Matt: Well, Alex, thanks for joining us today. We’re really excited to have you on the podcast.
Alex: Thank you for having me.
Matt: Yeah, yeah, I’m so excited to talk about this topic, paraplanning, which it’s just one of those things in the industry, which has been tossed around there as a term for various roles. And I’m really excited to hear what you’re doing with your business and how you got to be where you are. Why don’t you just go ahead and tell us a little bit about, what you’re doing now, what firm you’re working at and what your title is there?
Alex: Sure. I am the founder of Simply Paraplanner, which is a job board website. We connect to financial planning firms with virtual paraplanners across the country.
Matt: How did that come to be? Were you working as a paraplanner before that or were you working in a financial planning firm and just decided this was a passion project that you wanted to pursue as a legitimate business?
Alex: It really came out of necessity. I am a military spouse and with that, we move frequently. We move all the time, and a number of years ago, I think it was back in … Well, in 2010 we moved overseas to Japan, and while we were living overseas, I still wanted to pursue the CFP and I still wanted to become a financial planner, but there was no way for me to work with a financial planning firm overseas. I had to work virtually.
Alex: So the entire time that we were overseas, I looked for a virtual opportunity. I sent emails to any firm I could think of and really pitched my services and try to convince them to allow me to work virtually. And it was extremely difficult. I wasn’t able to find virtual work at the time. Instead, I spend the time focusing on the CFP. I studied for it, I passed the exam and everything while living overseas. And then I figured as soon as we moved stateside, I would be able to start working with a firm.
Alex: I figured we’d moved to a big city, I would be able to start working with a local firm, but that was far from the case. Instead, we got reassigned to the middle of nowhere, Oklahoma. To the middle of cotton fields, right on the Texas border. And it’s so far remote that the closest Target is 45 minutes away, and that is straight highway. 45 minutes away to the closest Starbucks and Target. As you can imagine, there weren’t financial planning firms there either. So instead of moving to the city and being able to work within a firm, I found myself just as remote as I was on this island in Japan.
Alex: I really needed to pursue the virtual paraplanning. I really needed to find something virtual for my lifestyle. And at this point I now had a child as well. So I wanted to be able to be with my kid, not commute an insane amount of time just to work with the only firm that was nearby. I kept reaching out to firms and looking for virtual positions. And around that time I heard about the XYPN Conference. It was this community of virtual planners that were going to be gathering together. And I figured if anyone was going to me, if I could convince anyone to allow me to work virtually, it was going to be within this community of virtual planners.
Alex: I went to that conference knowing that I didn’t want to be a firm owner, knowing that XYPN was not the right route for me, but just hoping to network and find someone within that community. So I did. And sure enough, I found not just one the virtual paraplanning gig, but multiple. And while I was there, the number one concern that kept being brought up during the discussions were virtual paraplanners: where to find them, how to start working with them. And I remember clearly in one session the speaker asked the audience who was interested in hiring virtually.
Alex: Every single hand was raised in that room. Then they turn the tables, they said, “Is anyone in this room interested in working virtually?” And I stood up and I was the only one there that was interested in working virtually. So then the question became how do we connect these people? How do we find virtual paraplanners that want to work with financial planners? And the answer was always, there is no place. Word of mouth, just good luck finding each other. And so it was at that point that I decided, “Hey, no one else should have to go through as difficult as a time that I had finding virtual positions.”
Alex: I found myself virtual roles, but now I’m like, “Hey, let’s connect all of these individuals that I know are also looking for virtual work with all these planners that I see here looking for virtual paraplanners.”
Matt: I’m guessing you couldn’t serve every hand that was raised in the room, am I right?
Alex: Correct, yes. I found two planners that day that I aligned well with and made sense and we decided to work together.
Matt: There’s a lot of really great things going on here and we’ll definitely talk more about the virtual here in a little while. But one of those things that I’ve run into, when I’m either at a conference or just talking to other planners is this word paraplanner. When people hear the word paraplanner, what traditionally has come to their mind?
Alex: I think traditionally, the word paraplanner means an entry level position. Very entry level used as a stepping stone to become a financial planner. And as far as I know, that is how people have viewed this position.
