Academic journal article Journal of Accountancy

Alphabet Soup: Financial Planning Designations and What They Mean

Academic journal article Journal of Accountancy

Alphabet Soup: Financial Planning Designations and What They Mean

Article excerpt

In these days of wary consumers, clients usually shop around for personal financial planning services. As a result, CPAs must recognize they are competing with other qualified planners. Comprehensive financial planning has many aspects, including investment planning, risk management and retirement and estate planning. This means other professionals--investment advisers, stock brokers and insurance agents--also offer PFP services to their clients.

These advisers may hold PFP certifications or designations. Since the American Institute of CPAs personal financial specialist designation is relatively new--the AICPA instituted the PFS designation in 1987--many CPAS hold one or more of the other available PFP certifications. Understanding the competition may help CPA planners market their services better. It also may help them decide if obtaining one or more of these designations will enhance their professional expertise.

This article describes the PFS and the three other well-known PFP designations--the certified financial planner (CFP), the chartered financial consultant (ChFC) and the chartered financial analyst (CFA)--in terms of the education, experience and testing requirements for obtaining and maintaining each. The exhibit on page 82 summarizes the requirements for each, and the [WHERE TO GET MORE INFORMATION] explains how CPAs can obtain additional information.


The PFS designation has been awarded to nearly 800 CPAs since 1987. After identifying the need to accredit accounting specialties, the AICPA chose financial planning as the first such specialty and established the PFS program to accredit CPA financial planners. Only licensed CPAs can obtain the designation.

To earn the PFS designation, a candidate must

* Hold a valid and unrevoked CPA certificate.

* Be an AICPA member.

* Have at least 250 hours of experience per year for the preceding three years before taking the exam in the six specified PFP subject areas (listed below).

* Submit a written statement of intent in order to comply with all reaccreditation requirements.

* Pass the PFS exam.

* Submit six references (three from clients and three from other professionals) to substantiate experience.

The PFS program does not have a specific course of study for candidates. The emphasis is on CPAs' PFP experience, which must be in six planning areas:

1. Personal financial planning process.

2. Personal income tax planning.

3. Risk management.

4. Investment planning.

5. Retirement planning.

6. Estate planning.

The six-hour PFS exam is offered twice a year (in January and September). It is composed of multiple-choice questions (50%), objective-format (other than multiple-choice) questions (25%) and case-study questions (25%). Since no partial credit is given, CPAs must retake the entire exam if they do not earn passing scores. The Personal Financial Specialist (PFS) Candidates Handbook provides information for candidates preparing to take the exam. It includes a content specification outline listing the areas covered and the weight of each on the exam. Sample exam questions, a list of useful reference materials and exam-taking suggestions also are provided.

Once CPAs earn PFS designations, they must go through the reaccreditation process every three years. Reaccreditation ensures practitioners continue to perform PFP by requiring at least 750 hours of PFP experience and at least 72 hours of PFP continuing professional education during the three-year period. Additional reaccreditation requirements include maintaining AICPA membership and a valid CPA certificate, submitting a written statement of intent to continue to comply with reaccreditation requirements and completing an internal practice review questionnaire.

The AICPA, through its PFP division, provides practitioners with CPE, marketing and technical support. …

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