Outsourcing or employing

It seems to be one of the eternal questions when your business starts to grow – outsourcing or employing? There are pros and cons of both, and many people fall on the side of taking on a full-time member of staff as they ‘get’ the culture and can perform other tasks when needed. You can train them in your own image, where their training, development and supervision are totally under your control.

Having said that, the outsourced option does not come with all the baggage of hiring a member of staff. Baggage such as the cost of recruitment, employer’s National Insurance contributions, pension contributions, annual leave, Covid restrictions etc, etc.

Many financial planners want to grow, want to make more money and keep more clients happy. But they don’t want to add to the head count and build up their expenditure, especially when the nature of their business can be cyclical. Crazy busy in February to May and very quiet through the summer months.

The Pros Of Outsourcing or Employing

Culture eats strategy for breakfast, or so they say. The culture of your business can be disrupted by hiring outsourced support, as they don’t go through the same onboarding and don’t have the same connection to your business. Although we believe this can be overcome by building a strong relationship with dedicated outsourced support staff.

Immediate supervision of your employees is a major benefit, especially in a regulated environment such as financial services. If you are in charge of the training and development of an employee then you can upskill people, helping with succession planning. Although spending all that additional time takes you away from your client facing time!

If you treat an employee right, then they will be an advocate for your brand and help build your business. The days of a job for life seem to be over, and people change jobs every few years on average, so this might not quite be the advantage it first appears.


The Pros of Outsourcing

All outsourced businesses have to earn their keep, or they are out on their ear. Unlike an employee who has certain protections in law regarding their employment, an outsourced provider can be dropped at short notice if they don’t cut the mustard. As a consequence, you find outsourcers do not sit on their laurels and give their all to maintain contracts.

National reach is another exciting reason to look at hiring a outsourced support firm over a new member of the team. If the talent doesn’t lie in your local area, then having access to a team across the UK could have the talent you need.

The costs associated with outsourcing or employing are also a lot more competitive than most think too. Let’s take a look at this in more detail…

The Long And The Short Of Outsourcing or Employing

These are the figures involved in a typical practice.

Salary? A typical experienced senior paraplanner can easily command a salary of £40K or more. Then with a further typical 20% required to cover NI, benefits, office space, training etc. At 220 days (after hols and training) and a typical 6 hours a day chargeable time this delivers –

  1. 1320 hours a year
  2. 110 a month
  3. at a cost of £36 per hour

We find that a typical IFA needs around 20 hours a month of paraplanning support, but let’s work on 25 to be on the safe side. At £50 per hour including VAT (our fixed rate) this comes to £1,250 a month, £15,000 a year. So, a firm with 3 advisers or less would clearly be financially much better off using an outsourced paraplanner.

But it isn’t just this that we need to take into account. Hiring a new team member takes time and money. Think about advertising costs, shortlisting, interviewing, onboarding, etc. And we’re looking at an average tenure of only 2 years before a paraplanner moves on.


The Paraplanning Hub

And that’s where we come in to take the strain. We beliebe outsourcing over employing a new member of staff is a real viable option. Rather than go through the hassle of looking for the perfect support for your business, we have done all of that for you. So, you get quality paraplanning and administration support on tap – just switch on and off whenever required.

We’re looking to work with progressive financial advisers that understand the benefits of quality paraplanning and administration support. Is that you? Then drop us a line.