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Establishing an outsourcing relationship can be a challenge for those organisations that currently complete paraplanning functions in-house. In my experience, the process can sometimes fail right from the beginning and before the outsourcing relationship even starts!

In choosing to outsource, you are effectively giving control of a function of your business to another person or company. If you were hiring someone internally to do this function, a normal recruitment process would likely occur – with the need to advertise for qualified and appropriate candidates, assess their skills, knowledge and experience and determine their cultural fit for your business.

Adopting a similar approach when making a decision to outsource will ensure that you have an effective strategy in place to get the right outsourcing ‘fit’ for your business.
Here are a few of our tips and suggestions:

1. Start with an internal assessment of your business.

Why do you want to outsource? Is it going to be a permanent solution or short-term relief for a busy period or whilst staff are on leave?

Do you have a standard process for your plan writing function? Do you use a template or specific financial planning software?

Having clearly defined procedures and templates in place as well as good communication, fact find and file note keeping skills are required to make outsourcing effective and will all help to set clear expectations and increase the chances of you receiving a document which meets your standards.

2. Decide what to outsource

Take a stocktake of the paraplanning function and tasks in the workplace. Part of this process should include understanding what tasks could successfully be outsourced and what tasks must remain in-house. Different outsourced providers will provide different functions and whilst you may be used to an in-house paraplanner completing the process end-to-end, you may find that an outsourced provider will only do an element of the process and some responsibility will remain in-house to complete the function.

3. Research the outsourced paraplanning service providers in the marketplace

Consider the services of all outsourced providers and look for those that are mature in the marketplace. They should be reputable and experienced. Paraplanning should be their expertise. They should have systems in place but also display a degree of flexibility to adapt to your culture.

Google may be a good resource to start your search. LinkedIn may also provide an insight into their previous experience and training as well as their current client base and service offering through testimonials and recommendations.

A better place to start may be within your network of planners, PDMs, BDMs and other associates. Asking for a referral to a paraplanner or paraplanning company may assist you to find an outsourced provider who is already familiar with the particularities and compliance requirements of your licensee or is familiar with the software or templates that you use.

4. Understand the market and competition

Take the time to understand what the ‘going rate’ is for outsourced paraplanning services. It may even pay to ask how the rates have been calculated as it can often vary between a flat fee and hourly rate. By understanding this can also help you to compare the price to outsource against the cost of the same service performed in house.

Not all outsourced paraplanners provide the same level of service. Be sure to understand exactly what services the price quoted includes and what it does not.

How an outsourced provider invoices for the work completed can also vary. Some providers require full or partial payment upfront or on completion. Others may offer weekly, fortnightly or monthly invoicing or retainer arrangements. Given the likely lag time between the outsourced provider’s invoice and actual payment from the client, it is important that you are comfortable with their invoicing arrangements and can manage your cash flow.

5. Undertake the selection process

Once you have narrowed down the list, you should have a clear selection process to select from the potential service providers. In establishing criteria, you should be reviewing sample SoAs, assessing responsiveness, testimonials and their general demonstration of the required skills, knowledge and experience.

Query them on their operating practices, benchmarks and improvement procedures that they have in place to ensure quality and reliability.

Risk management is also key and it pays to assess whether confidentiality and service agreements are implemented and necessary PI Cover and data security measures will be in place to protect your business and client’s interests.

If you are considering using a company as opposed to a single contractor, then it is important to consider the quality of people that they employ and how they attract, train and manage their staff and what performance measures are in place.

One of the primary reasons that many businesses outsource paraplanning is to reduce fixed costs. However, cost alone should not be the determinant factor in selecting your paraplanning provider. Remember that the paraplanner is a sole trader or company and is therefore in business to make a profit. If a service is particularly cheap, you should investigate what enables them to be able to provide such low-cost service. Perhaps it is due to efficient use of templates or software, economies of scale or use of offshore resources. It could also be because of adoption of a less sophisticated process, more inexperience or fewer quality controls in place.

You should be looking for someone who can demonstrate common values and adaptability to your company’s culture. Having current staff involved in the selection process can assist with this as it often demonstrates how personalities interact, communicate and generally get along with each other.

Once you have selected a short list of potential candidates it is important to meet with them either face-to-face or via Skype. Putting a face to a name will help to establish a stronger working relationship and encourage inclusion of them as part of your team and business.

6. Implement a transition plan

The outsourced provider should be able to articulate the transition process to start using their services, over what period you can expect it to occur and what they will require from you in order to ensure a smooth transition.

Consider their capacity to service your business – what resources do they have available to allocate specifically to your business and to customise their service to your particular requirements? Will you be an important customer or just another business on the books? Is there a single contact person, or will you be working with multiple people? Is there a process for providing feedback and requesting changes and improvements and if so, how will these be communicated and implemented?


The process of deciding on the right outsourced provider for your business should be made only after careful consideration and research. Spending the necessary time at the outset should help you get the right fit for your business and put you on the path to a successful working relationship with an outsourced provider.

This post was provided by guest blogger Lea Clothier who speaks from her experience of running an outsourced paraplanning business. Lea has 13 years’ experience in the financial services industry holding roles including Paraplanner, Adviser, Business Development Manager and Consultant. http://about.me/lea.clothier