beneficial.

Financial planning firms need to be aware that their control could be compromised when outsourcing work. It is possible that a financial planner does not know the contractor’s other work commitments. This could make it difficult for them to meet tight deadlines. It is essential to set clear work targets so contractors can be held accountable.