Matt: Just to ask you, in your opinion, not only what do other paraplanners do, but when you were forging that path for yourself, how did you communicate what a paraplanner actually does?
Alex: Just to be clear, I do not believe that paraplanning is an entry level role. I believe that paraplanners are really the technical experts, whether it’s back office or middle office. Middle office, meaning they communicate with clients as needed for the plan. I believe that a paraplanner becomes a technical expert and actually creates the financial plans. It’s important that they are knowledgeable and have gone through the CFP coursework for example, and are able to really hone in on the financial plan, whether it’s inputting the data into the software, actually creating the plans, creating for the advisers, creating preliminary recommendations for the advisors. All of that falls into paraplanning.
Matt: You mentioned the CFP exam obviously, those who are career changers or who are just graduating and coming out of college might not have that designation. Based on experience, is there an actual variance in what a paraplanner’s role might look like within a firm? Definitely as they progress, is there a legitimate career path for a paraplanner?
Alex: Yeah. We hope a number of different firms hire paraplanners, and I’ll tell you that when these firms hire paraplanners, we see the structure of the position vary greatly between firms. It really depends on what the firm is currently doing and what they’re hoping to outsource. So the number one goal is to be able to offload work and spend more time client facing. And so I work with the advisors to figure out what that looks like. What sort of tasks that fall under the financial planning process are they hoping to offload to free up more time?
Alex: And so it really does vary greatly from firm to firm. Sometimes we’ll see a paraplanner be jack of all trades. Those are usually much smaller firms where they hire someone to wear multiple hats and they help with everything from CSA level work, all the way up to the actual planning work and presenting the preliminary recommendations to the adviser. Other times in larger firms, they have it much more structured as far as what a paraplanner does.
Alex: A paraplanner will strictly do the planning work. They will work with, say eMoney or MoneyGuidePro, inputting the data and putting together these reports for the advisor. So it really depends on the firm size and their current process.
Matt: The million dollar question out there for the advisors listening is, when you have a variance in the role and it takes time to figure out exactly how you want to use a paraplanner within your firm, how the heck do you decide what you’re going to be paying them?
Alex: Right. That is the million dollar question and we get asked that all the time. And I hate to say it depends, but it really does depend on the role that you’re hiring for and the level of expertise that you are hiring. We tell people, we recommend just going with an industry standard and basing it off of the experience level, education level and expertise of the individual that you’re hiring for.
Alex: For example, if you are a small firm and you’re hiring someone to be a jack of all trades, you want them to do CSA level work, but also do the planning work and you want them to be a CFP with two years of experience, you’re going to have to pay that level of a CFP at two years of experience. You can’t vary or pay them less because they’re doing a CSA level work. If they’re doing the level of work that they are qualified for, you’re going to have to pay that top tier.
Matt: Do you have like an hourly rate of what you would suggest for someone with the CFP versus maybe in that stage of they’ve passed the exam, but they’re still looking to fill that experience requirement? Do you have a typical number that you’ll throw out there to an advisor?
Alex: It really does depend and so I hate to say that, but it really does depend on the situation. I can throw just very, very generic numbers and just know that depending on your situation and the tasks that you’re hiring for, it could vary quite a bit. But just to throw numbers out there, let’s say entry level, they don’t have a CFP yet. And the entry level hourly rate that we see is $30 per hour.
Alex: Once they gain more expertise, say they’ve passed the CFP exam, maybe they don’t have the CFP yet, but they have a few years of experience under their belt, then it might go up to 35, $40 per hour. Once they are a full blown CFP and have a number of years of experience under their belt, or maybe they are a subject matter expert, say in taxes or estate planning for example, then you’re probably looking at $50 per hour.
Matt: Oh wow. Yeah. That definitely is quite a range. And obviously as the advisors are developing that role and figuring out exactly what that’s gonna look like, what type of hurdles are an adviser or advisers facing when they start that hiring process? What are some of the biggest pain points out there that you’ve seen in helping advisors not only define that role, but actually find a candidate and place them within the firm?
Alex: There are a number of different struggles I would say the first, is probably figuring out what they want to outsource. And so in order to do that, in order to hire someone, you really need to figure out what you’re hiring for. In order to do that, I have the advisers write down all of the different tasks that fall under the financial planning process and just make a list of all of the ones that they are hoping to outsource, that they really wish they could offload, whether they don’t enjoy doing it, it’s taking up too much of their time, too much of their time that they could be spending elsewhere, like growing their business, being client facing, doing marketing for example.
