it's never too early (or too late) to specialize: is a career in personal financial planning...
TRANSCRIPT
It's Never Too Early (or Too Late) To Specialize: Is a Career in Personal Financial Planning Right for You?[presenter name/business name][presentation date]
Personal Financial Specialist
Introduction
About the PFP Section & PFS Credential• The AICPA PFP Section provides information,
resources, advocacy and guidance for CPAs who specialize in providing estate, tax, retirement, risk management and investment planning advice to individuals and their closely held entities
• The CPA/Personal Financial Specialist (PFS) credential distinguishes CPAs as subject-matter experts who have demonstrated their financial planning knowledge through experience, education and testing
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Personal Financial Specialist
Introduction
My background in accounting
My story about becoming a CPA/PFS
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Personal Financial Specialist
Agenda
What is personal financial planning (PFP) & what is a CPA financial planner
Why specialize in PFP
What are the business opportunities in the profession
How to pave your own unique career path as a CPA financial planner
How to gain the experience you need within the CPA profession
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Personal Financial Specialist
Traditional Areas Provide the Base for Specialization
CPA Tax
Provider
Financial PlanningCPA engages in tax, estate, retirement, insurance and/or
investment planning services
BASE Specialization Credential
Clients ask about planning
Clients ask about gift & estate valuations
Business ValuationCPA provides business valuation expertise for
taxes, M&A, expert witness, and other engagements
Demonstrates expertise through exam , experience
and education
Personal Financial Specialist (PFS)
Accredited in Business Valuation
(ABV)
CPA Auditor
Financial ForensicsCPA engages in forensic
work around fraud investigations, etc.
Fraud suspected or found during audit
Audits leveraging automated tools, IT audits, application control reviews, SOC
Information TechnologyCPA works on information management & business intelligence engagements
Demonstrates expertise through exam , experience
and education
Certified in Financial
Forensics (CFF)
Certified Information Technology
Professional (CITP)
Audits resulting in valuation requests
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Personal Financial Specialist
What is financial planning?
RISK MANAGEMENTINVESTMENTRETIREMENT
ESTATETAX
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Personal Financial Specialist
What is a CPA financial planner?
CPA financial planner who practices in one or more of the following areas of financial planning:• Cash flow planning• Risk management and insurance planning• Retirement planning• Investment planning• Estate, gift, and wealth transfer planning• Elder planning• Charitable planning• Education planning• Tax planning
Enhance your technical credentials with the CPA Personal Financial Specialist (CPA/PFS)• More on this later in the presentation
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Personal Financial Specialist
Why specialize?
Client retention
Added revenue and profits
Staff retention
Balance workload throughout year
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Personal Financial Specialist
Why specialize?
The most significant challenge facing CPA firms of all sizes across the nation today is client retention and firm growth.
Jim Metzler AICPA vice president for small firm interests.
Another significant challenge to CPA firms is staff retention and succession.
Many in the younger generation are eager to develop a broader expertise that includes financial planning.
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Personal Financial Specialist
What do younger CPAs want professionally?
Less compliance/routine work (Type 1 work)
More Future oriented and Value driven work (Type 2) such as:• Financial planning• Strategic planning• Profit improvement planning• Benchmarking• Key performance indicator (KPI) monitoring
2020 Survey, Chris Frederiksen, CPA/PFS, Chairman
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Personal Financial Specialist
Why specialize?
A study by CEG International found more than half of wealthy individuals are likely to obtain financial services from their CPAs
Financial planning is too important to be left in the hands of unqualified professionals
CPAs are quite possibly the single most important decision makers for individuals and businesses, and it is time to realize that we do more than just taxes
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Personal Financial Specialist
Specialization will drive accounting sector growth
2012 2013 2014 2015 2016 2017
Accounting Industry
1
Forensic Accounting
Financial Planning
Business Valuation
IT Consulting
1
Risk Management
Gro
wth
Rat
e
1x
2x
4x
Sources: 1 IBISWorld 2012 2 Deloitte
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Personal Financial Specialist
Why specialize?
Business Valuations
State and local Taxes
International Tax
Litigation Support
Estate/Trust/Gift Tax Plan.
Forensics/Fraud
Industry Specializations
75%
73%
72%
70%
69%
68%
63%
% of major firms growing their practices in these disciplines….
Source 1 Accounting Today
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Personal Financial Specialist
Why specialize?
