The numbers behind in-house vs. outsourced advice production
10th November of 2021

As with anything, you have many options when it comes to producing advice. You can choose to do all this in-house, or you can work with a specialist provider to get this done. Experience matters in any industry, and it certainly matters in financial planning.

This led me to explore and compare the concepts of in-house vs. outsourced paraplanning.

An overview

A paraplanner with 8 years of experience will earn around $78,000 + Super ($7,800) in the Sydney area. If they are in-house and working 4 days a week, you will be giving up desk space and infrastructure, which can collectively amount to around $4,000 per annum. This means that the actual cost of your paraplanner is somewhere in the area of $90,000.

Despite the numbers, time is arguably the hardest aspect to manage. Knowing how much actual production time you have is paramount to helping you make informed decisions. There are 249 working days in 2022. You will need to factor in 2 weeks of holidays, which brings this number down to 239. Take into account sick time, which roughly averages another 10 days, and you are down to 229.

How the numbers stack up

At 7 hours per day, 229 days will mean that you have about 1,600 hours in the year. With standard SoAs taking on average 10 hours to complete, the paraplanner will be able to produce 160 SoAs. Taking into account the $90,000 that is spent on the paraplanner, the average cost of an SoA will work out to $563.

We price our standard SoAs at $386, meaning that the $90,000 you would have spent on your in-house paraplanner would have got you 233 standard SoAs, or 73 more SoAs compared to your in-house paraplanner.

Breaking this down further

Here’s where things get more interesting. The time taken to produce advice varies based on complexity. Based on our 11 years of experience, we have found the following:

  • Simple advice: 6 hours per SoA and 1 hour per RoA
  • Standard advice: 10 hours per SoA and 2 hours per RoA
  • Complex advice: 18 hours per SoA and 3 hours per RoA

This is where the uncertainty sets in. No one knows what this breakdown can look like since clients’ situations vary wildly. Even if you know the average breakdown, it’s difficult to predict when the work will turn up – meaning that you will either have an overabundance of work or presenteeism – where there is just not enough work to fill in the hours. Both of these situations can be incredibly demotivating, and can adversely impact the quality of advice.

As you can see, optimising the value from your team can be difficult to do. Add on the associated requirements to deliver these advice documents (updating CRMs, document collation etc.) and it’s easy to see how time is whittled away.

The other hidden benefits of outsourcing

By partnering with an outsourced provider, your management of time becomes much simpler. We manage our teams, so you won’t be affected by time off and sick leave, and training won’t eat into your available production time.

You don’t need to worry about whether you have a backlog of advice to be produced either – the capacity will be ready and there will be no training time required. Alternatively, when your workflows reduce, you won’t need to worry about presenteeism.

Partnering also provides you with the leverage to scale. We have seen the largest exodus of advisers from this industry, and there are now more people looking for advice, with less people to provide it. Growth in this space is inevitable. Are you ready to capitalise on this opportunity?

If you’d like to find out more, reach out to me on info@planlogic.com.au, and I’ll be happy to take you through how we can support your practice.

Jay Beckton
Head of Partnerships
0415 962 722