Paraplanning

Paraplanning is the process of paraplanners working with financial planners to serve customers and clients. 

Paraplanners perform data gathering and research but do not output recommendations or create plans. They only assist in the creation of recommendations and plans by financially trained experts.

How Does Paraplanning Work?

Since paraplanners do not create plans and recommendations, paraplanners work closely with financial planners and other experts in the creation of these documents and plan implementation. The paraplanner provides their expertise in the financial areas and the planner takes it from there.

Paraplanners ensure that planners have all of the knowledge and information they need to create their own plans. Paraplanners also work with clients and customers, guiding them through questions and ensuring they understand all of the issues presented by paraplanners and other paraplanning professionals.

Paraplanning vs. Financial Planning

Financial planning is an umbrella term that covers paraplanning, paraplanners and paraplanning itself.

Paraplanning typically refers to the relationship between paraplanners and financial planners/advisors or paraplanners working with clients on behalf of financial planners/advisors. Paraplanners provide paraplanning support to get information such as client financial data and the paraplanner’s opinion on how to proceed with recommendations.

The Benefits of Paraplanning

The paraplanning process provides a number of benefits to financial planners and paraplanners.

Paraplanners contribute the important role of gathering client data for paraplanners to use in their own analysis and recommendations. Paraplanners work with paraplanners to create plans and deliver high-quality information for paraplanners to review and use in their own paraplanning practice.

Paraplanners help financial planners and paraplanners to grow their paraplanning practices by providing high-quality paraplanning services such as data gathering and research. Paraplanners do not create plans or recommendations, but paraplanners work closely with financial planners and other paraplanning professionals to ensure paraplanners have all of the information they need to create their own paraplanning reports.

Types of Paraplanners

There are two types of paraplanners: paraplanners and paraplanning specialists.

Paraplanners can work in paraplanning services, paraplanning departments, or paraplanning teams at financial planning firms. Paraplanners can help individual advisors create their own plans for client analysis, guidelines, and decision-making processes.

A paraplanning specialist is a more advanced paraplanning designation. Paraplanning specialists have paraplanners and paraplanning experience, along with some college-level paraplanning classes.

Paraplanners can work in a number of planning capacities such as paraplanners at financial firms or paraplanners working directly with clients on their own.

Paraplanning Qualifications

No educational requirements exist for paraplanners, though paraplanners must demonstrate a basic understanding of finance and investment concepts. Educational background in finance or business is a plus. Regardless of paraplanning background, paraplanners must stay current with financial trends and new regulatory requirements.

The Bottom Line

Paraplanners are professionals whose responsibilities include gathering data to use in their own financial planning processes. Paraplanners gather information about clients and their finances, including income, investments, net worth, insurance policies, credit scores, and other data points needed by paraplanners to deliver plans. Paraplanners do not create recommendations.

Paraplanners provide support to deliver their own high-quality paraplanning reports and recommendations.

Paraplanners gather information, including personal financial information and data points that financial planners use. Paraplanners refer to this process as paraplanning support.
Paraplanners gather information about clients and their finances, including income, investments, net worth, insurance policies, credit scores, and other data points needed by paraplanners to deliver plans.
The paraplanning process provides a number of benefits. Paraplanners create paraplanning reports that give clients more detailed, accurate information for financial planning engagements.
Paraplanners provide paraplanning support, but paraplanners do not create plans or recommendations. Paraplanners work closely with financial planners and other paraplanning professionals to ensure paraplanners have all of the information they need to create their own paraplanning reports and recommendations and deliver those recommendations to clients.
No educational requirements exist for paraplanners, though paraplanners must demonstrate a basic understanding of finance and investment concepts. Educational background in finance or business is a plus. Regardless of paraplanning background, paraplanners must stay current with financial trends and new regulatory requirements.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.