Freelance Paraplanning

by Richard Allum on 7 January 2009

Life as a Freelance Paraplanner

Martins Blog:

Star Date: January 2009

Mission : To boldly go where no man (or woman) has been before (well except Roger and Richard and Emma and Emma and Heidi and …………..)

As a paraplanner of some years standing there are many, many aspects of the role which I really enjoy and had often wondered (like many of you) whether it would be feasible to leave my comfortable employed position, with a salary and all the benefits that go with it and work for myself.

As I’d never worked for myself before and having looked at the blogs and articles on the site I asked Roger Barlow, who many of you will know and who has been a freelance paraplanner for many years, to write a short article about what’s its like to be a freelance paraplanner and the types of things you need to consider before taking the plunge.

Roger’s article is below. Next week I’ll let you know how I got on in my first weeks as a freelance paraplanner.

freelance_110x110.pngThe Financial Services industry is changing rapidly, not least with the recent publication of the RDR. The events of the previous months will have seen many businesses looking at their business model and considering the best way to structure their business so that they remain successful in the future. 

Something which is being considered more often is the outsourcing of the paraplanning function. If the business levels are not the same as they were 12 – 18 months ago then surely businesses don’t need to employ the same levels of back office staff as they did previously and this includes paraplanners as much as anyone else.

However these same businesses will still want a quality report when they do write the business and the solution may be that they outsource this work to a Freelance Paraplanner rather than employing a paraplanner on a full time basis. We therefore asked Roger Barlow, who many of you may know and has been a supporter and contributor to the forum from the start, to write a short piece about starting out as a freelance Paraplanner. Roger is a freelance paraplanner and has been for a number of years. He can be contacted by email here  Thanks Roger for a fantastic insight into the role of the freelancer.    

How do you become a freelance paraplanner? 

This has been one of the most visited topics in the forum to date and there has been considerable interest in other posts on the subject of freelance paraplanning.  So, how do you become a freelance paraplanner? Establishing yourself as a freelance paraplanner is a big step to take.  You will be giving up a full time job with regular income and employee benefits such as a pension, death in service, healthcare etc and stepping into the unknown. 

You probably have no previous experience of running your own business.  But with careful planning and a lot a determination, there is no reason why you cannot make a successful career out of freelance paraplanning. 

So where do you start? 

  • You will need to decide whether to set yourself up as a company or as self-employed.  An accountant can help you number crunch some figures to determine which option is right for you and will also help you in setting up the business.
  • Once established, you should register the business with the Data Protection Act and comply with the principles and guidelines of the Act.  
  • You should also consider taking out liability insurance.
  • Get a solicitor to assist with writing your terms of business. 

The office: 

For most freelancers, the office will be a room at home, but you may prefer to find a small office space although this will of course increase your costs and may not be practical for many when starting out. 

  • You will need a desk, a computer, access to the internet, a fax and printer.  
  • You will need to establish an email address and website and there are many web-hosting companies on the internet that can assist you with this.  
  • Your website will be the second best advertisement you will have for your business, after yourself, so my advice would be to spend wisely on a website that looks professional and sends the right message about your business.  Many IFAs looking for a freelance paraplanner will search the internet, so your website will be their first impression of your company, and they will no doubt view your competitor’s websites too. 
  • Consider whether to subscribe to research websites, such as Synaptic, O&M, Aequos, Analytics etc.  All come at an expense to the business, but will add value to the service you offer.  Remember that the standard licence granted by these companies will not allow you to use the results for your IFAs.  Most companies offer a ‘paraplanner licence’ which does allow you to do this but this will cost extra.  Not doing so could leave both you and your IFAs breaching a licence and not able to rely on the outputs – not very compliant.  

What do you charge for your services? 

Fees for freelance paraplanning vary considerably.  Some will charge a monthly retainer for a set number of hours, and then charge for work over and above the agreed hours.  If you decide to charge a retainer, do you carry over any unused hours to the following month, or should those unused hours then be “lost” to the adviser?  If carried over, consider the impact this will have if the adviser provides a significant increase in workload the following month.  Perhaps good news to be receiving the work, but it has to fit in with your other commitments and can make it difficult to manage your time effectively. 

Do you charge an hourly rate or fixed fee per report? 

If its hourly rate, you should consider whether you confirm to the adviser before working on a case how many hours it will take (which is effectively fixed fee anyway).  If you decide on fixed fees, you will need a menu of fees for the different work you will undertake.  Consider that additional work such as provider selection, asset allocation, and fund selection, cash flow forecasting etc will all take additional time and should be charged accordingly. 

Generating business.   

I would suggest the first adviser you should approach about your new service is your previous employer.  As a valued employee, they may consider using your services on a freelance basis rather than incurring recruitment costs and starting from scratch with a new full time employed paraplanner. 

You could consider advertising on various financial services forums and websites but again, these come at an expense.  Attending seminars and conferences offers excellent networking opportunities and also helps keep you in touch with developments within the industry.  This is an important issue, because once you are working from home, you can become rather isolated. 

You could contact other freelance paraplanning companies to work on a sub-contracted basis.  This is a good way to get started, as you will gain valuable experience with how a freelance paraplanning business works. Remember that freelancing means giving up on those employee benefits you previously enjoyed.  So it’s not just your income to consider, you will need to arrange your own pension, protection, private medical insurance etc. Establish a business plan for the future. 

As your business grows, are you happy to continue as a one man/woman band, or do you want to expand the business by employing other paraplanners (either on your payroll or as freelancers).  Bear in mind that employing other paraplanners will mean you spending more time checking their work and managing a larger client bank than report writing.  Utilising other paraplanners will mean setting up a contract between you and the paraplanner and your solicitor can help with this. 

As you become established, you will quickly find that there are times when there are not enough hours in the day to manage workflows.  Do not over commit yourself.  Tempting though it may be, taking on too many clients will almost certainly mean compromising the service that you provide to existing clients.  Your business will be built on your reputation as a paraplanner and a key area of new business is referrals from existing advisers.  So managing your existing clients is very important. 

For those of you who are interested in the concept of freelance paraplanning but perhaps apprehensive about running your own business, I understand a new concept will be coming to the market sometime in the New Year whereby you can buy into a packaged freelance paraplanning service that will provide you with everything you require to set up on your own, including the software, marketing and leads.   

Freelance paraplanning will not suit everyone.  Giving up a full time position with regular income and employee benefits is a big step to take.  Moving from an office environment where you are surrounded by colleagues and in regular face to face contact with your adviser into what will probably be, at the outset at least, a spare bedroom at home and working on your own is a massive change.  It will also take time to build up your client base and you should be prepared for having little income in the early months. 

Even when you are established, workflow and therefore the income your business receives will fluctuate. However, the benefits of running your own freelance paraplanning business can be hugely rewarding.  The satisfaction of running your own business, the variety in the work that you undertake, the relationships you will build with many different advisers, the improved quality of life and the personal satisfaction and financial reward for all your own hard work is hugely appealing.  For those of you who take the plunge, best of luck!

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