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Tom Hegarty: Should paraplanners be Level 4 qualified?

There is currently no minimum qualification level, but the majority of advisers think this needs to change

The role of the paraplanner is a relatively new one and its definition and responsibilities can differ hugely between firms. According to the Chartered Institute for Securities and Investment, the role can be broken down into four key parts:

  1. Preparing and maintaining the client file. Confirming risk profiles and client objectives with the adviser, identifying information to compile a cashflow analysis.
  2. Preparing recommendations. Identifying areas for planning, undertaking research to find appropriate solutions to present to the adviser, considering asset allocations and investment strategy, and preparing draft recommendations and reports to be signed off by the adviser.
  3. Implementing recommendations. Preparing suitability letters, completing application forms, ensuring all compliance paperwork is in order, and implementing investments or financial plans as appropriate.
  4. Reviewing client files, portfolios, products and processes. Attending and organising client meetings, reviewing portfolios, allocations and risk profiles, and initiating review meetings.

A paraplanner’s responsibilities may include some, or all, of the above. These core areas necessitate a number of different skillsets, of which advisers cite the most desirable being high technical proficiency, and strong research and report writing.

Tom Hegarty: The gold standard in paraplanning

The paraplanner’s average salary in 2017 was between £18,000 and £36,000, according to Salarywise – a wide band, indicating the spectrum of responsibilities.

Experience over exams?
Each month, we survey our members to explore the views of the adviser community on a hot topic in the profession. This month we asked: do paraplanners need to be Level 4 qualified?

There is currently no minimum qualification requirement for paraplanners, as they are not authorised, but there are recommended routes available. These include:

  • Chartered Insurance Institute Certificate in Paraplanning – R01 to 3 and J09 (Level 4)
  • CISI Certificate in Paraplanning – financial planning and advice and tax for UK individuals and trusts (Level 4)
  • London Institute of Banking & Finance Certificate in Paraplanning and Administration (Level 3)

Seventy one per cent of the survey respondents said paraplanners should be Level 4 qualified. One commented: “Without the full diploma, you are simply not a paraplanner.” If the paraplanner is making recommendations to the adviser around client solutions, they should be as qualified, if not more so.

Twenty nine per cent said there was no need, as they did not have any liability for the advice given. As one respondent said: “If they are diploma qualified, paraplanners may as well be the adviser.” That is not to say this cohort saw exams as completely unnecessary.

While most respondents thought experience was just as important as qualifications, there was agreement that a lot of the required skills and competencies were best taught through exams.

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One concern raised was the blurred definition of a paraplanner and that levels of required qualifications could depend upon responsibilities held by each individual. Those writing suitability reports and constructing model portfolios may require a higher level of technical knowledge and ability, for example.

It was broadly agreed that the continuing professional development requirements for paraplanners should be the same as for an adviser, with it being vital they are always up to date with key changes in the industry.

A minimum qualification requirement has been talked about often, but this is currently down to the individual or their firm to decide.

There has also been growing emphasis on the possibility of paraplanning being thought of as a profession. Could formal qualifications be the only way to prove this? The government-approved apprenticeship standard for paraplanners requires one of the Level 4 qualifications mentioned above to be achieved.

We hope to help new entrants in this area through the paraplanner apprenticeship programme, pending government funding.

Tom Hegarty is managing director of New Model Business Academy


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. I both agree and disagree. Virtually all my Paraplanners are Diploma qualified or higher (i’m afraid that the so called “Paraplanner” qualifications i have seen the syllabuses for are just not good enough). I do however have a couple of Paraplanners who are approaching the end of their careers, and understandably reluctant to commit substantial time to qualifications, to simply get a piece of paper to prove that they can do, what they have been doing for years, and sometimes decades, with only a couple of years left before they exit. I think that there is plenty of scope for both within our highly understaffed industry, and i think Michelle Hoskins, Paraplanning Standards approach may well be useful to either create the bridge between both camps, or run alongside other formats.

  2. Given that the adviser is responsible for all and any recommendations put to his clients, it seems logical that the paraplanner should be at least as qualified as him.

  3. No, they should be level 6 qualified. They are in effect the ones providing the detailed advice and judging from I have seen in firms with advisers and paraplanners the advisers are just salesmen and the paraplanners do the work.

    • That’s the way it used to work between 1988 and 2003 with NatWest when they were Independant. Client facing were actually less qualified than the back office (paraplanner) putting together what was presented by us.
      There is an arguemnt for two different types of paraplanner and two different types of adviser. Both types of adviser need to be level 4 minimum of course, but someone with just R01 (or equivalent) can support an adviser where things are relatively simpel for teh clients needs.

  4. It depends on the nature of the role. Some paraplanners are glorified admin who churn out highly templated investment review and top-up reports and may not wish to progress any further. Others may be qualified and experienced but have no meaningful input into the solution suggested to the client and merely research and document whatever the adviser tells them they have to (even if they disagree). It’s about finding the right paraplanner for the advisers, customers and areas of advice in question. Most firms insist on level 4 minimum and most career paraplanners voluntarily complete level 4 minimum. Some paraplanners also have CF30 permissions where they have a hybrid role. There is already a problem with a shortage of paraplanners as it is. Introducing a mandatory qualification would make the recruitment situation even worse. Experience plays a big part in paraplanner competence as well. Some people are very good at passing exams but cannot apply their knowledge very well in the real world.

  5. I was at a conference once and was told that I must be a paraplanner because I was talking at an in-depth technical level on a topic being discussed.

    I remember being surprised by this at the time as I thought and still do, think it is my job as the adviser to know in-depth what I am advising my clients on.

    Our Admin staff write our reports and need a good technical understanding of products but at the end of the day, I am the one who signs the report. I think Inky Ghost says it all really.

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