The Evolution of Paraplanning in the Wake of DBFO Reforms

The recent release of Tranche 2 of the Delivering Better Financial Outcomes (DBFO) draft package marks a significant milestone in Australia’s financial advice landscape. As reported in Financial Standard, this reform package introduces several key changes, most notably replacing Statements of Advice (SOAs) with Client Advice Records (CARs).

Understanding the Changes

The second round of draft legislation focuses on three primary areas:

1. Replacing SOAs with CARs: The new Client Advice Records are designed to be principles-based, technologically-neutral, and written in plain English to help clients make informed decisions.

2. Clarifying super fund advice parameters: The legislation clarifies that superannuation funds can collectively charge members for advice on contributions, investment options, insurance held through super, and retirement income, but only with the member’s written agreement.

3. Enabling member ‘nudges’: Super funds will now be able to send targeted prompts to members at specific life stages to boost engagement with their superannuation.

What This Means for Paraplanning Services

For outsourced paraplanning operations like MutualPlans, these changes represent an evolution rather than a revolution. The transition from SOAs to CARs does not fundamentally alter the core value proposition of professional paraplanning services. In fact, it may enhance it.

Beyond Document Production

The SOA has long been viewed as the primary deliverable of the paraplanning process, but experienced paraplanners have always known that the real value lies in the work preceding the document. The elimination of SOAs in favour of CARs reinforces this reality.

The core components of quality paraplanning remain unchanged:

• Thorough analysis of client circumstances and objectives
• Application of best interest duty principles
• Comprehensive financial modelling to determine optimal strategies
• Ensuring compliance throughout the advice process
• Structuring advice that puts clients in demonstrably better positions

These elements constitute the substance of paraplanning work and will continue to be essential regardless of the final format of advice delivery.

Enhanced Value Proposition

Rather than diminishing the role of paraplanners, the DBFO reforms actually highlight the strategic value that professional paraplanners bring to financial advice practices. While the format of advice delivery changes, the need for expertise in developing compliant, client-centric advice strategies only grows.

The CAR requirement for “appropriate records on file to demonstrate compliance with legislative requirements” underscores the continued importance of thorough background work. This includes maintaining detailed records of strategy development, consideration of alternatives, and justification for recommendations—all areas where skilled paraplanners excel.

The Predicted Evolution Comes to Fruition

Two years ago, we predicted that the removal of SOAs would make professional paraplanning services more valuable, not less. As noted in Financial Newswire, the argument was made that paraplanning would evolve beyond document creation to focus more on strategy development and compliance management.

Those predictions are now being validated. By shifting emphasis away from standardised document production, the reforms create space for paraplanners to demonstrate their true value: their technical expertise, strategic thinking, and ability to translate complex client needs into compliant, effective financial strategies.

What Clients of Paraplanning Services Can Expect

Financial advice practices utilising outsourced paraplanning services can expect several positive developments as these reforms take shape:

1. More focus on quality over format: With less emphasis on document structure, paraplanners can dedicate more time to enhancing the quality of advice strategies.

2. Greater efficiency: CARs promise to be more streamlined than SOAs, potentially reducing the time spent on document finalisation.

3. Enhanced collaboration: The principles-based approach may facilitate more meaningful collaboration between advisers and paraplanners, focusing on client outcomes rather than documentation requirements.

4. Continued compliance assurance: While the delivery format changes, the need for robust compliance remains. Professional paraplanners will continue to provide this critical safeguard.

Looking Forward

The DBFO reforms represent part of a broader government initiative to make financial advice more accessible and affordable for Australians. For paraplanning services, these changes align perfectly with the evolution toward more value-added services.

The further reforms still under development—including modernising the Best Interests Duty and creating a new class of adviser—will likely continue this trajectory. These changes may create additional opportunities for paraplanners to provide specialised support in navigating the evolving regulatory landscape.