Did you become a financial advisor to sit in your office and enter data into a computer? Probably not. But like many of your counterparts, entering client information into financial-planning software or performing administrative duties may be a major part of your day-to-day job. Faced with these administrative burdens, what are your options?

If you have the ability to add payroll to your overhead, hiring an assistant to perform administrative duties may be your answer. And when it comes to preparing financial plans for your clients, you can further increase your in-house overhead by hiring a junior advisor. Or you could try outsourcing to a fee-based paraplanner. A paraplanner is an individual with investment and/or financial-planning experience who reduces the employment and administration costs of financial professionals by providing them with the ability to outsource their financial- planning services. With a strong technical and financial-planning background that can only benefit your clients, your business and your bottom line, partnering with a paraplanner can make both business and economic sense.

Paraplanning is a service for advisors who are open to the concept of partnering with a third party, but for some, the process just doesn’t fly. Some advisors may like the concept of outsourcing their financial-planning services, but don’t trust someone else to enter client data for their high-net-worth clients. This is indeed a valid concern — protecting your clients and your business is of utmost importance. But paraplanners do have the training and expertise to get the job done, so if advisors are able to overcome their fears of outsourcing this portion of their business, they may see a positive impact on their bottom line.

In order for any long-term personal or business relationship to be successful, trust needs to be earned. Partnering with a third party is no different. My suggestion to any advisor who’s unsure about partnering with a paraplanner is to first establish a relationship with one. Don’t be shy; volunteer as a guinea pig to the paraplanning process so you can see firsthand how the service works. Once trust between the advisor and paraplanner has been established and an agreement put in place, clients should be made aware of the new partnership arrangement so they not only understand how the process works, but can be reassured that their information will continue to be safeguarded to the highest level.

Paraplanners get involved with the planning process as soon as the discovery meeting has taken place with the client. I’m a firm believer that the more information that’s known about a client, the more personalized the plan will be and the more it can cater to his or her individual needs. Once the relevant information has been collected by the financial planner, the next step is for the paraplanner to review the information to ensure the plan being developed will be a true reflection of the client’s goals, objectives and needs. Although the majority of a paraplanner’s business is conducted via e-mail and webinars, depending on the location of the advisor, a face-to-face appointment may be possible.

After the review has taken place, the paraplanner enters the data into the financial-planning software. A typical modular plan focused on a single or multi-faceted set of needs can take anywhere between two to three hours; a full comprehensive plan may take five to eight hours; and for a full comprehensive plan with a business or holding company component, you’re looking at upwards of ten to fourteen hours to complete the plan. Paraplanners are then able to e-mail the financial plan to the planner so he or she can review it and make specific recommendations. Recommendations are then entered by the paraplanner into the software so the final solution can be presented to the client.

An Internet search on the term paraplanning shows the majority of the search results are from the United Kingdom. In the U.K., there are over 35,000 paraplanners who work with financial professionals, and this number is growing. The Institute of Financial Planning, the professional body of financial planners and paraplanners in the U.K., has even created a paraplanning course and certification, as the need for paraplanning has been drastically increasing in recent years.

If you are a sole practitioner, or even have a financial team but don’t outsource your financial-planning business, there are a few important questions to ask yourself if you’re looking to implement maximum efficiency. These include:

  • What’s my time worth on an hourly basis?
  • Are my skills as a financial advisor being best utilized through client data entry into a financial-planning program?
  • Will outsourcing my financial plans free up some of my time, allowing me to focus on quality-building aspects of my business, like prospecting or client meetings?
  • Are the answers to these still not convincing enough? Contemplate the decision to hire a junior advisor on a full- or part-time basis. Basic considerations would include: Paying a salary or an hourly wage to someone who lacks not only industry experience, but the expertise needed to create a financial plan using the relevant, up-to-date software can be costly. You may also need to spend a lot of your time and money to train a junior advisor on how to use the software. After spending your time and money, how loyal is your junior advisor going to be to you and your business? Will he or she take the training – and maybe your clients – to another firm?

    With a paraplanner, you’re paying by the project, and not for downtime, breaks, bonuses and other benefits. And these professionals are experts in the relevant planning software, know the right questions to ask and won’t poach your clients. Now, which solution makes more sense?

    In addition to the traditional services, paraplanners may also offer a cash-flow-management component for the clients of the advisor. That is, the design and provision of a detailed cash-flow analysis. In essence, paraplanners can determine to the exact penny the income as well as every fixed and variable expense that flows through the hands of a client. Take a moment and think of all the pre-authorized plans you started by using a best-guess strategy based on estimated numbers.

    Now, what would happen if each one of your clients had the ability to double their current monthly contributions, not because their incomes increased, but because by working with a paraplanner, they learned how to manage their money more efficiently? This would certainly be advantageous to any financial practice.

    The cash-flow-management software program used by most paraplanners allows clients to log into a secure online system with their own unique username and password. Once into the secure site, the client has the ability to upload his or her banking and credit transactions (no different than using Quicken).

    As a registered user of the online system, the paraplanner can also log in from a remote site, allowing him or her to view only a summary of all income and expense items uploaded by the client. No need to worry about privacy issues, because the paraplanner is only able to see totals for income and expense categories — not specific financial transactions, which can only be seen by the client.

    With the ability to collaborate with clients from a remote site, the paraplanner can help them gain a better understanding of their financial situations. This gives them the ability to save and invest more with their financial consultant while repaying debt.

    While still a relatively new concept in Canada, paraplanning will evolve with the needs of advisors and their clients. In the meantime, advisors should remember that outsourcing financial plans and the cash-flow-management side of the business isn’t about giving up control. It’s about working smarter to ensure they have the time and resources to pursue more enjoyable aspects of the business.


  • Tyrone Matheson is a financial coach and CEO of Inside Out Training.