Do you need qualifications to be a paraplanner?

– Alex Buckle DipPFS, Paraplanner

Well, the short answer is ‘yes’.

Although there isn’t technically a minimum qualification that is needed to become a paraplanner, a quick search online shows that most paraplanner jobs and job adverts say that having a Diploma in Regulated Financial Planning or equivalent would be desirable.*

*That said, don’t worry if you aren’t qualified and want to dip a toe into the paraplanning world! Most firms will support you with your professional qualifications even whilst you are working, which is great if you need some extra support!

The day-to-day work of a paraplanner varies on which financial planning businesses you are working for but, in general, it will typically involve:

–       Completing cash flow analysis

–       Carrying out research (i.e., provider, investment strategies)

–       Preparing suitability letters

–       Carrying out tax calculations (i.e., inheritance tax, chargeable gains, capital gains tax)

But what does the financial planner do?

Whilst the paraplanner is working on the above tasks, the financial adviser is more client facing meaning they can be out spending more time with their clients, creating relationships of trust, and really getting into the nitty gritty with them. They will gather both the hard facts (i.e., age) and soft facts (i.e., goals and aspirations) and then begin the financial planning process. The client’s financial plan will aim to ensure that the clients’ remain on track to meet their objectives, or if this is not possible, they will ask the clients to prioritise their goals and work towards what’s achievable. This is why the paraplanner works alongside the financial advisers to ensure the small details are included in the client files which can often be highly technical.

Not only does taking on the above responsibilities free up the financial planners’ time, but the administrative tasks themselves will obviously have a direct impact on the recommendations. Does the cash flow analysis suggest that the client can afford the lifestyle they want? Will there be any tax consequences for restructuring their investments?

It is therefore very important that we are up to scratch with our technical knowledge! The qualifications will help develop the technical knowledge needed.

Importance of knowledge understanding in the financial services industry.

However, getting the relevant qualifications is only the first step as the finance world is constantly changing! The most recent Spring budget, for example, saw big changes to the lifetime allowance, dividends allowance, and capital gains tax exemption.

We need to keep our technical knowledge up to date to ensure we remain competent and can clearly communicate all the advantages and disadvantages of a recommendation. In fact, continuing professional development (CPD) is a requirement for qualified members, including accredited paraplanners, to ensure their skills and knowledge are up to date. The qualified members must complete a minimum of 35 hours, of which 21 hours must be structured (i.e., lectures, conferences, and courses), in a 12-month period.

So, yes, a paraplanner does need a qualification… But that’s not everything! There are lots of other skills that are essential to being a good paraplanner. These key skills include but are not limited to, attention to detail, time management, and communication.

The tick list to perfecting Financial Planning and making Financial Advisers happy…

Attention to detail

–       To ensure the suitability reports of financial advisors are accurate – i.e., errors can suggest carelessness and be detrimental to the professional relationship between clients and financial advisers.

–       To ensure the wider picture is considered – i.e., does the client have any means-tested State benefits that will be impacted by the advice?

–       To ensure that all tax calculations are accurate – i.e., errors in a tax calculation could lead to a large tax bill.

Time management

–       To ensure deadlines are met – i.e., some recommendations are tax year-end sensitive or there might be ‘early bird’ discounts available.

–       To ensure the client’s expectations are met.

Communication

–       To ensure that relationships of trust are built and maintained.

–       To ensure the written communication is tailored to the client – i.e., avoid jargon for those with little financial experience or make the font larger for those with poor eyesight.

–The Verve Group