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Career Opportunities For New CPAs As Personal Financial Planners

by Kevin J. Sigler, PhD, CFP

New CPAs entering into public accounting firms have an outstanding opportunity to perform personal financial planning for clients, in addition to traditional accounting services. The market for financial planning services in the area of tax planning and estate planning, as well as the coordination of investment and retirement planning, is growing; it is a natural niche for CPAs. The market in these areas will be expanding. Baby boomers are moving into middle age, planning for retirement, and standing in line to inherit money from their parents in the coming years. The public perception of CPAs, as having expertise and integrity, gives them an edge over the competition in providing financial planning services; if they properly market themselves, CPAs will be in position to dominate this line of business.


The amount of wealth that will be transferred from parents to children (baby boomers) over the next 5 to 20 years in the United States is staggering. Nearly $1 trillion will change hands by the turn of the century, and almost $5 trillion will be transferred by the year 2016.

Retirement planning and estate planning is also becoming more important to the general public, since most employees who have a retirement plan are today involved in some type of plan that places the burden on them to choose the vehicle for investment. This is unlike the traditional pension plan that many U.S. employers have offered in the past. The traditional pension plan offered by an employer calculates the payout of retirement income to the participant based on a set criteria, such as time of service and the amount of salary drawn during employment.

Today, employees are involved in such retirement plans where once vesting requirements are met, the money invested for the participants will actually become theirs and part of their estate. Given the nature of these type plans, the amount of retirement income yielded by them will be based on how well the investments of the plan fair before and after retiring. Therefore, retirement plan participants many times have the task of managing their own retirement funds and must choose investment vehicles for the money.

The 401(k) plan is one such plan where the participants choose their own investment vehicles among a variety of choices. The retirement plan accumulates equity for retirement based on the contribution of the employee (and employer) and the performance of the plan's investments. In addition, these kinds of retirement plans allow the participants, after leaving their employer, to roll the vested value of the plans into Roll-Over IRAs and direct the money themselves.

In many cases, it is up to the individual to choose his/her investment strategy in order to build for retirement. They are faced with complex decisions that lead them to seek advice from personal financial planners. This situation has and will continue to present an opportunity for CPAs to perform financial planning for individuals, in addition to handling the accounting needs of their clients.

Perception Of CPAs As PFPs

The public appears to prefer that a CPA performs their individual financial planning over others. According to survey results by Chesser, Moore, and Sakarda (Consumer Attitudes About Accountants as PFP Providers, Journal of Accountancy, June 1996), individuals choose PFP services from CPAs because CPAs know their clients and understand their goals; they stay informed about tax matters; and they serve as an objective party in handling financial decisions. The survey also cites the high level of knowledge and ethical standards that CPAs possess as reasons why they choose CPAs over other financial planners.

Another survey by Chesser and Moore (The CPA-Financial Planner: Some Insights, The CPA Journal, April 1996) indicates that individuals want independent and objective advice when selecting a personal financial planner, and CPAs are viewed as having these qualities. Other reasons for selecting CPAs as financial planners include: to reduce taxes for the individual; to provide estate planning expertise; to plan for retirement; as well as to coordinate investment, insurance, and tax advice.

This public perception---that CPAs possess expertise in the personal planning area and have integrity and superior ethical standards---will assist new CPAs at public firms in offering personal financial planning services as an avenue to develop business and a client base.


Even though the public has a positive perception of CPAs as personal financial planners for their clients, there are still some reservations about using them in this capacity. A study by Fleming (Perceptions and Expectations of CPA Financial Planners, Journal of Accountancy, June 1996) finds that some people feel CPAs are too conservative and have been slow in promoting themselves to their clients as financial planners.

One way for CPAs to demonstrate their commitment to providing financial planning services, as well as their expertise in the area, is through professional designations. Many accountants sit for the Certified Financial Planner (CFP) exam. Unless the CFP candidate already holds a financial planning-related designation or has taken upper level courses in the areas at an accredited college, he or she must complete a program that has been registered by the CFP. Every candidate must also pass a two-day exam, including topics in the areas of individual income tax, estate planning, retirement planning, insurance, and investment planning.

There are also other designations such as Personal Financial Specialist, which is available to only American Institute of CPA members. Another designation offered by the American College is the Chartered Financial Consultant. It requires nine classes, plus one elective. The National Association of Personal Financial Planners specializes in financial advisors, which are fee only. Obtaining any or all of these designations related to individual financial planning will signal both commitment and expertise in the financial planning field; they may overcome reservations of potential clients about using CPAs for this service.

CPAs are in an excellent position to market individual financial planning services since they will already be performing accounting services for clients. The easiest and most efficient way of marketing this service is to the existing customer base, by answering the questions posed to them by clients in a manner that fosters their clients to think about their entire financial position. It may lead to providing planning services for them (see Freeman and Friend, Client Questions Clinic, Outlook, winter 1996).


New CPAs are in a position to increase the revenue stream, as well as the number of services and clients, of their public accounting firms by offering individual financial planning services. Because of the expertise and integrity perceived by the public, clients are more likely to be receptive to the notion of CPAs performing individual financial planning services for them.

Kevin J. Sigler is a professor in the Cameron School of Business at the University of North Carolina, Wilmington.

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