Paraplanning Explained

by Adam on September 25, 2016, no comments

CalculationsIn my journey into financial planning I began as a Financial Services Apprentice, achieved my Diploma in Regulated Financial Planning and moved into a Paraplanning role.

Paraplanning is a career in it’s own right, but is also as great stepping stone into a career of advising clients.

There is, however a lot of confusion about what paraplanning actually is and a journalist contacted me recently to learn about paraplanning for an article she is writing for CISI.

Here’s some of the answers from her questions.

What exactly does a paraplanner do and how does it differ from an adviser? When is it best to use one and when the other?

A paraplanner provides technical research and support to advisers. In my role at Pen-Life I perform tax calculations and assess where requested withdrawals should come from taking into account tax and other financial planning decisions. Day to day, a lot of my time is spent analysing existing pensions and investments and assessing if the client would be in a better position if they were to move their pensions to our managed solution. Increasingly I am building cashflow models too to demonstrate to a client how their various investment and pension pots will perform over time and how best to take income from various sources to maximise the various allowances available to them. I am also on the investment committee which meets quarterly and as a paraplanner I play a role in the research process, determining which funds meet our criteria to be considered in our model portfolios. Finally, a big part of most paraplanner’s jobs is the preparation and writing of suitability reports, required for clients to understand the implications of the financial advice provided.

The main difference between a paraplanner and an adviser is an adviser is a regulated position. Advisers are the ones that sign off on the advice and have the relationship with the client. As a paraplanner I am mostly behind the scenes doing the technical work of financial planning. The adviser typically directs the paraplanner with what they believe needs to be done, but the paraplanner is expected to think independently and offer other ideas and solutions back to the adviser. For this reason many financial planning firms expect their paraplanners to be qualified to the same minimum standards as advisers.

In smaller firms the adviser might do their own paraplanning but generally when it comes to financial planning it’s not a choice between using one or another, it’s a collaborative effort.

How does the training and CPD differ – or is it the same?

On a technical level, the training and CPD is the same in my experience although a paraplanner does not formally have to record their CPD from a regulatory perspective. Both advisers and paraplanners look at the client’s situation and needs, and devise a plan to achieve client objectives. However on a non-technical level, there are important differences. Advisers need to develop their ‘soft’ skills much more than a paraplanner might. The adviser needs to be able to be comfortable speaking with the client face to face. They need to probe well for relevant details and get to the heart of what the client wants to achieve. There is also a sales element, explaining to potential clients how financial planning generally, and how the adviser in particular can be valuable in their unique circumstances. As a paraplanner who aspires to become an adviser in time, I cannot ignore developing these soft skills but they are not required to the same extent as I paraplan at my desk each day.

FINANCIAL PLANNING CAREER FAIRWould you recommend paraplanning to others as a career?

From many conversations with others, I’ve learnt most people ‘fall’ into financial services. I’m in the minority because I actively sort it out and made a career change into paraplanning. After obtaining a degree in history and politics I got a job in quantitative market research – writing questionnaires and analysing data, looking for insights and stories amongst the tens of thousands of data-points. At night I began learning about investing and began growing my own portfolio. I then started writing about my experiences in the markets on a blog, Magical . This morphed into a full-time job writing articles and managing web properties. I was self-taught and enthusiastic but when my readers came to me for financial advice I could only share my own experiences. This made me want to pursue financial qualifications to one day be capable of giving financial advice to a broader and more diverse base than me! Now I’m in paraplanning I can see many parallels to my market research days. I’m still looking for the story in the numbers. But I’m much more fulfilled working in financial planning because those numbers represent real people’s financial lives, there in black and white. Our work as financial planners is to help our clients define their objectives and goals and then meet them. We can help people retire much earlier than they thought possible and we regularly save clients from losing thousands in tax charges they were unaware of due to the intricacies of HMRC.

Yes, I would recommend paraplanning to others but newcomers should know: You can never stop learning – legislation around tax is always changing, and every client is different and has different products and different goals. It’s challenging but rewarding when a plan comes together.


Would you expect the use of paraplanning to grow?

I expect paraplanning to grow because it’s useful for an adviser. An adviser can have more time to grow their client base and meet more clients if they have someone just as competent as them or even more competent than them behind the scenes working on the technical aspect of financial planning. Paraplanning is a profession in its own right but it is also an excellent stepping stone to becoming an adviser as it provides an opportunity to learn the technical side of financial planning without the pressure of sales and searching for clients. So I can only see paraplanning growing. One thing to note though: paraplanning is still not clearly defined and the role is so diverse from one company to another. There is a movement towards developing a paraplanning standard to help with this.


Can you add anything to this? Be sure to join the discussion by leaving a comment below this post.


This post was written by Adam, a Financial Services Apprentice (and aspiring financial planner) based in York, UK. Read more here. To follow his progress just put your name and email in the boxes below and join the Financial Planning Academy