The current demand for paraplanners is far exceeding supply, with new bonus and incentive structures pushing up salaries by as much as $15,000 to $20,000 a year. Headhunting is now a common practice and new entrants to the paraplanning profession can and do demand higher salaries than ever before. The salary range for a Sydney-based paraplanner with a minimum of three years' experience is currently $55,000 to $75,000 a year. A year ago this range was $51,000 to $72,000. Meanwhile, paraplanners in Western Australia particularly are enjoying a spike in remuneration levels. A year ago, the salary range for a WA paraplanner was $41,000 to $62,000. Today paraplanners across Australia are reportedly enjoying more uniform levels of remuneration.
Financial Recruitment Group managing director Judith Beck says while the salary range for paraplanners has not changed dramatically, paraplanners are now consistently being paid at the higher end of the range. "It's not that salaries have gone over the ranges, but they are just being pushed to the top range," Beck says. In fact, she predicts in 12 months' time there will be completely new salary ranges for paraplanners.
While this remuneration boom is very good news for paraplanners, the historically poor retention of paraplanners and the new expansion of their career paths is applying more pressure on the already inadequate supply of paraplanners. "Nobody can find paraplanners at the moment," says Roger Rosentreter, managing director of IFP Solutions, which has provided outsourcing paraplanning solutions to the financial services industry for more than 10 years.
But according to Sydney-based outsourcing paraplanning specialists Outplan, which entered the market two years ago, the biggest challenge for the paraplanning industry is the lack of recruitment of junior staff. "There is not a lot of grassroots recruiting going on," Outplan technical director Michael Blanchflower says. Since November last year, Outplan has expanded from two to six paraplanners. The company's staff now includes senior paraplanners with five to six years' experience, one female paraplanner who has been working in the industry since 1991 and some junior staff who have completed sections one to four of their Diploma in Financial Planning. Given its willingness to recruit junior staff, Outplan says it is not seeing a lack of supply in paraplanners. Blanchflower says its use of an ongoing advertising program to attract paraplanners keeps such challenges at bay. "You've got to look before you need them," he says.
Rosentreter says he is currently receiving enquiries for paraplanners four to five times higher than in previous years. He says new paraplanning contractors can and do ask for significantly more money than they ever have and a good paraplanner can easily earn as much as $95,000. "Paraplanners have finally come of age in the last 12 months," he says. Explaining why this has happened dates back to the Financial Services Reform Act (FSRA). "FSR provided the initial impetus. Changes to superannuation in the last year means financial planners are flat out seeing clients so they are using paraplanners more," Rosentreter says. However, he also says financial planners have now got their head around the role paraplanners play, the value of outsourcing and the importance of their role as relationship builders.
Historically paraplanners have been perceived as the technical professionals and financial planners as the communicators and the relationship builders. But paraplanning was always seen as a transient profession, with the classic career progression involving an evolution to financial planning. In fact, according to Beck, the average tenure for a paraplanner is three years. For these reasons, the retention of paraplanners has become a huge issue for the financial planning industry and indeed goes someway in explaining the current supply challenges. But other trends have also emerged, further exacerbating this situation. For example, Beck says paraplanners are now being targeted for a number of roles, including compliance and business development managers, giving the profession more career options. This is particularly the experience in the larger institutions, which are able to offer paraplanners greater variety in career path. "The larger institutions are better at moving people up through the ranks or bringing them into other careers," Beck says. "And if companies go and try and bring people into these roles, that will cause new [salary] thresholds." She also says companies have become a lot better at creating incentive plans based on key performance indicators, which helps retain staff as do training and development programs and succession planning. "Companies have definitely opened their eyes," she says.
While larger institutions have a more structured approach to career progression for paraplanners, she says the carrot for smaller boutique financial planning firms is that it is easier for paraplanners to get introductions to clients to help make the transition to financial planning.
