Do CPAs have a place in personal financial planning (PFP)? A few decades ago, that might have been a provocative question.

Take, for example, “Accountants as Financial Planners,” a 1991 New York Times story about the AICPA’s efforts to highlight CPAs who ventured into PFP. Putting the accounting profession on the defensive, the article wondered, “Why should the public get their financial advice from CPAs, as opposed to non-accountants?” (Stuart
Kessler, an NYSSCPA past president who was interviewed for the piece, offered one succinct answer: Because CPAs “are bound by enforceable standards of conduct. The CPA is thought of in the public mind as being independent and objective.”)

But in recent years, the conversation has shifted. The PFP industry has undergone rapid expansion—according to the U.S. Department of Labor, the number of financial planning advisers is poised to grow 22 percent by 2022—and, more and more, CPAs are leading the charge. In an AICPA survey of 2,400 CPAs last year, nearly half said that their firm offers PFP services. 

The new question, according to several speakers at The CPA as Financial Planner Conference, a joint event presented by Baruch College and the Foundation for Accounting Education on July 15–16, is directed at CPA firms that may be watching from the sidelines: Why aren’t you offering PFP services?  

As it touched upon a wide range of PFP opportunities, from elder care plans to planning for college, the conference had one overarching message: This practice area cannot be ignored. Indeed, according to data from the market research and long-range forecasting company IBISWorld, the demand for PFP is set to outpace the demand for general accounting by 2017.  

“Firms that don’t provide financial planning or at least align themselves with those that do are not only going to grow at a much smaller rate, but many have been losing clients to firms that have more services than a small practitioner may provide,” said David A. Frisch, a wealth management expert who co-led a discussion about using tax information to identify financial planning needs.

On the other hand, the speaker said, firms that do take a bite of the apple could find themselves playing an ever more prominent role in their clients’ lives.  

The conference, organized by longtime CPA educator Sid Kess and Steven V.
Melnik, an associate professor of tax law at Baruch’s Zicklin School of Business, featured Kessler as its keynote speaker. Reiterating the point he made to the Times 24 year ago—that CPAs are a natural choice for PFP services—he said the number one benefit of the practice area for firms is that it helps to grow strong client relationships. 

If a CPA does a good job of shepherding a client’s personal finances, Kessler said, he or she can eventually become “the family consigliore.”  This, in turn, would allow CPAs to extend their client base over several generations—not only working with parents, but their children or grandchildren—and draw in revenue from additional services, such as retirement planning, estate planning or asset allocation. 

Making the shift

So how does a CPA get started in PFP? According to Kessler, an obvious point of entry is through existing clients. 

As Walter M. Primoff, a financial executive and personal financial consultant, noted during a Q&A session, the annual rhythm of the CPA–client relationship brings opportunities for PFP that other professionals don’t have. 

“Every time I meet with [a planner] who is not a CPA, the first thing they tell me is, ‘I would give my right arm to be in a position where my client had to talk to me once a year!’” he said.

Opportunities for PFP services may also arise as a natural extension of work that is already being performed for a client. For example, during his talk, Frisch said that tax information can be useful in determining a client’s weak spots. 

Outside of existing clients, Kessler said that CPAs could also pursue high-net-worth individuals—who are often too busy making money to give significant thought to managing it—or other professionals, like lawyers. Most attorneys, Kessler said, focus on their clients so much that they give short shrift to themselves. As a result, he said, “their estates are a mess.”

Regardless of whom a CPA seeks out, Kessler advised setting up a casual meeting where, instead of delivering a lecture about the importance of financial planning services, he or she takes the time to listen to the client’s needs.

However, CPAs shouldn’t feel pressure to offer services to every client they’ve ever had; in fact, according to Deborah Fox, the CEO and founder of a financial planning network, they probably shouldn’t. Instead, at least in the initial stages, CPAs should look at their client list and identify who among them might benefit from PFP services. Moreover, she said, if the CPA frames the opportunity for PFP services as a special deal that other clients won’t get, they can create a sense of exclusivity, or what she referred to as “the country club effect.” 

Another point to keep in mind: CPAs don’t need to know everything, in order to offer effective financial planning services. If a CPA doesn’t feel comfortable navigating a certain topic, Frisch said, he or she can always partner with someone who does.  

“The goal here is not to be one of the spokes in the wheel,” he added. “The goal here is to be the middle of the wheel, directing where things are going.”

Regulatory concerns

Before setting up a financial planning practice, it’s vital to ensure compliance with relevant regulations, of which there are many. Jonathan L. Gassman, who led a session on regulatory rules and standards, noted that the AICPA added guidelines for CPAs who act as personal financial planners to its Code of Professional Conduct on July 1, 2014, which most state boards of accountancy have since adopted. The institute’s Statement on Standards in Personal Financial Planning Services (SSPFPS 1) encompasses topics such as general professional responsibilities, responsibilities of members in personal financial planning engagements, the planning of engagements, and working with other service providers. It’s currently available at aicpa.org. 

According to the AICPA, the standards apply to a practitioner if he or she provides cash flow planning; risk management and insurance planning; retirement planning; investment planning; estate, gift and wealth transfer planning; elder planning; charitable planning; education planning; or tax planning. 

“If you’re helping clients ascertain where they are today vs. where they want to be in the future, [and] you are providing specific recommendations … it’s very, very important you follow the guidelines,” Gassman said. 

As an additional word of caution, John S. Marten, a shareholder at Vedder Price and member of the firm’s Investment Services group, noted that CPAs who dole out specific investment advice about securities would likely be considered by the SEC to play an investment adviser’s role, meaning they would need to register as an investment adviser, adhere to the standards promulgated for investment advisers and maintain a compliance program in order to ensure that those standards are being followed. 

The SEC defines an investment adviser as anyone who, for compensation, is engaged in the business of providing advice; making recommendations; issuing reports; or furnishing analysis on securities, either directly or through publications. While CPAs are generally exempt from SEC registration, that only applies if such services are incidental to their profession and if they’re providing limited investment advice. 

“If you crossed that line from financial planning to investment advice, you need to register,” Marten advised. 

The NYSSCPA offers additional resources for CPAs interested in personal financial planning through its Personal Financial Planning Committee, which holds meetings approximately nine times a year.  

cgaetano@nysscpa.org