CPAs & Financial Planners / Relationship Growth

Many CPAs are taking a more holistic approach with their clients and their financial needs. The number of CPAs that are performing financial planning for clients is growing. Currently the PFS (Personal Financial Specialist) designation afforded only to CPAs by the AICPA is growing by about 5% a year. Many clients who don’t have a financial planner do have CPAs, and they trust them with their money. From what I have seen, there are positives and negatives to this.

Ask yourself if you go to the Dentist when you have a cold. Obviously the answer is no, and while the Dentist may be a Doctor, they do not handle what your primary care physician handles. For some reason many people confuse this differentiation with CPAs. The mistake is made where clients assume their CPA who handles their taxes is also qualified to handle their financial planning needs. Unless the CPA has focused on this area, this is not the case. Many times the CPA will take on the obligation hoping to continue to nurture the client relationship, when the right thing to do would be to refer to a financial planner they trust.

On the flip side, many CPAs have seen commission and fee hungry money planners act unethically in their practice, which creates a schism between financial planning and tax preparation. This is unfortunate because while the two fields may be different, they are inter-related. Tax planning requires knowledge of the individuals financial plan and the character of assets under the estate of the individual, and financial planning must consider the complete tax situation of the client. When there is a divide between the two, the client is usually not getting the best service because of this relationship.

My advice.. For a CPA or tax practitioner, find a financial planner you trust, and then trust him. If your not willing to implement financial planning into your practice (and appropriately) then know your colleagues and know when to refer out. I have seen tax professionals give negligent investment advise on countless occasions, and sometimes it is not within their legal right to be doing so. Not every financial advisor is just looking for the “commission and run” relationship. Get to know someone you can refer to, keep a relationship with them and follow up with your clients. And I can’t stress this enough, don’t express an opinion on something you are not a professional in.

I am a CPA, I focus on certain areas outside of tax preparation. When I am confronted with something outside of my specialities, I refer out. Nothing is more frustrating than seeing some professionals do the opposite. Client’s don’t pay you to be their swiss army knife, they pay you to be their sniper, in whatever area you can do the sniping in! Some people don’t agree with me, but I consult for both professions and have cultivated numerous relationships between CPAs and financial planners, and this is my experience.

CPAs are growing rapidly in the field of financial planning and with about 77 million baby boomers on the edge of retiring, this will probably increase exponentially over the next 10 years. Hopefully the two fields of taxation and financial planning become integrated over time, not less.

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