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Two Lies & One Truth about Personal Financial Planning

Personal Financial PlanningFriends and colleagues ask me all the time, “Why do you specialize in personal financial planning (PFP)?” That’s easy to answer, but let’s see if you can figure it out based on a game you’ve probably heard of: two truths and a lie, or in this case, two lies and one truth.

Lie #1: PFP is only about product sales and investments.

Clients are looking for more than tax advice and tax planning. Based on my experience of working with clients, as well as networking with leading CPAs who offer financial planning and those who hold the CPA-exclusive Personal Financial Specialist credential, what clients really want is integrated advice on all of their financial affairs. This includes tax, estate, retirement, investment and risk management/insurance planning.

If you stop to think about it, any CPA is already offering 90% of what it takes to specialize in PFP; the missing link is the 10% devoted to integration. In some cases, there may be a product need such as insurance or investments, but the products are determined and driven by the financial planning process. Many successful CPA financial planners do not sell products.

Today, clients are more sophisticated and their needs are more complex. As a result, I feel they are outgrowing advisors who only manage investments or offer financial products without the education, independence and professionalism CPAs provide using an integrated, client-centered approach. By considering what individual, family and business-owner clients are already asking about beyond tax, including educating children, transferring wealth, protecting assets and funding retirement, any CPA can increase his or her value to the client.

Lie #2: CPA financial planners are not offering financial services; they’re offering tax and accounting.

If you’ve set up shop in a storefront and only want to offer tax prep, then you’re right; you’re not going to offer financial services. However, I bet you’re already offering PFP services, but you might not realize it.

Here’s a simple example. We know a tax return for a client is more than just numbers; it’s a way to identify some key life planning elements to meet financial goals. So instead of filing the return and moving on to the next client during tax season, recommend a get-together over the summer to discuss some planning options. Dig deeper into the questions your client has about retirement funding, protecting assets, transferring wealth, paying for college and more.  The information from the client’s tax return will provide you with most of the information you require to prepare a financial plan.

There is a lot of great help available from the AICPA’s PFP section, including resources and learning opportunities like webcasts and the annual Advanced PFP conference.

You may also want to download a free checklist to help you analyze and identify key issues to consider as you prepare, review, and discuss your individual tax returns with clients.

Truth: CPA financial planners have a fiduciary duty to their clients.

We all took an oath at the beginning of our careers to uphold the highest standards and obey the AICPA Code of Professional Conduct. The AICPA’s Statement on Standards in Personal Financial Planning Services is built on the cornerstone of the CPA profession – the public interest – and enhances the consistency and rigor that CPAs are known for in the financial planning discipline.

The bottom line is this: we have to do the right thing for our clients regardless of how it impacts us, the clients’ advisors. As a CPA, you should position yourself as the advisor of choice; the market is evolving rapidly, clients expect more and there are more competitors for business.

I hope by now it’s evident why I specialize in PFP. Helping clients realize their financial dreams is fulfilling work, offering a tremendous opportunity to open up new revenue streams for your practice and increase the retention of clients and staff.

Tom Trainor, CPA, CA, Hanover Private Client Corporation. Tom is managing director of Hanover Private Client Corporation in Toronto, Canada. He is a member of the AICPA PFP Executive Committee.

Personal financial planning list courtesy of Shutterstock.


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