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Myths about Personal Financial Planning Services

MythsThere is a good chance you have visited a physician for a routine check-up. At that appointment, your doctor asked many questions – inquiring about your diet, exercise, stress, and health history – and ran diagnostic tests to assess your overall health. Your physician may not have solved any problems at that appointment, but you undoubtedly valued and were willing to pay for an objective professional to assess your health status.

Why is it, then, that many CPAs doubt the value of offering similar diagnostic and planning services to assist clients in identifying potential problems and improving their overall financial health? Broadening your services by asking the right questions, understanding your clients’ financial situation and delivering advice (or making referrals to trusted specialists) is not only valuable to your clients – but also to your practice.

Before you tune out by citing common objections, allow me the opportunity to debunk some of the common myths about personal financial planning (PFP) services.

Objection #1: “I am not a financial planner.”

I often encourage CPAs to consider a simple test to identify personal financial planning. First, does your client’s issue have to do with money? Second, does it involve planning? If “yes” and “yes,” financial planning it is.

If you prefer a more technical description, the AICPA’s Statement on Standards in PFP Services indicates that “PFP services encompass one or more of the following activities: cash flow planning, risk management and insurance planning, retirement planning, investment planning, estate, gift, and wealth transfer planning, elder planning, charitable planning, education planning, and tax planning.” (See SSPFPS paragraphs .03 and .12 for a complete definition of PFP services.)

Accordingly, tax practitioners have financial planning conversations all the time. As an objective adviser, regardless of whether you identify yourself as a “financial planner” or not, clients trust your objectivity and professionalism to go over their full financial situation.

Objection #2: “I am not interested in selling products or managing investments.”

CPAs have been objectively advising individuals for over 100 years. However, when the investment sales industry began using the terms “adviser” or “planner,” confusion in the market ensued. An individual may think, “I have a tax preparer, an estate planning attorney, and a financial adviser; my financial needs are well covered.” Not necessarily. If their “financial adviser” is merely an investment manager, they often have significant gaps in their financial plan. How many times have you seen clients with no will, assets omitted from their trust, inadequate insurance or no realistic retirement plans? This creates an important need and opportunity for CPAs to be “holistic overseers,” making sure that all important areas of a client’s financial life are addressed.

In this role, you are not necessarily handling every aspect of the client’s finances; however, you – like the physician at the annual physical – are asking the right questions and working with other specialists to coordinate the big picture. Many CPA financial planners don’t manage investments or give investment advice, but add enormous value with their knowledge of tax and all it touches – that is, all aspects of the client’s financial life.

Objection #3: “Offering PFP services wouldn’t help my practice.”

The opportunities for practice growth, better client retention and referrals are compelling. Consider the facts:

  • PFP is forecasted to grow two times faster than the accounting profession through 2017 (IBISWorld 2014).
  • The Bureau of Labor Statistics has projected the need for the number of personal financial advisors to increase 27 percent nationwide through 2022.
  • Average total compensation among CPA/PFS credential holders is 11% higher than that of CPAs without the specialty credential (2013 AICPA Compensation Survey).

If you are concerned that your clients won’t pay for these services, consider presenting a one-time overall financial preparedness assessment designed to prevent financial pitfalls or gaps, with optional ongoing monitoring. The diagnostic benefits, motivation and accountability that personal finance assessments provide your clients will logically position you as a much more valuable advisor. Clients often know they should address these needs, but they rarely get around to it or know whom to ask. 

From that assessment, if you end up referring to professionals specialized in solving the issues you and your clients discover, these specialists will undoubtedly value your referrals.  Your collaboration will nurture working relationships.  

Objection #4: “I’m not equipped to offer PFP services.”

Even if you only feel comfortable asking questions of your clients, you offer a critical service by bringing these issues to the forefront. If you are ready to start raising questions to your clients and/or want to dig into deeper planning, the AICPA PFP Section has a range of resources to help you do just that.

Start with this straightforward checklist to analyze a tax return for personal financial planning opportunities, or this interview tool to identify issues and motivate clients. If you are ready to dig deeper, there is a range of PFP practice guides, including a roadmap to help you develop and manage a PFP practice. These tools are just the tip of the iceberg; the PFP Section has comprehensive technical and practice management guidance in this area.

Before you downplay the role you can play in personal financial planning, remember that the value of the questions we ask is as important as that of the answers we bring.

Jean-Luc Bourdon, CPA/PFS. As Principal at Brightpath Wealth Planning in Santa Barbara, CA, Jean-Luc helps clients understand their financial options and choose their best life story. Jean-Luc often speaks and writes about financial planning, as well as serves on the AICPA Personal Financial Planning Executive Committee.

Myths courtesy of Shutterstock


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