In Support of CPA Financial Planners: The AICPA Applauds CPAs' Professional and Volunteer Efforts in Their Communities

By Melancon, Barry C. | Journal of Accountancy, February 2005 | Go to article overview

In Support of CPA Financial Planners: The AICPA Applauds CPAs' Professional and Volunteer Efforts in Their Communities


Melancon, Barry C., Journal of Accountancy


The AICPA developed the Web-based Personal Financial Planning Competency Model Self-Assessment Tool to help CPAs identify required PFP skills.

In 2005, the AICPA will celebrate its 20th year supporting CPAs as they continue their role in the expanding field of personal financial planning (PFP). In many respects, the CPA profession has had a significant role in shaping and directing the future of PFP services. Looking back over the past two decades much can be said about the impact CPAs have had in the field of personal financial planning services and their ability to adapt to the ever-changing business environment. The emergence of CPAs as financial planners and wealth managers has evolved over the past 20 years to meet the growing financial complexities of individuals in need of personal financial planning.

CPAs AND FINANCIAL PLANNING

Surveys conducted by the AICPA and others throughout the 1980s and 1990s suggested there was an increasing number of individuals that needed financial planning guidance in combination with the expertise of a CPA, as financial technicalities became a larger part of successful personal financial planning.

CPAs are in a unique position to provide financial planning services. CPA financial planners are often recognized for their ability to bridge business and personal finance issues. They understand how taxes, business interests and personal finance issues can affect a personal financial plan. CPAs are also known for their objectivity and high ethics in protecting the public interest as it relates to such planning services.

Though not all CPAs have chosen to offer personal financial planning services, many who have done so have added a broader range of new business opportunities and have significantly expanded their practices.

Initially, one of the challenges CPAs faced as they expanded into financial planning involved the selection of compensation arrangements for their services. While advisers in the financial services industry were routinely compensated through commissions, fees were the only permissible means of compensation for IRAs when the AICPA officially began its support of personal financial planning in 1985.

In 1990, the AICPA and the Federal Trade Commission (FTC) entered into a consent agreement. The FTC order issued pursuant to the consent agreement enabled members of the AICPA in the field of financial planning to accept commissions under certain circumstances and with disclosure. Today, nearly every state accountancy law permits CPAs to accept commissions from the sale of financial products provided the client is not also an attest client and thus requires independence by the CPA. Currently, CPAs deliver financial planning services in both commissioned and noncommissioned arrangements. The FTC order also prohibits the AICPA from discouraging members from accepting commissions under the circumstances described above.

SERVICES GROW IN POPULARITY

Today, an estimated 23,000 AICPA members provide personal financial planning services while 15,000 are NASD-licensed to sell investment products and nearly 11,000 are licensed to sell insurance products. The AICPA also estimates its membership includes over 10,000 registered investment advisers and another 60,000 CPAs who are providing limited personal financial planning services as an extension of their existing tax practices.

The opportunities that lie ahead are numerous. Recent surveys conducted by the AICPA indicate PFP services are one of the fastest growing sources of new and recurring revenue for CPAs. In fact, the AICPA estimates that firm billings for PFP services are expected to grow anywhere from 10% to 20% over the next five years, a clear indicator of the need for this service. Much of the revenue growth can be attributed to the recent market downturn and the current small business climate.

As many consumers realized the financial strategies that worked well for them in the booming '90s economy were not succeeding in the new millennium, they began to seek out the objective advice that has long been a hallmark of the CPA financial planning community. …

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