Expanding Your Practice into the World of Financial Planning

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EXPANDING Your Practice Into the World of Financial Planning

In today's climate of competitive financial services and amid increased demand for quality financial advice by a sophisticated public, many accountants are expanding their traditional services into the financial planning arena. At first glance, such an expansion would appear to be a "natural fit." Accountants bring a great many positive attributes to this endeavor. Yet adding financial planning services to an accounting practice is not always as smooth as the accountant may initially perceive. A successful "fit" ultimately depends upon advanced education, the acquisition of additional professional skills, an objective self-examination of personal aptitudes and effective strategies for making a smooth transition.

One accountant who successfully negotiated the transition is William Stevenson, CFP, EA, of Long Island, New York. In the mid-1980s, Stevenson had a thriving tax practice and enjoyed a year-round relationship with his middle-class clients. There was just one problem, according to Stevenson. "Clients would ask me financial planning questions, yet I felt I really couldn't answer the questions out of context. To put them in context, I had to have a broader understanding of financial planning. I wanted to fill in the holes I had in my knowledge and better serve my clients."

To fill in the gaps, Stevenson earned his Certified Financial Planner [TM] designation in 1987. Today, Stevenson still maintains a thriving tax practice, but he is able to answer many of those financial planning questions -- or work with other professionals who can provide the answers. "I try to take a holistic approach to tax planning," he says. "The education I received has helped me achieve that by expanding my horizon."

But is the addition of financial planning services to your accounting practice necessarily the best move for you and your firm? Why should you consider such a move? What personal aptitudes, education and skills does it take to succeed as a financial planner? If you choose to make the addition, how should you go about it?

Demand Is Growing

More and more consumers, nervous about these financially turbulent times, are seeking professional financial planning advice about investments, funding for college education costs, retirement, tax planning and a host of other financial needs. This demand is likely to grow as the Baby-Boom generation moves from its heady consumption years into a more conservative period of saving and investing. At the same time, companies -- large and small -- are offering financial planning as an employee benefit, or are themselves seeking qualified advice in such areas as pension planning, executive compensation and succession planning. The financial planning process has proved to be a valid answer to these complex and important needs.

As a result, accounting firms reluctant to expand the horizon of their practices into financial planning may find many of their clients switching to "full service" firms. That is why LeeAnn Wilson, CFP, CPA, owner of FYI Financial Consulting of Lake Oswego, Oregon, made the transition into financial planning two years ago. "It's a survival issue," says Wilson, chair of the Personal Financial Planning Committee of the Oregon Society of CPAs. "For accountants not to actively expand their activities and provide quality financial planning is to truly miss the boat in terms of servicing clients."

A Natural Synergy

A natural synergy exists between accounting and financial planning. This is reflected in the fact that over the past three years accountants have made up the fastest-growing segment of students enrolled in the CFP Professional Education Program at the College for Financial Planning [R].

There are several reasons for this synergy which include the following.

Many accounting skills are highly transferable to financial planning. …