January 25, 2022 By Eden Smith

Understanding Paraplanning

Paraplanning staff (also known as paraplanners) do most grunt work, such as preparing reports and plans for financial planners. Larger firms may have established new departments to handle these tasks. Paraplanners can be costly, so small companies may not hire them.

Paraplanners often have very few client interactions. Instead, they design and implement financial plans according to the financial plan. A financial plan is updated every time a client’s situation changes. They assist in gathering new information and providing financial planners with updated projections. Paraplanners will attend client meetings to collect information and follow up on administrative tasks. This includes obtaining identity documents and bank statements. Other duties include billing clients and managing the firm’s financial plan software.

Paraplanner isn’t synonymous with administrative assistant or secretary. This tool was created to give financial professionals more time to focus on their clients. The paraplanner is freed from the burden of meeting face-to-face with investors by having this tool.

Many paraplanners will stay with the company for many years. They might specialize in venture financing, estate, and planning. Others might see this as a step up to financial planning and advisors.

Paraplanning Vs. Financial Planning

Paraplanning services have a functional difference from financial planning. One of the significant differences between the two is how closely they interact with clients.

While paraplanners have no contact with their clients, financial advisors do. They offer advice and guidance regarding their investment goals and plans. Financial planners also have higher educational and professional qualifications than paraplanners.

Paraplanning Qualifications

Paraplanners will need a bachelor’s degree in accounting (or finance). Many college graduates become paraplanners to enter the financial planning industry.

For certification, applicants must take a 10-module program and pass a final closed-book exam. Paraplanners can also become Certified Private Accountants (CPAs). This will increase their chances of finding employment.

Types Of Paraplanners

Paraplanners are divided into two distinct categories: Outsourced paraplanners and those who work in-house. Here is a quick view of each.

Paraplanning In-House

Internal paraplanning allows Financial Advisors to become more familiar with the specialized abilities of their staff. The financial planner will need a paraplanner with a reputation for reading bank statement statements.

Internal paraplanners are less likely to leak sensitive client information to rivals than hiring them. There is a downside to in-house paraplanners being hired. They could be promoted above other staff or the firm to a more senior position.

Outsourced Paraplanning

Some financial planning firms may opt to Outsource Paraplanning services. This is done to companies or Independent Contractors who offer these services on demand. Smaller businesses may benefit from outsourcing, mainly if they have limited budgets and require extra help during busy periods. This may also benefit companies that plan on growing their business.

Financial planning firms who decide to outsource should be aware of the possibility that control over their work may be compromised by delegating it to third-party contractors. It could be that a financial consultant is not aware of a contractor’s other work commitments. This can make it difficult to meet tight deadlines. Contractors are accountable when they set measurable goals.