Academic journal article Journal of Accountancy

How to Get Started as a Financial Planner

Academic journal article Journal of Accountancy

How to Get Started as a Financial Planner

Article excerpt

In the 1980s, as the term financial planning" first entered the American consumer's lexicon, almost anyone could and did call himself or herself a financial planner. Stockbrokers, accountants, bankers, insurance agents and others claiming specialized training offered a confusing array of credentials: CFP, CPA, CLU, APFS and ChFC. But as the smoke clears in the financial services industry, CPAs, many holding the accredited personal financial specialist (APFS) designation conferred by the American Institute of CPAs, have emerged among the leaders in delivering financial planning services. (For more on the APFS designation, see the sidebar on page 42.)

Today, more CPAs are considering expanding into personal financial planning and still others are considering specializing in this discipline. To help them get started, the Journal spoke with three successful practitioners to see how they got where they are today and what advice they can offer others who may be hoping to achieve similar success.

LARRY FOWLER-AVOIDING THE TAX WARS

Larry Fowler, CPA, APFS, has always been associated with local firms, first in California and now in Bellevue, Washington, where he is a sole practitioner. Fowler's experience includes tax, auditing and compilation engagements, primarily for small businesses. After heading the tax department of a large local firm, he decided to avoid "the annual wars of hundreds and hundreds of tax returns" and open his own office. "I do nothing more," Fowler says, "than financial planning and taxes." Even so, he prepares tax returns only for planning clients.

When asked why he started a PFP practice, Fowler answers simply: "Because I enjoy it." He adds, "It's much more creative than traditional accounting." Fowler also wanted to operate his practice on a reduced scale, with fewer responsibilities in terms of employees and less liability exposure.

GETTING STARTED

For Fowler, the difficult part of getting started was understanding the scope of the subject. "In financial planning's relatively short history, we have been through a process of figuring out what it is-and we've been at it for almost 20 years." Fowler encourages beginners to stick with what they are doing while testing their concept of financial planning. "If you have a non-PFP practice, keep it going while you develop a financial planning model that works for you and your clients."

Fowler recommends taking small, manageable steps, the first being to develop technical skills. "Learn how to do cash flow projections, about interest rates and how inflation and financial markets work together." Fowler says it's important to "get good at what you do technically before you try to market financial planning to others." He suggests practicing by doing free plans for friends or long-time clients.

TWO NEW DISCIPLINES

Most CPAs find financial planning involves more reading, research and learning. Fowler had to master two areas not part of traditional accounting: insurance and investments. Before offering himself to clients as a financial planner, Fowler learned everything he could from insurance agents-their products and industry, the way they do business and the relationships they have with their clients. "I knew if I got involved in financial planning I'd eventually have to talk to clients about life insurance, and I like to know what I'm talking about." Fowler found himself making similar forays into investments, spending time with investment professionals and reading about investment theory.

USES OF TECHNOLOGY

Technological innovation has had a dramatic effect on financial planning. Early plans were produced with a yellow pad and a well-sharpened pencil. Comprehensive PFP software assumed much of that burden in the mid-1980s. Today, technology has come full circle. Many believe most commercially available PFP software is not useful in practice, a view Fowler shares. …

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