Are planners worth what they’re paid?

Pay rises, pay cuts, pay freezes. In the past 12 months, these phrases have circulated the Australian marketplace capturing the attention of employees and employers alike.

With the release of the nationalHays Personnel Recruitment and Salary Survey, attention is drawn to pay once again, this time for the financial planning industry.

Among the sectors examined in theHays PersonnelRecruitment and Salary Surveyare the earnings of Australia’s financial planning sector, and includes national salary data on paraplanners, senior paraplanners, financial planners still studying their DFP and qualified financial planners working in the banking industry.

However, while the survey clearly demonstrates those planners that are paid the most and the distinct differences in pay between the states, the data does not give any insights into whether these figures accurately represent the value of duties undertaken by the respective paraplanners and financial planners.

The concept of value is a highly subjective one. Yet if you were to compare two planners who work in the same firm in the same state, who hold equal levels of responsibility, yet one has a few more years experience and therefore earns a different rate of pay, how would you calculate which planner has more value?

Is it based on the time spent taking personal calls and sending e-mails, or is value derived from client outcomes and the value add for the business?

According toHays Personnel Recruitment and SalarySurveybusiness manager Edmund Gill, the value of financial planners at present cannot be measured because demand for them is so high.

He says employers today are more likely to offer a more attractive salary package to planners to entice them to apply and hopefully fill the vacant planner position.

“The financial planning industry, over the past 10 years, has gone through somewhat of a revolution. Ten years ago, financial planning wasn’t strictly regulated, with a lot of people pretending to be financial planners within the industry,” he says.

“However, the market has been externally and internally regulated and the number of planners has been slashed. A qualified financial planner is now in higher demand. In the early stages of their career, financial planners are paid a lower salary, but once their network and client base has been developed, they can do extremely well,” Gill says.

In the past 12 months, the salaries of the Australian financial planning community has stagnated but the leading national planner price tag remains at $95,000 for a Sydney bank-based financial planner.

What exactly are the corresponding duties of each financial planning category to warrant current salary levels?

TMP Worldwide recruitment specialist Shelly Pokorny says a typical day for a paraplanner would begin at 8.30am and finish at 5.30pm and involve working closely with a senior paraplanner or qualified financial planner to provide financial strategy, or a financial plan to suit a client’s situation.

Pokorny says there may be times when a paraplanner works alone with clients, however, mostly a qualified financial planner works alongside them.

As for a junior planner, she says their duties might start with meeting clients, or being mentored by a senior paraplanner.

However, a junior planner might also spend time on client services work, such as client enquiries to familiarise themselves with client contact.

“Financial planners liase directly with their clients. A senior financial planner may be focusing on a specific market or working with their existing client base,” Pokorny says.

Pokorny says expectations of employees vary. She has seen positions available for entry level planners and senior level planners from all different types of firms.

She says the large banks tend to be very sales orientated, with many looking for planners with previous banking and sales experience.

Others including boutiques are looking for planners with good relationship skills and two or three years plus experience.

“Some of them look for an existing client base, at times they will even buy their client base from them. The people who are passionate about the role and who are interested in wealth creation, as well as people who have tertiary qualifications and comply under Policy Statement (PS) 146 are what employers are after. Planners who listen and are generally interested in what clients are saying are also pluses,” Pokorny adds.

According to theHays PersonnelRecruitment and Salary Survey, a fully qualified financial planner from Sydney is currently paid $75,000, while a Sydney-based adviser studying the DFP is on $55,000.

Notable figures from other states include Brisbane, where the salaries of fully qualified planners is $70,000, with Adelaide and Canberra planners earning $60,000 each.

However, Perth’s planning market has boomed, with junior paraplanners receiving a $3,000 pay increase to take their salaries to $38,000, compared with last year’s figure of $35,000. Senior paraplanners based in Perth experienced a $5,000 increase, growing their annual income to $48,000.

Fully qualified financial planners received a boost of $7,000, shooting their income upwards to $70,000, while the salary of Perth-based financial advisers still studying their DFP dropped by $2,000 to $48,000.

So, are financial planners worth what they are being paid?

Tom Collins Consultancy chairman Tom Collins believes planners are overpaid. However, he attributes this to the high demand for planners caused by a shortage of advisers in what is currently a growth industry.

“Yes, it is quite generous. However, banks and other large institutions are nowadays keen to build up their wealth management,” he says.

Collins says banks have to pay more money in salaries because banking groups are currently the training ground for planners. And to stop planners from being poached by outside groups, the banks need to provide bonuses and incentives to stay.

However, Gill believes the state of planners’ sky-rocketing salaries is due to intervention by the Australian government.

He says because of the Financial Services Reform Act (FSRA), it is getting harder and harder to become a financial planner, with the number of qualified financial planners dropping.

“You do have to work hard to become a qualified planner. It has changed from a sales job to a professional one.

“It is also the Government, ASIC (the Australian Securities and Investments Commission) and APRA (the Australian Prudential Regulation Authority) that have insisted planners become a lot more professional,” Gill says.