Stepping out: paraplanners pave their own career path

According to theMoney ManagementSalary Survey, a senior paraplanner can earn an average of $65,000 in Sydney and $35,000 in Canberra, with a possible high of $85,000 in Sydney compared to a possible low of $30,000 in Canberra.

This is well behind the highs of $130,000 in Sydney or $100,000 in Canberra that can be earned as a financial planner.

Though paraplanner remuneration is up from an average of $60,000 in Sydney and $28,000 in Canberra in 2001, industry sources seem to think that remuneration is not likely to increase greatly.

Sharon Walsh, managing director of SRW Professional, a company specialising in the provision of paraplanning services to advisers who want to outsource the function, says she expects wages to only increase in line with inflation.

Walsh says that generally paraplanners are valued correctly in the market and it would be impractical for individual advisers to pay much more for paraplanners than the current rates.

Roger Rosentreter, director of another paraplanning company, IFP Solutions, says current salaries for paraplanners are “about right” and that they cannot expect to earn the same money as advisers.

“I believe things will stay pretty much as they are for the foreseeable future, with things pretty tight for advisers,” Rosentreter says.

“In 1998, I said for the next couple of years paraplanners would be able to charge what they like, but I think they have come to the end of the road with that,” he says.

Walsh believes there is definitely a market out there for paraplanning services, because she says not all advisers can afford their own paraplanner and not all advisers are capable of doing their own plans due to time constraints.

She says there are many small paraplanning groups that are “invisible in the scheme of things”, because lots of paraplanners, particularly females, are looking to work part-time or full-time from home.

According to Walsh, these paraplanners don’t need a lot of plans to make a nice income as an individual paraplanner.

“If you are good and have experience, if you had five advisers at one plan a week, then that’s a nice little income. You don’t need a lot of plans if working on your own to make more than $60,000 per year,” she says.

Rosentreter says there is definitely a market for outsourced paraplanning, and he claims IFP Solutions is doing especially well through targeting individual advisers rather than large groups.

“It can be a tough market sometimes and at other times very easy. Probably the biggest thing that will happen is when advisers move from dealer to dealer and you may never see them again,” he says.

“Paraplanning has traditionally been seen as a loss leader to get advisers on board in a dealer group, but we don’t tend to see it that way,” he says.

Walsh predicts that the view of paraplanning will change in the future, as more of those who take on the role view it as a career rather than as a step towards financial planning.

“It used to be a given that they would become financial planners, but not everyone wants or needs to be paid lots of money — some will be happy with what they get,” she says.

An interest in and aptitude for paraplanning will also be a reason for more growth in career paraplanners, according to Walsh.

Rosentreter is a good example. He has moved from financial planning into paraplanning because of a preference for the technical aspects of advice.

He says that, ultimately, a paraplanner’s wage relates back to the needs of the dealer and adviser as well as the skills of the individual, as those paraplanners dealing with complex structures and more plans should be paid more.

The salary survey shows that paraplanners studying the Diploma of Financial Planning (DFP) receive an average remuneration of between $58,000 in Sydney and $32,000 in Canberra. This is up from an average in 2001 of $50,000 in Sydney to $27,000 in Canberra.

Walsh says good paraplanners can expect to gain both management responsibility and more income as they move up the ladder, though this is commensurate with the better skills individuals gain.

“It’s a bit like hunting for oysters on a rock — they can find the ones that stick out like a sore thumb. It’s a matter of being able to see what others miss,” she says.