Onshore vs. Offshore Paraplanning: Which is Right for your Firm?

As the founder of onshore paraplanning firm Mutual Paraplanning Services (MutualPlans), I’ve received several inquiries from advisers about outsourcing offshore vs. onshore—particularly as paraplanning becomes more challenging due to the current labour shortage.

Which is best? As with most things, it depends! This blog breaks down some pros and cons based on my own observations and client feedback to help guide you.

Offshoring PRO: Lower up-front costs

From a business operations perspective, this is a significant pro. Cost reduction is the primary selling point of offshore paraplanning, which outsources paraplanning to “low labour cost” countries like the Philippines or India.

After all, if onshore paraplanning services are conducted virtually, why can’t you work with paraplanners overseas, too? It’s certainly an option. And Australia does not have a monopoly on clever people!

CONSIDERATION: Communication hurdles

Time zone differences can work negatively rather than positively.

For example, if you work with offshore paraplanners based in India, they start work around 3 p.m. Sydney time.

Yes, this can allow for the ideal of work being completed while you sleep (definitely a positive), but it can also throw a wrench into communication. If you need to train, communicate or collaborate with your offshore paraplanners on advice documents, that leaves little timezone crossover.

This time difference can slow down the feedback process, make managing your paraplanners’ output challenging, and impact the speed at which you can SOAs to clients. Plus, having your staff active on email and reviewing material after work hours is not always a sustainable solution.

CONSIDERATION: Less specialist knowledge

We’ve received feedback that offshore paraplanners can lack depth of knowledge on paraplanning and the Australian Financial Services sector.

This lack of knowledge is fine if you only need them to complete basic paraplanning tasks—but they may not keep updated with changes in Australian financial services. So, until their knowledge and skills catch up, you cannot always turn to them to advise on compliance, contribute to strategy discussions, or create more complex SOAs and ROAs.

This factor may pose more of a problem when your financial planning clients request complex projections and in-depth evidence to support their strategy and when your regulatory requirements are stringent. It can also leave you to review their work carefully, correct mistakes, add depth where needed, or risk dissatisfied clients and poor audit performance.

CONSIDERATION: Data security is a potential problem

At Mutual Plans, we work within high-compliance AFSL channels. Some of their licensees require them to outsource to paraplanners in Australia only, in which case, offshore solutions will be an immediate ‘no go’.

Even if that’s not the case, with cybersecurity risks rising, it’s ultimately your firm’s responsibility to ensure your client’s data is secure.

Sharing information with anyone is a risk, and it’s essential to inquire with the offshore paraplanning firm about what steps they take to protect your client’s financial data and to determine whether they instill a robust information security culture.

Overall, the type of paraplanning service best suited to your firm will be driven by the kind of financial planning business you are and your clients’ needs.

Suppose your advice tends towards the more complex and subject to strict regulatory requirements, or you require detailed modelling to support it. In that case, an offshore paraplanning arrangement is unlikely to be your best bet.

In that case, onshore paraplanning firms will provide the greatest “value add” and peace of mind, knowing that the skilled, experienced team is there to tackle any task and is readily available to communicate, collaborate and strategise with.

If you do choose to pursue an onshore paraplanning solution?

At Mutual Plans, we have a double-digit team of expert paraplanners ready to support your advisers with their extensive knowledge of the Australian financial planning industry, expertise in highly regulated industries, and timely turnarounds. We deliver high-quality, sophisticated financial modelling and client scenarios, regularly consult with clients on strategy, and data security is a priority.

You can explore our end-to-end paraplanning services (and review client feedback) here or learn about our team and philosophy here.

If you have any questions, reach out to us and ask away.

Wishing you the best in your decision!