Is now the time to implement PFP services?

• Author: Tillery, Susan
• Position: Personal financial planning

AICPA survey reveals PFP service offerings result in substantial economic benefits for CPA firms and their clients.

The CPA profession has naturally evolved toward personal financial planning (PFP). This is a bold statement but one borne out by the results of the recent AICPA PFP Division survey on the economic benefits of implementing a PFP practice in a CPA firm, among other things. Perhaps the most unanticipated result of the survey was that 55% of CPA respondents whose firms offer PFP services said they have been doing so for over 15 years.

CPA respondents also named the top five PFP services that have the greatest positive impact on their firm's revenue:

* Income tax planning;

* Estate/wealth transfer planning;

* Retirement planning;

* Investment planning/management; and

* Cash flow planning.

Most of these services are already performed by many CPA firms, and all five are addressed by the AICPA Statement on Standards in Personal Financial Planning Services that went into effect July 1, 2014.

More than 2,400 CPAs responded to the survey. Of those respondents, 49% currently offer PFP services. The survey was sent to a cross-section of CPAs in public practice, including all members of the AICPA Tax and PFP sections in June and July 2014. The survey results are based on the responses of those CPAs who currently offer PFP services.

Other illuminating information from the survey includes:

* Firms charge a variety of types of fees for PFP services: 64% of CPA financial planners bill based on hours; 42% charge on a per-project or retainer basis; 29% are paid on the basis of assets under management; and only 15% receive commissions (some firms use a combination of these methods).

* Ninety-one percent of the firms that provide PFP services also provide other services. Of those firms that provide PFP and other services, 64% indicated that PFP clients provide more revenue to their firm than their non-PFP clients, and 65% reported that PFP services increased their firms' value.

* Seventy-nine percent of firms were profitable in their first year of providing PFP services.

The survey reveals additional economic benefits for CPA firms that have added PFP services to their other offerings, through:

* New clients: 63% reported an increase;

* Client retention: 39% reported an increase;

* Client referrals: 25% experienced more of them;

* Revenue per client: 41% reported an increase; and

* Referrals from other professionals: 53% reported additional referrals.

The survey also dispels any notion that PFP services compete with traditional CPA services. Rather, it confirms that PFP services complement traditional services. Of firms that provide tax and PFP services:

* 83% never or rarely...