As if earning two bachelor’s degrees in three years wasn’t tough enough, industrious Adrienne Sadowski craved real-world work experience at the same time. So from her dorm at Pitzer College in Claremont, Calif., the pajama-clad student, via computer, held down a part-time gig with McGee Financial Strategies, an advisory firm in Portland, Ore.
“I’m oddly motivated,” says Sadowski, now 22 and a financial planning assistant with McGee’s independent practice, affiliated with Raymond James Financial Services. The paraplanner first started there at age 15 as an after-school file clerk.
Not all paraplanners are as enterprising as this one; but such support staff need to be on the ball indeed.
Paraplanners, a relatively new breed in the industry, are gaining recognition, increasingly, as cost-effective employees that add real value to a practice. They act as fact-finders, help put together financial plans and portfolios and are whizzes with financial-planning computer software. Some paraplanners even conduct investment research and meet with clients.
With today’s vital emphasis on quality staff and the baby boomer retirement boom already under way, it could be a major mistake not to hire a paraplanner — a.k.a., sales associate or junior professional, among other titles — as part of an advisory team.
“It’s silly if you don’t have a paraplanner to leverage your time and create some depth in your firm. There are just too many pieces in the business nowadays,” says Judith McGee, principal of McGee Financial, who has mentored several other young paraplanners in addition to Sadowski.
Though paraplanners are often CFPs and can even be Series 7-licensed — or beyond — many of these men and women have zero urge to become full planners at the helm of their own practices. Some, like Sadowski, do. But paid lower compensation compared to rookie advisors, paraplanners, usually preferring to stay behind the scenes, are a cost-effective alternative to employing newbie or experienced planners.
“If I hire a person who ultimately wants to run their own practice, I’m providing an awful lot of training to someone who [sooner or later] is going to leave me. But my paraplanner is content to help me grow my practice,” says Len Valletta, principal, Albany Financial Group, in Albany, N.Y., and affiliated with LPL Financial Services.
Maria Wells, 40, who joined Valletta last April, is a CFP and also has her Series 7 and Series 63 licenses, together with various insurance licenses. But “the idea of going out and finding individual [clients] has always been a little daunting to me,” she says. “Also, I’ve felt more comfortable with a salaried position versus one that’s commission-based.” Wells, however, was hired with the understanding that she’ll soon also be on an incentive program.
Many paraplanners, in fact, earn a salary plus bonus. Some, like Christine Stiles, in Williamsburg, Va., make commissions as well. Stiles, 48, has worked with top Wachovia Securities wealth manager Joe Montgomery, who consults or custodies about $10.3 billion, for nearly 16 years. An assistant vice president, Stiles has both Series 7 and 63 licenses and is a Registered Paraplanner and an Accredited Asset Management Specialist. The two latter designations are offered by the College for Financial Planning (www.cffp.edu), from which nearly 12,000 RPs have graduated.
But even with her impressive credentials and 26 years in the business, Stiles has no plans to move up to FC. “I already lose a lot of sleep. What I do is stressful enough!” she only half-jokes.
An Advisor’s Skills, Minus the Entrepreneurship
Super paraplanners boast a variety of talents, and excellent people skills are perhaps chief among them. “You know the game: It’s a contact sport,” says Montgomery, a managing director of investments. The FC is referring to offering clients premium-level service.
Not only does a crackerjack paraplanner need to be a people-person but he or she “has to communicate with clients in a way that mirrors or models the objectives or personality of the [advisor],” according to Jeff Moscaret, principal of Moscaret Investment Advisory, in Pasadena, Calif., and affiliated with Commonwealth Financial Network.
The FA’s paraplanner, Lance Hedgpeth, has drawn consistent client kudos for his personable manner. “That adds huge value to my firm,” says Moscaret, in the business for 20-plus years. “We try to present ourselves as very hands-on, very client-touch-oriented. Lance does that extremely well.”
According to Hedgpeth, 41, who is studying for the Series 7 — a license that will let him place trades and thus “relieve some of the burden on Jeff” — the client is always right. “Even though you may disagree, you have to appease them. I might voice my disagreement, but I try to be very diplomatic.”
Paraplanners must also have a keen appetite for learning, an analytic mind and good math skills.
In all, it’s the “desire to get it right, not just close to right,” notes Montgomery, an advisor for 31 years. “A paraplanner needs to be as near to error-free as possible because in this business, errors can be expensive.”
According to Valletta, “paraplanners should have the same technical skills as the planner. They have to have a lot of expertise. They have to be able to do almost everything the planner himself can do, but they needn’t have an entrepreneurial spirit.”