Personal Financial Planning Services Untap the Potential of CPAs

The CPA profession—long known for its tax and planning expertise with individuals, families, and business owners’ personal finance decisions—is undergoing a transformation.

This change is being driven by increasingly complex client needs, technological improvements such as tax preparation automation and artificial intelligence, and generational shifts in client expectations. These developments are creating an opportunity for a more integrated approach to their tax and financial planning services.

A client’s need for retirement planning, estate and gifting advice, a business owner’s exit plan, risk management, investments, or decisions about elder care and education all have tax implications—and the public considers them all financial planning. CPAs who proactively integrate their tax and financial planning advisory services in these areas provide their clients a more complete financial solution.

CPAs are uniquely qualified to offer year-round financial planning. Their deep knowledge of tax as well as financial legislation and application ensures they consider their clients’ big picture. They implement client tax strategies and answer questions in the context of helping them achieve financial or personal goals.

Forward-Looking Approach

While CPAs have always addressed clients’ needs in these areas, they have the opportunity to formalize these forward-looking discussions under the banner of tax-focused personal financial planning. Clients will quickly see the value of their CPA taking the reins and integrating proactive financial planning with their tax strategies.

A CPA’s analytical strengths highlight two hallmarks of their approach to an integrated financial planning service offering. First, they take full advantage of tax strategies. The lifetime benefit of lower tax liabilities in current and future years is too big to be misrepresented, sometimes paying bigger dividends than the investment returns, and there are few financial planning decisions that don’t have tax considerations.

Second, their approach to risk management ensures that potential impacts of a recommendation on other client goals will be considered. Nothing is truly risk-free, and often mitigating some risks introduces other risks that are either acceptable or easier to manage. Disclosing and mitigating risk and avoiding unintended consequences is part of being a CPA.

Certified public accountants have high professional standards and regulatory oversight for these financial planning activities. Together, this establishes a rigorous framework for objective client-centered financial planning, addressing issues like written disclosure and consent for conflicts of interest.

Client Benefits

Financial planning can be overwhelming or easily put off. The trust a client has in their adviser can be a deciding factor for follow-through. Extending the trust they have in their CPA to encompass their broader financial goals can provide additional peace of mind.

Clients make better decisions when CPAs use a human-first approach of tying client goals and purpose to their financial planning recommendations. This holistic strategy ensures that financial decisions are tax-efficient, allowing clients to maximize their long-term financial potential.

Financial planning takes a team of professionals representing a variety of specific expertise. Clients working with a CPA financial planner should have confidence that additional qualified professionals, such as investment, insurance, legal, or valuation, will be included and coordinated as needed, saving them time and money while ensuring the overall financial plan is functioning as envisioned.

Practitioner Benefits

Expanding their services to include financial planning, CPAs may dramatically boost their revenue sources through financial planning (fee-for-service), investment management (assets under management), or a combination.

Labeling services for what they truly are allows an expansion and diversification of service offerings. This minimizes unnecessarily giving away value under tax compliance services that are better described as financial planning, allowing the CPA to connect their services more accurately with their clients’ needs.

Personal financial planning is a relationship-based service that is less dependent on outside factors such as investment results and allows clients to engage with the firm on a more personal level. Such services allow many touch points throughout the year, reducing the seasonal variations commonly associated with tax services.

The value of the firm is rooted in the involvement of the next generation of CPAs and attracting the next generation of clients. Millennials and Generation Z are very attuned to working for purpose and building relationships. Financial planning is the perfect personal advisory service to attract these professionals and clients.

Getting Started

This integrated approach isn’t as difficult as it may seem. Many steps can be accomplished concurrently, building knowledge, and gradually rolling these services out to clients. Remember the initial approach won’t be the final service—experience and clients’ changing needs will evolve the offered financial planning services.

• Recognize that specifically excluding investment advice and management can allow the CPA to focus more specifically on financial planning and the client’s big picture.
• Assess the type of clients and planning currently provided during tax planning discussions. Start asking questions to better understand the topics that are most important to specific clients and that, perhaps, other professionals aren’t talking to them about.
• Assess current knowledge of personal financial planning topics such as planning involving tax, retirement, estate and charitable, risk management and insurance, elder needs, education, and business owner needs. CPAs often find they know more about these topics than they think, particularly if they have been in practice for a long time.
• Identify sources to obtain education as well as resources to use with clients. Don’t underestimate the knowledge learned while working with clients. Their varied situations force learning, just like the tax practice. This education can also start CPAs on the path of obtaining specific credentials that expand their credibility further.
• Consider the practice management needs such as business model, pricing, technology, workflow, and compliance. These will be important to further develop this service offering in personal financial planning.

The successful implementation of a tax-focused personal financial planning service offers long-term benefits to the public, CPA firms, and individual accountants. The evolution of services to integrate tax planning activities into a more complete, client-focused financial planning approach demonstrates how the CPA profession continues to adapt and be resilient.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Dan Snyder is the director of personal financial planning for the Association of International Certified Professional Accountants.

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