Career Path 5 – Financial Advisor
By: Jeanne H. Yamamura, CPA, MIM, PhD and Wiley CPAexcel Author and Lecturer
CPAs who enjoy helping people to accomplish their goals and dreams serve as personal financial advisors and provide their clients with financial planning and advisory services. These services can range from setting up college funds and making home purchases to investment advice and portfolio management to estate and retirement planning. Because of their tax expertise, general familiarity with client financial situations, and the personal relationships already established, CPAs are well-positioned to provide this assistance. In fact, many appreciate the opportunity to aid their clients in every area of their financial lives, instead of being limited to just tax preparation or accounting services.
Personal financial advisors help their clients answer questions like these:
- Have I saved enough for retirement? If not, how do I get there?
- What is the best way to fund my children’s college educations?
- How should I set up my estate to protect my heirs?
- I want to sell my business and retire overseas. How can I do that?
- Are my investments sound? Will they yield the income that I need?
- I have received an inheritance. What should I do with it?
- Is my family protected if I die or become disabled?
- My dream is to sail around the world for a year. What do I need to do to accomplish that?
Small business owners are often in particular need of financial planning services as their personal and business finances overlap and may be inseparable. As a result, personal and/or business financial concerns may not be adequately addressed. Additional problems arise for business owners who need to consider the tax implications of the legal structure chosen for their business, the need for protection against lawsuits resulting from negligence or defective products, business continuity planning, investment diversification beyond solely investing in the business, and the potential need for more sophisticated estate planning. A CPA with financial planning expertise is able to assist the small business owner in tackling these personal and business financial issues.
In creating a financial advisory practice, CPAs/PFSs are able to freely choose the clients they want to serve and the types of services they plan to offer. Some personal financial advisors offer the full range of financial advisory services to individuals and businesses while others elect to specialize in a niche area and work mainly with clients in need of these particular services. For example, a general practitioner may offer comprehensive financial planning which will include investments, insurance, and college, retirement, and estate planning. A niche practitioner, on the other hand, might work with early start up entrepreneurs and provide assistance in budgeting and cash flow analysis, insurance protection for the business and the family, and employee compensation plans.
The AICPA created the Personal Financial Specialist (PFS) credential to reflect additional expertise in estate, tax, retirement, risk management, and investment planning. The PFS credential is awarded to CPAs based on experience, education, and examination. CPAs who have chosen to specialize in investment management services may also have obtained Series 6 or 7 licenses from the Financial Industry Regulatory Authority (FINRA) which enable the sale of investment products.
The field of personal financial planning is expected to grow rapidly. The Bureau of Labor Statistics reported a growth rate of 27% through 2022 for personal financial advisors, a rate much higher than average, driven by an aging population and increased life expectancies. If you are interested in helping your clients to make sound financial decisions and to achieve financial good health, this may be the career path for you!