Alex: Anything that they either don’t like doing or feel that they could outsource, I have them create this list, and then from there we’ll help them create a job listing that they can post. I think the next issue that arises, many firms feel that they need to have all of their systems and processes in place before they can hire. A lot of people kick the can down the road. They say, “I’ll hire in six months, once my processes are in place.” But then in six months their processes still aren’t in place and they’ll say, “Okay, I’ll wait in another six months and have my processes in place.”
Alex: I think that’s one of the biggest myths is that you have to have all of your systems and processes documented and 100% ready to go when you hire, because that’s what our paraplanners can do. Our paraplanners can come in, shadow you and document as you’re going through the training, what it is that you’re doing. Say it’s even just in a Google document, if following you and seeing what you’re currently doing for a process, now suddenly you have a second hand that can go behind you and turn that into a repeatable process that can even be used to train later hires as well.
Matt: That’s a really great point and I think to have you ever noticed maybe the advisors, do they ever struggle to really get those processes, not only on paper, but actually explain how someone should actually carry out that process and some of the nuances of creating a financial plan? Are there ever struggles there?
Alex: Sometimes. I would say a lot of these firms that we help hire a lot of them, this is their first hire and they’ve never had to train before, and so we recommend doing a lot of screen sharing. You can also record your screen while you’re doing a regular task that you do all the time. You can just record your screen and then share that with a paraplanner. And that helps a lot with training as well.
Alex: Sometimes you’ve been in the business for so long that you forget how to start from scratch and explain the process from beginning to end. So having someone shadow you or recording a video for them allows them to watch it over and over again and go at their pace and really see everywhere you click and see everything you do and see the considerations, and allow them to ask questions as well so that they really understand what it is that you want them to be doing.
Matt: Yeah, and I think there’s a lot of value in just seeing how each adviser does it. The advisors I’ve worked with throughout my career, it seems that everyone has a slightly different way of doing things. Just taking the time to train and show people how it’s done is probably valuable for the advisor, right?
Alex: Absolutely. And you’re right when you say that every firm does things differently, and it’s important to remember that, that your process probably does not look like the firm next to you process. When you bring on a virtual paraplanner, it’s really important not to assume that they are going to know your process right away because there’s a good chance that they are working with other advisors who do things very, very differently. Training is really key.
Matt: When those advisers are looking to make that first hire, do you find that they’re typically looking to make that full time hire right away or are they more comfortable starting with a part-time hire the first time? What have you seen in your experience with working with advisors and helping them find that first hire?
Alex: We typically see firms hire first as a 1099 position, say 10 to 20 hours per week, and then that usually starts off as a trial basis to make sure that it’s a good fit for everybody, but then quite often we do see that individual grow into a full time role. Either the hours will increase or we have seen quite a few of them grow into W2 salaried positions.
Matt: You did mention in your initial spiel about Simply Paraplanner where you do primarily work virtually or the members of your community are virtual paraplanners. Do advisors have any main concerns about hiring virtually?
Alex: I would say the number one concern with hiring virtually becomes security. How can I ensure that my client’s information is safe? And I tell advisors that working with a virtual paraplanner is going to be very important as far as the security measures go, just like working with a client virtually. So all the same security measures that you have in place working with a client virtually, you’re going to have to make sure that you’re doing that with your virtual paraplanner as well.
Alex: If you’re not working with a client virtually right now, just all of the best practices that you’re currently doing within your firm. For example, make sure that you have an NDA in place with your virtual paraplanner, and then you’re also going to want to make sure that expectations are clear. For example, having an encrypted hard drive is a great idea. Making sure that no one is using public Wifi is a big one, not sharing client data over email for example.
Alex: You’re going to want something secure, a secure document sharing software. So those are some examples of things that should already be going on in the firm and just making it clear that the virtual paraplanner understands how you operate as a firm and that those best practices are shared.
