Paraplanners remain reluctant to transition into adviser roles, report shows

According to a new report compiled by The Paraplanner Hub and Tanngo, and based on a survey of some 210 paraplanners, paraplanners continue to shun advice.

Namely, much like last year, just 21 per cent of the surveyed paraplanners said they plan on becoming an adviser.

When further probed about their responses, the 79 per cent who expressed reluctance cited the obstacles of excessive compliance demands and elevated risk as their primary concerns. This was followed by a preference to avoid client-facing responsibilities and the pressures associated with sales.

Also cited as deterrents were stringent education requirements, and the possibility of a healthier work-life balance as a paraplanner.

The results in the 2023 survey mirror last year’s findings when 80 per cent of paraplanners said advising was not for them. This is compared to 72 per cent in 2021.

Speaking to ifa, Melanie Drago, administrator at The Paraplanner Hub and founder of Tanngo, asserted that the hesitation of paraplanners to become advisers is not influenced by red tape, and thus, the results from the Quality of Advice Review (QAR) are unlikely to impact this aspect.

“I think what the industry needs to do to help more paraplanners transition into advice is to provide more incentives, perhaps with better pathways which won’t require excessive study, coaching, and mentoring to help change their perceptions,” Ms Drago said.

“The appeal of owning their own advice business may also change their minds, but this needs to be explored more with this cohort.

“Finally, developing them to give the confidence to speak to clients and give advice rather than keep them in the background. The survey did reveal that paraplanners wanted more client contact. The other problem is that senior paraplanners earn similar wages to advisers these days, so the incentive to move across may not be as appealing.”

Delving into the role of a paraplanner, the report revealed that typically, a paraplanner supports one to three advisers, while contract paraplanners often work with four to eight. This variance, the report explained, could stem from employees being involved in more administrative tasks within their roles, leaving them with less time dedicated solely to paraplanning duties.

On average, the report found, a paraplanner completes around five statements of advice (SOAs) per week, with 53 per cent handling fewer and 19 per cent managing more.

“The anticipation is that in response to the QAR, new legislation may reduce the length of SOAs, potentially allowing paraplanners to generate a greater number of ‘fit for purpose’ advice documents per week than the current average of five,” the report reads.

The report also explored the communication methods employed by paraplanners when interacting with advisers, uncovering that email continues to be the predominant mode of communication – 84 per cent acknowledged relying on this form of communication, marking an increase from 62 per cent in 2022.

Phone communication also experienced an increase, rising from 16 per cent in 2022 to 59 per cent in 2023. Interestingly, face-to-face meetings were preferred by less than 40 per cent of paraplanners.

In terms of their preferences in collaborating with advisers, 48 per cent of paraplanners expressed contentment working with any adviser. Meanwhile, 25 per cent indicated a preference for self-licensed advisers, and 22 per cent favoured working with large licensees. Only 4 per cent expressed a preference for industry superannuation funds, while a mere 1 per cent leaned towards bank advisers.

Paraplanners feel undervalued

The report revealed that despite the increasing sense among paraplanner that they contribute value to both the industry and clients (79 per cent compared to 72 per cent last year), some 54 per cent still believe that other industry participants undervalue paraplanning.

Additionally, when the report inquired about the willingness of paraplanners to assist super funds and product providers if they were to enter the advice realm, only 23 per cent expressed a readiness to “cross over”, while 47 per cent said they would consider it.