At the time of writing there are just over 30,000 regulated advisers in the UK. In comparison, it is estimated that there are around 2,000 ‘paraplanners’ in the industry, although this figure depends on how you define a paraplanner so, in reality, the figure is probably quite a lot lower.
When you consider these statistics, it is pretty clear – particularly to anyone who has either tried to hire a paraplanner or tried to engage with an outsourced paraplanner recently – that there is a significant shortfall in supply when compared to the apparent demand.
One of the major issues we face in the paraplanning world is that people normally want a ‘ready-made’ technical bod. In other words, someone that turns up on a Monday morning with a bursting CV full of impressive credentials that can slot straight into your financial planning firm with little to no on-the-job training.
Trouble is, there are very few of us (considerably fewer than the 2,000 noted above) who are able to fit that kind of mould. For this reason, it has driven up the cost of employing those people to a level that often makes them salary-prohibitive for many small firms.
So what do we do about it?
There are three possible solutions:
- Accept that the cost of hiring a good, multi-skilled and technically competent financial planning professional is generally going to be high. But hey, they’re probably worth it.
- Go it alone and make do with what resources and skills you already have available to you.
- Grow your own paraplanner from scratch, by either offering further training to your existing colleagues or taking on an enthusiastic newcomer to the profession and moulding them into your own shape and style.
Personally, I favour the third option.
Yes, there’s a huge risk that you could spend a whole load of time, money and energy investing in someone only to find that they ‘fly the nest’ when they’re at their peak.
However, if you look after them well and keep them motivated and engaged with your clients, there will be a greater degree of emotional loyalty and there’s a good chance that you’ll get several years of excellent support from them. It’s an investment worth making.
This is an excerpt from Kim’s most recent column for Professional Adviser which was published in December 2015.