PFP: what it takes: credentials, time commitment among considerations of offering PFP services.

• Author: Goodfriend, Karen
• Position: FINANCIAL PLANNING - Personal financial planning

CPAs who provide tax and other financial services already possess many of the requisite skills to provide personal financial planning services. And the trust-worthiness and competency inherent in the CPA brand--our status as the trusted adviser--gives CPAs a competitive advantage as financial planners.

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Further, as financial illiteracy reaches epidemic proportions, the time is right to be a personal financial planner.

In a 2004 CalCPA survey, 40 percent of California respondents reported carrying credit card debt every month, while 58 percent don't save any fixed amount of earnings monthly. Meanwhile, almost 40 percent of all CPA firms will offer financial planning services by 2006, up from 14 percent in 2002, according to a survey by Tiburon Strategic Advisors.

Whether or not they describe themselves as financial planners, many CPAs may provide some element of these services. For example, advising a client on a home mortgage may begin as a tax engagement. But if the client asks, "How much house can I afford and still be able to retire?" the forward-looking scope of the engagement expands to include financial planning.

DETERMING YOUR INTEREST

To help determine whether financial planning is right for you, ask yourself:

* Are you at ease discussing highly personal subjects with clients? For example, understanding the client's life goals and dreams, addressing their career decisions, and dealing with conflicts between spouses about money are all part of financial planning.

* Are you comfortable giving advice based on assumptions about the future, which are inherently uncertain?

* Do you like learning new skills, such as acquiring knowledge of investments and insurance?

* Are you willing to devote enough time to provide this service proficiently?

Once you've assessed your comfort level, you can turn to honing your skills. Financial planning requires technical knowledge of investments, insurance, risk management, estate and income tax. One way to determine your skill level is through the AICPA's Competency Self Assessment Tool, http://pfp.aicpa.org.

But possessing that intellectual capital alone isn't enough. Financial planning takes that technical expertise and applies it to an integrated process of identifying client goals, evaluating alternative paths and making recommendations accordingly.

CREDENTIALS

Obtaining a financial planning credential is an objective way to determine your qualifications and communicate them to the...