Matt: Yeah. I mean, especially in today’s day and age, I think just about everyone out there is probably using some sort of web based software or document storage tool, but in addition to that, are there any other softwares that an advisor might want a paraplanner to have on their computers? Like in terms of accountability or just security or any other softwares that they might want a paraplanner to have or a paraplanner should have?
Alex: We do get a lot of questions about what software we recommend. A good one that we recommend to advisers and paraplanners is a password sharing system. For example, LastPass. It’s a great way if an advisor is unable to create an additional user for a software, but they don’t want to share their password into whatever given software it is, they can share access to via LastPass, so they can grant access to an individual and they can also take away access from this individual.
Alex: But this individual will never see what the password is itself. So it’s a great way to share logins to whatever software it is that you can’t create a new login for without actually having to share the password. So that’s a good example of a security measure.
Matt: A lot of these advisors who are looking to make that first hire, whether it’s full time or part-time, usually they’re doing that because they’re pretty busy, they’re just running out of time or they’re super stressed out with their calendar. Do you help the advisors with the hiring process at all and what does that look like on your end from Simply Paraplanner?
Alex: We do. We have two different options for advisers to find their virtual paraplanner. We have a do it yourself method where an advisor can come, post their own job listing just like a everyday job board and virtual paraplanners can apply. And then they really figured out how to handle that process and we are very far removed from that. The other option, we do have a full service offering and with that we do help along the entire hiring process.
Alex: With that one, we actually work very closely with the advisor. We have discovery calls, questionnaires, to really understand what it is that they are looking for and then we at Simply Paraplanner, we’ll write the job listing for them. So once we’ve written it and both parties agree that the job listing clearly defines what it is that they were looking for, we’ll post it to Simply Paraplanner.
Alex: We’re currently seeing anywhere from 20 to 40 applicants per job. We are receiving a lot of applicants, and that can be really overwhelming for an adviser. With the full service offering, instead of the adviser receiving say 40 applicants and having to go through their resumes and cover letters instead, we field those applicants. We will get the initial candidates, say 40 of them, and then we will put them through a two phase screening process.
Alex: The first phase is a questionnaire to really weed out the obvious misfits. Those that don’t meet minimum qualifications or for example, they are requiring a certain number of hours that the adviser can’t promise. There are certain disqualifiers that don’t make it through that first round. The second round, then we go through phone interviews with the candidates, and so we’ll narrow down the pool even further after our phone screenings and then we present to the advisor the top three candidates that we feel would be a good fit for their firm.
Alex: Suddenly their candidate pool is shrinking from 40 qualified candidates all the way down to the top three candidates and then they take it over from there. Now, all of a sudden they only have to interview three and decide which of those three are the best fit for their firm.
Matt: Very interesting. You’re doing so much of the screening. Is there a particular reason why you’re not recommending a top candidate versus giving them those top three?
Alex: There are certain things that you just can’t screen for. For example, personality fits. I can do my best to see who I think would be a good personality fit, but I really want to provide the adviser with three to pick from, because who I might think would be the best fit, there are certain considerations: culture of the firm, personality fit. There are so many different things that go into choosing that one individual that I prefer to give them a small pool to choose from rather than placing a single individual in the firm.
Matt: You’re essentially financial planner in the financial planners and saying, “Here’s options A, B and C. Here’s the pros and cons of each, but ultimately it’s up to you to decide which path you’re going to go down.”
Matt: For those planners out there who might be interested in this, what happens if a planner brings someone on board and they’ve already gone through this exhaustive candidate screening process and for some reason it’s a short term fate and it just doesn’t ultimately work out in the end? What can advisors expect in that type of situation?
Alex: Well, I really do not want to say this out loud, but knock on some way. So far all of our advisors have hired from the top three candidate pool and have been very satisfied. And that’s because the screening process is a very long process, but if for some reason that person ended up not being a great fit, there are a number of different options. If it’s within the first 30 days, they can come back and we can review and see what went wrong. Were really none of the top three a good fit for your firm?
Alex: Say they did pick one of the top three and that individual wasn’t the best fit, they still have two others from that top candidate pool that they can play around with. But let’s just say that none of those three were good fits after their interviews or they brought them into the firm and they still weren’t a good fit, then we would go back. If it’s within the first 30 days, go back and see, did we miss the mark on the job listing? Did we attract the wrong kind of candidates? Did we misunderstand what you were looking for? Then we could go back from scratch.
