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Offshore paraplanning risks highlighted

While outsourced paraplanning is becoming increasingly popular, advisers should be aware of the risks involved in sending these duties overseas, a business consultant has warned. 

Kim Payne from 9Rok Consulting said offshoring admin duties is a growing trend among financial advisers but technical tasks may be better suited to Australian providers. 

“It's really common at the moment for financial planners to look at areas like the Philippines particularly, because culturally they are more aligned to the Australian way,” she said.

“With something like paraplanning where there is the additional technical competency required, I find outsourcing domestically has been more successful to date."

Ms Payne suggested while international outsourcing providers received extensive training, they often lack the skill level required for Statements of Advice (SOA) or modelling.

“One of the biggest reasons is the gap between their technical competence and training and experience relative to Australia,” she said.

“There just hasn't been the level required to do something as technical as putting together an SOA and quite complex strategy.”


In addition, cultural differences may become an issue where initiative or creativity is required, she suggested.

“With the businesses that have tried outsourcing offshore, the people they have used have been great people,” she said.

“But they're really great at taking orders but not as good at using initiative and coming up with ideas.”

Nonetheless, as demand for outsourcing gathers pace, Ms Payne predicted overseas paraplanning will become an increasingly effective solution.

“Watch this space. It's definitely something that Australian companies set up in the Philippines are starting to get on to because it's one area where a lot of businesses are realising they need the help,” she said.