The need for semi-permanent support staff and paraplanners within smaller advice firms is on the rise, especially when superannuation funds begin offering advice.
Melanie Drago, former paraplanner and senior consultant at Tangelo Advice Consulting, recently launched Tempie in July 2023, which offers short-term, onshore resources to financial advice businesses.
“I call it back-office support. Not advising, but anything else that supports an adviser we can help with,” she told Money Management.
Drago joined the financial services industry in 1997 and has since held roles including paraplanner at AXA, advice documentation manager at AMP and manager of advice solutions at ANZ.
In 2019, she founded Tanngo, an online platform connecting financial planners with freelance support services, after noticing a gap in the market for finding contract paraplanners. Following this, the founder received feedback from advisers needing a more semi-permanent solution, such as temporary staff for six months whilst they sought a full-time replacement.
“The problem advisers are finding is that they don’t want to commit to a full-time resource if they don’t have enough work. They may only need someone to help out for a few months, such as during the end of financial year period,” Drago commented.
The increased demand typically came from smaller businesses needing to manage their cash flow. After realising this type of temporary support was not being offered, Tempie was launched last month.
“I had all these paraplanners that were really keen to do it, who have been in the industry for over 10 years. It’s good for them as a contractor, they get stable work for a little time, and the adviser gets someone that can hit the ground running.”
Majority of her clients come from the Paraplanner Hub, a community of approximately 1,800 people launched in 2019, as well as word-of-mouth marketing.
Drago also observed the lack of full-time administration staff as most preferred to do contract work on a part-time basis.
“This opens up the talent pool. It allows [advice firms] to find experienced people that are more in their cost range. Rather than paying $90,000 a year, they can maybe afford $40,000 a year for a short time,” she explained.
As the industry begins to implement the Quality of Advice Review (QAR) changes, the Tempie founder expects the demand for advisers to continue growing, therefore causing a need for more support staff.
Changes in the QAR include reducing regulatory red tape, getting rid of Statements of Advice, and having super funds offering retirement income advice.
“Advisers will also be dealing with more boutique clients rather than the mass market, which I think the super funds or product providers will deal with instead,” she described.
Once super funds begin offering advice, paraplanners could be pulled into that direction to help build their advice businesses.
“[Paraplanners] have got the skills and are not as expensive as an adviser, so I think the demand is going to increase there,” Drago added.
“With the removal of Statements of Advice as it stands today replaced with fit-for-purpose models, there will be more paraplanners offering different types of documents and supporting advisers with new templates,” she said.
In addition to providing short-term support staff, Drago aims to also start coaching new paraplanners due to a lack of thorough training.
“I really want to improve that as well, and be seen as having the best and most successful paraplanners to provide to these boutique advisers.
“I’m hoping with what I’m doing, we will start to see paraplanning as more of a profession. They’ll be more trained up and recognised as a proper career,” she continued.
As more advisers move away from larger firms and towards smaller AFSLs, Drago sees boutique firms as where the profession is going. Research by Wealth Data has highlighted the proliferation of firms opting for a micro-AFSL structure with one to four advisers.
“[The industry] is more self-licensed and I want to make sure they’ve got access to the resources that they need.”