Alex: But no matter what, if an adviser post a job to our job board and say they received 40 applicants, they will always have that candidate pool of 40 applicants. They can always take those resumes from their job listing and review any of the 40 at any time.
Matt: Once they go through the process, they always have that resource available to them, which is really awesome. And I do want to shift gears a little bit. Obviously, you’re having high number of applicants for all of these jobs. For the newer entrance to the profession, whether again, they’re just graduating or they’ve gone through the CFP education and they’re wanting to transition into the financial planning profession, paraplanning is not really taught anywhere or talked about too much within those programs. Where do those who are interested in paraplanning go to learn more information about becoming a paraplanner or what that role really looks like on their end?
Alex: You’re right when you say that there just aren’t very many resources. When I went out and started doing this on my own, I didn’t know of anyone else doing this. I didn’t know of any resources. I felt very isolated and had to figure out a lot of it on my own. Fortunately, I met with Jen Pritchard, through Facebook actually. She put out a Facebook post asking if anyone else was a virtual paraplanning. And we ended up forming a study group of five of us, and we were the only five that we knew of, and we had all had to figure this out on our own.
Alex: And so we were comparing notes, comparing resources and figuring out best practices just between us five. That’s when we decided that it would be a really good idea to create resources for individuals that want to do paraplanning. That’s really what we have been focusing on over at Simply Paraplanner. We have the job board, which helps individuals find each other firms and virtual paraplanners. But we decided that there needed to be a better place for those interested in becoming paraplanners to find more information.
Alex: In May, I think it was, we launched something called the Paraplanner Portal, and what that is, it’s basically a virtual academy and community for virtual paraplanners. It’s a place where we, Jen and myself and our team over at Simply Paraplanner, we share all of the information that we’ve learned along the way. We have templates and documents to download, sample timesheets and invoices, even some sample contracts that you can take a look at. We have courses in there, we have forums where you can communicate with other virtual paraplanners.
Alex: Let’s see. One of the biggest excitements we have in there is software trainings. We’ve partnered up with a few different software companies. For example, eMoney and MoneyGuidePro, where individuals can now come to the Paraplanner Portal and train up on the software that they weren’t able to train on elsewhere. Many entry level jobs require a base knowledge in one of the most popular financial planning software. And before this, there wasn’t a place for individuals to gain that base level of knowledge. So that’s something that we offer in the Paraplanner Portal as well.
Matt: All right. For those of our listeners who are interested in learning more about paraplanning, are there any designations or other types of self education outside of Simply Paraplanner that they can look at and just learn more about what it means to actually be a paraplanner versus something like a junior planner?
Alex: We recommend that all virtual paraplanners or those interested in becoming a virtual paraplanner pursue the CFP coursework. And that’s because the majority of our job listings require that base knowledge. They are seeking an individual that has either finished the coursework, passed the exam or in some cases those that are actually CFP professionals. We think it’s a good place to start, and at least show that you are pursuing it. There are some other designations out there.
Alex: For example, there’s the Registered Paraplanner Designation, and honestly I’ve never seen an individual hired because they have that designation or seen any adviser request that. It’s almost always the CFP designation.
Matt: For those who might be interested in just taking a look at that Registered Paraplanner Designation, what exactly does that entail?
Alex: It’s basically the first course of the CFP. It’s an entry level introduction to what financial planning is.
Matt: You talked about, the hiring process with the advisors that you work with. If you’re getting a pool of 40 applicants, that’s not great odds of getting your name into the top three. What are some things that those people who are interested in finding those paraplanning roles, what can they do to just set themselves apart from the majority of the candidates that you’re screening through?
Alex: I think there are a few things that individuals can do to stand out. The first would be to clearly read the job listing and see what the individual is looking for and address those concerns in your cover letter. I think it’s important to note that the cover letter is very, very important. Advisors love reading the cover letters. That’s their first impression of who you are as a candidate and it gives you an opportunity to provide more context to your situation and your resume and also explain things like your passion for the industry or how you relate to the individual that’s hiring.