Findings from 2013 AICPA Compensation Survey• Median total compensation for CPAs is $160,200. That is, exactly half
of all CPAs earn more and half less. The average total compensation is $236,600.
• The data show that total compensation is higher among credential holders. On average, specialty credential holders receive a total compensation $26,700 higher than non-credential holders.
• Many CPAs believe credential holding leads to higher compensation and hiring and promotion opportunities.
- 31% say holding a credential leads to increased compensation- 51% say holding a credential makes a difference in being
promoted, and - 66% say holding a credential makes a difference in being hired
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Personal Financial Specialist
What qualities make a good CPA financial planner?
Interpersonal skills• Working with a variety of client personalities• Communicate complex financial concepts in easy-to-understand
language• Willingness to help others.
Analytical mind/detail-oriented
Desire for life long learning
Strong ethical responsibility
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Personal Financial Specialist
How to become a CPA financial planner
Education• College level• Beyond (CPE, web seminars, conferences, PFS exam review
courses and education)
Become a CPA• Bolster your CPA credential with the PFS credential
Experience• Develop soft skills• Develop technical skills
Understanding the business• Engage with other successful CPA financial planners
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Personal Financial Specialist
Year 1-2
10+ YearsExpert
(continue specialized training
– advanced)
CPA training - intro / beginning level
specialized work
experience
obtain specialized credential
specialized training -
intermediate
work experience
specialized training - advanced
articles/ speeches/ seminars
Years of Experience
Job Position
Manager
Director
Partner / Managing Director
Specialized Credential Career Path / Goals
Year 3-4 Senior
work experience
training - general
Years 5-7
Years 8-10
work experience
CPA
Staff
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Personal Financial Specialist
Why does being a CPA matter?
True, you can be a financial planner without being a CPA
BUTCPAs are the “most trusted advisor”
CPAs are required to be objective
CPAs have a broad base of knowledge
CPAs must follow the Code of Professional Conduct
ANDThe CPA/PFS credential demonstrates your expertise and clearly differentiates you from other CPAs and non-CPA financial planners.
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Personal Financial Specialist
The CPA as the Personal Financial Planner
Legacy of the CPA profession & multigenerational perspective• Century of experience sets the CPAs apart the trusted adviser• Independence & objectivity hallmarks of the CPA profession
Informal advice morphed to formal profession• CPAs wrote the book on college planning, tax planning and
generational wealth planning. • CPA is the personal CFO, simplifying the complexity that wealth
brings & often “quarterbacking” other advisers
Taxes an integral part of all PFP decisions• Overall picture of a client’s financial situation• Tax returns offer details of cash flow/income situation• Planning decisions have tax implications
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Personal Financial Specialist
Business models
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Personal Financial Specialist
Business Opportunities
Endless!
You are already the trusted advisor in most cases• CPA credential
Familiar with tax strategies and tax law• Impacts all areas of PFP advice
Know the client situation• Tax returns
Diversify your client base and revenue streams
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Scope of Services
Segmented financial planning
Comprehensive financial planning
Financial planning with assets under advisement
Financial planning with assets under management
Financial planning with assets under management and product sales
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PFP Entity Structure
Service within CPA firm or separate practice dedicated to PFP
CPA firm affiliated separate entity (RIA)
Separate entity (RIA) not affiliated with CPA firm
Referral partner
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Investment Advisory Business Models
Investment Adviser Investment Adviser RepresentativeBroker-Dealer Registered RepresentativeSolicitor/ReferralPortfolio ManagerCompensation Models• Fee-Only Financial Adviser (RIA – fiduciary) – most CPAs use
this model• Fee-Based Financial Adviser• Commission Payments
The CPA's Guide to Investment Advisory Business Models
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Where to look for a job as a CPA financial planner
There is no “right” path – almost everyone’s looks different
CPA firms (Tax department)
Wealth management firms
Banks and brokers
Start your own financial planning practice
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Personal Financial Specialist
Creating Your Own Career Path
Unlike public accounting firms, personal financial planning firms come in all shapes, sizes, and areas of specialization
Determine where your strengths lie and the work you really want to do
Find the firm that most closely matches your goals or…
Create your own firm to fulfill your vision
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Bolster your CPA license with the CPA/PFS credential
Distinguish yourself from other CPAs and non-CPA planners
Affirm your expertise independently by the largest and oldest association of accounting professionals
Demonstrate dedication to continual professional improvement in financial planning
Enhance your image as a trustworthy adviser to your financial planning client’s with the AICPA’s Professional Code of Conduct
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Personal Financial Specialist
Know your client and, as their trusted advisor, help them plan and make decisions with their entire financial picture in mind
Be a leader for your client by initiating advice and coordinating other advisors to your client
Be an advocate for your client, to help your client achieve his/her goals
Be a coach and educator to your client, to empower your client to make informed decisions
Navigate complex issues that your client faces on a regular basis
Gain personal satisfaction from working with clients on their path to achieving their goals
Why choose to be a CPA/PFS?
