Personal Financial Planning Feed

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The AICPA provides information, tools, advocacy and guidance for CPAs who specialize in providing estate, tax, retirement, risk management and investment planning advice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Personal financial satisfaction hits record high - what’s in it for me?

Personal finances are like fingerprints, everyone is unique. With the AICPA’s Personal Financial Satisfaction Index (PFSi) at an all-time high, you may be wondering what it means for you.

Let’s start with some background. The PFSi is a quarterly economic indicator that measures the financial standing of the average American. It’s calculated as the difference between two sub-indexes: The Personal Financial Pleasure Index, which measures the growth of assets and opportunities, and the Personal Financial Pain Index, which calculates the loss of assets and opportunities. Most recently, the Pleasure Index (68.1) greatly outweighed the Pain Index (42.1), bringing the PFSi to a positive reading of 25.9, the highest reading since 1994.

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Don’t overlook this important subject with clients

HealthWe’ve all heard the phrase, “Your health is your wealth.” Why then are so many advisers hesitant to talk to their clients about it? Health intersects the planning you provide in many ways, yet practitioners rarely go there. The result is missed opportunities and incomplete planning.

A client of mine suffered a major heart attack and stroke at age 65. In the aftermath, he and his wife resolved to spend his remaining years traveling and gifting the wealth they had amassed. On the surface, their reaction sounded like a generous, intentional plan. Unfortunately, they hadn’t considered that his life expectancy was quite a bit longer than they assumed, even after the scare. In that time, the term insurance he was certain would cover his wife’s living expenses after he was gone would expire.

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Beyond tax: Extending your success

Financial planningAs we near the end of October, tax practitioners across the profession collectively breathe a sigh of relief. Another tax season is in the books, and CPAs find themselves ready for a vacation or a change to their tax-centric practices.

We’ve been there, craving balance as another tax deadline passes. In our search for an alternative, we discovered a complement to our tax skills that has reenergized our careers and opened new opportunities for our clients and practice.

If you find yourself in need of more than just a vacation after October 15, here are a few things we’ve learned as we’ve recently transitioned our careers from tax compliance to advising clients on all aspects of their financial lives, including estate planning, retirement planning and beyond.

The benefits to your practice and clients are vast.

If you’ve been in practice for a while, you probably have a roster that includes many long-time clients. Over the years, clients may have approached you for your thoughts on their plans for retirement or the best way to plan their child’s education. If you’ve had these kinds of conversations, you’ve been doing personal financial planning (PFP) without even realizing it. By formalizing your PFP services, clients will benefit from your holistic understanding of their full financial picture, and you’ll improve both your practice and lifestyle by:

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The road to retirement starts here

Older couple riding a bikeWhen it comes to saving for retirement, there is no one-size-fits-all plan. Each American has a unique and fluid situation, impacted by a variety of factors. Fortunately, CPA financial planners are well-versed in the different aspects that go into a tailoring a retirement plan that best fits their client’s needs.

I sat down with Leonard Wright, CPA/PFS and member of the AICPA Personal Financial Specialist Credential Committee, to learn some best practices for starting a retirement plan that helps maximize enjoyment during your golden years.

Jonathan Lynch: A recent survey found that less than half of non-retired Americans are confident they will reach their retirement goals. With all the uncertainty surrounding retirement -- where should someone without a plan begin?

Leonard Wright: Before bringing numbers and calculations into retirement planning, simply think about where you want to be when you reach that stage of your life. Ask yourself how you envision enjoying your retirement years. Define exactly what your desired lifestyle will entail. Will you downsize your residence? Do you plan on travelling? Would you consider working part-time? And perhaps most importantly, what age would you like to retire?

Once you have a clear vision in mind, you can start building the plan to make it a reality.

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The Next Generation: Empowering Future Firm Leaders

Leadership 2“Leadership and learning are indispensable to each other.” –John F. Kennedy

Who represents your future? What’s your professional legacy? How do you know whom to trust with your business when you retire?

Most firm owners know the future of their business relies on the strength of their successors—the individuals most capable of growing and maintaining both client relationships and the service teams within the firm itself. What’s less understood is HOW to identify, nurture and promote the best and brightest candidates in practical terms. What can firm founders and owners do to ensure they’re selecting and preparing the right people to carry on their firms as eventual partners and even owners themselves?

The first task is to recognize the rising stars within your firm. These people are the strongest innovators, always looking for new opportunities to expand client services and grow the business. They’re the ones who naturally lead, and embrace opportunity to build strong teams within their professional circle. And they’re never afraid to assume more responsibility—for not only the daily workings of the firm, but also for the long-term prospects of the business—which includes being personally invested in both client relationships and the firm’s reputation. But once you’ve identified these potential stars, how do you invest in them?

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