Alex: I think it’s a good idea to look up the website of the firm that’s hiring and get to know them a little bit better. If you show that you’ve done your homework, you understand who the firm is, you understand who is on the team, what members of the team are actually hiring and what the structure looks like, if you understand the types of clients that they’re servicing and you can address all of this in your cover letter, that is going to go a long way and you really will stand out to those advisors.
Matt: Yeah, those are great tips too, and just looking through, I’m sure you recommend looking through like a firm’s ADV. Would that be a good idea for individuals as well?
Alex: I think it’s a good idea to make sure that it’s a kind of company that you do want to work for. For example, you can see their fee structure and their size as well, to make sure that you are applying for jobs that you actually want to be in. It’d be pretty upsetting if you didn’t understand who a firm was and you got to the final stages of the interview process or even hired only to realize that you are actually not a good fit for the firm.
Matt: That’s a really great point for those who are coming into the career path, is make sure it’s a good fit for yourself, not just the employer is a good fit for you. Just to wrap things up, you’ve been very clear about a paraplanner not being the same thing as a junior planner. What do you really see in the differences between those two roles?
Alex: I think the biggest difference is whether or not the individual is client facing and whether or not the individual is on track or is currently giving the recommendations directly to the clients. Junior planners or associate planners are on the track to becoming client facing and managing relationships and actually giving the recommendations directly to the clients. Paraplanners however, they stay back office or like I mentioned middle office and they’re the ones that are honing their technical skills.
Alex: They are creating the plans and the preliminary recommendations, but they are never giving the recommendations directly to the clients. And I don’t want anyone to think that it is a stepping stone because it’s very possible to become, what I like to call it professional paraplanner: work your way all the way up, be very experienced, have a lot of technical expertise and stay back office. Maybe you are an expert with taxes or let’s say estate planning or you can have these expertise, and still stay back office, and just present those preliminary recommendations and allow the advisor to do all of the relationship management.
Matt: Just to kind of piggyback off of what you said about the registered paraplanner being a very basic entry level education, do you think there is a broader challenge here or possibility for having a true paraplanner designation similar to the CFP where it’s the gold mark for a paraplanner versus a client facing planner?
Alex: That’s an interesting question because the CFP as it is right now does not teach those client facing skills. They don’t teach the relationship management skills. That’s what things like the residency program or the FPA residency is for, is to teach you those soft skills that you don’t learn in the CFP coursework. The CFP coursework really is very technical and that’s what paraplanners need.
Alex: I would even challenge it to say that those advisors, client facing individuals, really need something supplemental that is about soft skills and being client facing whereas the CFP could be more for paraplanners.
Matt: What I was getting at there is, you had mentioned there’s different levels of like what you should expect to pay a paraplanner based on experience. Do you think we’ll ever get to that level with paraplanning where maybe there’s like a level one, two and three paraplanner or have you seen that done anywhere else?
Alex: I would love to see something like that. And that’s actually what they’re doing in the UK right now. They do have different levels of paraplanners and I think it does go up to level four. It might go a little bit higher, but each level has clearly defined education levels and programs associated with them and qualifications. And so you’re able to pass an exam and say, “I am now a level one paraplanner.” And then you pursue more education and you pass another exam and you’re now qualified as a level two paraplanner.
Alex: It is very structured and very defined in the UK. I would love to see that in the US. I would love to see paraplanning itself more defined, but also so individuals could really address and put on their resumes or be able to tell advisors where they fall in the structure: are they level two qualified? Are they level four qualified? I think it would make everyone’s lives easier. I think it would be easier to figure out how much to pay an individual. It’d be easier to figure out who you’re looking to hire.
Alex: Right now they say, “I want a CFP professional,” but CFP professionals come from all different backgrounds. What are the actual qualities and skills that you’re looking for in the position? And so being able to say what type of paraplanner you want, I think would be amazing.
Matt: You brought up a really great point there in that the CFP, there are those who are CFPs and are strictly doing investment management versus CFPs who are truly doing holistic planning. You’re basically saying the same would be true for a paraplanner.
Matt: Awesome. Well, Alex, thank you so much for joining us today. We really appreciated hearing more, not only about your business, but just what you feel is the future of paraplanning versus the traditional path of junior planner to financial planner. Again, thank you for your time today. We really appreciated having you.
Alex: Absolutely. Thank you, Matt.