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Personal Financial Specialist
Who can benefit from being a CPA/PFS?
The CPA/PFS credential demonstrates the expertise and experience that a CPA has in personal financial planning. This can benefit many CPAs who practice financial planning:
• Tax practitioners who also focus on estate and retirement planning with their clients
• CPAs providing broad-based comprehensive financial planning services• CPA planners focusing on niche areas like wealth management or risk-
management planning• Young CPAs with qualifying experience to gain recognition
The CPA/PFS credential validates the CPA’s understanding of the overall financial planning issues faced by his or her clients. This allows CPAs to meet their client’s needs and expectations regardless of how their financial planning business model is structured.
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Personal Financial Specialist
CPA/PFS Qualifications
A CPA license and AICPA membership
Education• 75 hours of PFP-related education in the last five years
Examination• PFS exam, CFP exam, or ChFC exam
Experience• Two years of full-time PFP-related experience (3,000 hours, can
include 1,000 tax compliance work)
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Personal Financial Specialist
Next Steps
Join the PFP Section• See Sarah Bradley at the AICPA booth for a special conference
discount.
ThisWaytoCPA.com• Website dedicated to upcoming and newly minted CPAs• CPA profiles, career tools, info CPA exam and licensure
Social Media• Search Young CPA Network on Facebook, LinkedIn and Twitter
Contact us: [email protected]
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Resources for CPAs to take next steps…PFP Practice Center (aicpa.org/PFP/practicecenter)
The CPA’s Guide series (http://bit.ly/YJoXkI) • Includes guides on developing and managing a PFP practice,
technology in PFP, investment advisory business models, etc.
Join the PFP Section (joinpfp.org); Become a CPA/PFS (aicpa.org/PFP/PFS)
Forefield Advisor (aicpa.org/pfp/forefield)
PFP Pathway: From Tax Preparer to Financial Planner (aicpa.org/PFP/Pathway)
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Using a tax return for developing personal financial planningVisit aicpa.org/PFP/pathway to access this checklist and other free resources.
Analysis of a Tax Return for Personal Financial PlanningDone Dependents and Filing Status
Does the client have children?Understand any education planning opportunities.Discuss gifting opportunites with the client.Consider income shifting to take advantage of the children's low tax rate.Have gift tax returns been filed?Do the number and ages of dependents indicate that income continuation needs are likely to be high?
Does the client have elderly parents whom they care for?Discuss estate planning with the client. Review the dependency rules to be sure the parents can be claimed.Discuss the future financial commitment of this care with the client.
Is the client divorced?Consider filing status and dependency exemptions in divorce situations.
Done IncomeWhat is the source of the client's income?
Understand their sources of income - wages, self-employment, partnership, etc.Are there any income deferral opportunities available given the client's investment income source?
Discusss the benefits of saving through 401(k), 457, 403(b), SEP, or IRA's. Does the client have income from a retirement plan still held with former employers?
Discuss rollover of funds to an IRA or consolidating IRA's with the client.Does the client have social security income?
Consider whether any of the social security income maximizing strategies might apply.Is the family income dependent on one wage earner?Are maximum 401(k) contributions being made?
Done Schedule B What are the sources of the client's interest income?
I f it's taxable, does it come from bonds, CD's, savings accounts, etc?I f it's tax-exempt, understand the state tax impact.I f the source is savings accounts, consider the FDIC limitsI f the source is municipal bonds, consider the safety of the bond.Does investment income indicate a liquid fund has been established for emergency needs?
What are the sources of the clients dividend income?Is it mostly from mutual funds or stocks?
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Personal Financial Specialist
Questions?
Visit aicpa.org/PFP
RISK MANAGEMENTINVESTMENTRETIREMENT
ESTATETAX
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