CPAs perform a wide range of services including personal financial planning. This is a critical service for clients and I feel the CPA is best able to perform these services. I have been doing this since I started my own practice, having considerable experience from my initial jobs with CPAs.
Why Choose Your CPA for Personal Financial Planning: Key Reasons
- CPAs performing these services are usually very experienced in this with some CPAs earning the Personal Financial Specialist (PFS) designation from the American Institute of CPAs (AICPA). The CPA doesn’t need that credential but those that do indicate a greater dedication to serve their clients with these services. There are “competing” designations which I won’t name, but the CPA exercises a much higher degree of independence, honor and desire to only provide advice and guidance that is in the best interests of their clients.
- Preparing a client’s tax return provides a plethora of data that could be used when advising clients on their personal financial planning. This gives a big head start with information regarding the client’s financial affairs. Also, most of the discussions between the CPA and client about their tax return provide added insights about the client’s concerns.
- The relationship with the CPA is already established and the familiarity creates a more effective engagement. Many times the financial planner delves into the client’s desires, what ifs, concerns and stresses and the closeness of the CPA with the client can get to the most important concerns easier, quicker and with a much greater opportunity to get to the issue of what the client might really want to know and is concerned about.
- CPAs perform services in multiple disciplines, not just financial planning. Additionally, financial planning is not a fill-in-the-box-with-numbers type of assignment. It requires the CPA to use all of their experience with every type of client with many varied issues and to be able to apply their experience to the specific client they are engaged with at that moment. An overall goal of personal financial planning is concerned with providing clients with a method of achieving their goals or setting up a plan that would provide the client with long-term financial security. This is a great responsibility and one that the CPA is definitely skilled in to help the client achieve.
- Some financial planning goals are lofty and might involve considerable amounts of money, but others can be concerned with a client getting out of debt or setting up a workable spending budget. Because of the nature of the services CPAs perform, they not only have the experience but they are able to deal with a client with whatever level of expertise is needed to help the client accomplish their goals.
- Frequently a financial plan involves establishing a method of investing to achieve a client’s goals. CPAs are not limited by proprietary products, service protocols, maintaining an umbrella organization’s brand, cookie-cutter investment allocation methods, or the desire to maximize commission income from product recommendations.
- Occasionally there is a need for financial planning to make sure a client’s financial affairs are in order should they have a premature death or sudden disability. Further estate planning is an important issue and while many people associate estate planning with saving estate taxes, most people are not at the wealth level where estate taxes should be a concern, but every client is in need of some estate planning.
- Many people are unaware of all the risks they are subjected to. The CPA personal financial planner can help with identifying proper risk management suggestions.
- Personal financial planning services cover the entire gamut of a client’s financial life and are an essential service that many people require but do not get. If you are not sure if you are a candidate for such services, call your CPA tax preparer and ask them what they think about it for you and how you could benefit from such a consultation or engagement.
A Real Life Example
To be a little specific about this, consider a young married couple with two children under the age of five and both parents die together in an accident. There is a need to have a will naming a guardian to care for their children and a further need for some low-cost but high-death benefit life insurance to establish an asset base to provide for adequate cash flow to the person caring for the children and then to have funds available for eventual college and many other costs associated with raising two young children. The CPA would make the suggestions, determine the appropriate amount of insurance and the ongoing costs of the premiums and a guarantee that the insurance would not be cancellable should the health of one of the parents deteriorate.
I could go on much further with this, but the point I want to make is the importance of the role of the CPA in advising their clients on ways to achieve their goals and how to get started.
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