Sometimes the procedures involve only the financial planner and the client. Often, though, a team approach is used, which may include the client's insurance agent, attorney, CPA, banker, and investment adviser. The objective is for the participants to make suggestions and recommendations to the client in the area of financial planning.
Financial planning can be completed in several hours, or it may take several weeks. The procedure, generally, is:
- Meet with the client to discuss the engagement.
- Issue an engagement letter outlining the terms of the engagement and what specifically is to be covered.
- Collect the data.
- Input the date into a computerized system, if one is used.
- Review the information and draft a preliminary report for the client.
- Discuss the report with the client.
- Issue final letter or report to the client and have the client put the plan into effect.
THE AICPA COURSE
The American Institute of Certified Public Accountants (AICPA) offers a five-course sequence that provides a thorough review of all phases of personal financial planning. The program also teaches how to communicate the financial planning process to clients effectively. Upon completion of the program, the graduate receives a Certificate of Educational Achievement (CEA) in Personal Financial Planning (PFP). Graduates of this program may go on to pass the exam for Accredited Personal Financial Specialist. The five courses, including a synopsis of the topics therein, are:
Developing Strategies and Providing Services:- Putting the Process into Practice. How to expand your practice into personal financial planning services? How to collect and process the data? How to build skills and help clients reach their financial goals?
Wealth Accumulation and Management:- Help clients with financial concerns in key areas - investment, asset allocation, insurance, cash management, family financial planning.
Fringe Benefits and Business Planning:- Teach clients the best methods of arranging fringe benefits for themselves and their families.
Wealth Utilization and Transfer:- Study estate planning and retirement. Factor in life-style and health-care issues; learn Medicare, Medicaid, and Medicap insurance.
Application and Implementation - a Case Study. Case study approach applies principles of fundamental planning and shows how to work with clients to develop reports, Investment and mathematical tools available; cash flow; diversification; tax shelters; specific types of investments.
Participants must successfully complete all five courses before they receive their certificate. Participants may also earn continuing professional education credit of 72 hours for completing the courses.
THE COLLEGE FOR FINANCIAL PLANNING PROGRAM
The College for Financial Planning, located in Denver, Colorado, is a division of the National Endowment for Financial Education. The College offers many educational programs leading to certificates or degrees. Especially notable for CPAs are a CFP program for certified financial planners and a 16-course Advanced Studies Program in financial planning. Students are offered several study options:
1. A core specialty in one or more subject areas:
- wealth management
- tax planning
- retirement planning
- estate planning
The Certified Financial Planner program covers the full range of personal financial planning topics in a series of five courses:
- Financial Planning Process and Insurance
- Investment Planning
- Income Tax Planning
- Retirement Planning and Employee Benefits
- Estate Planning
1. Wealth Management Series
- Investment Strategies and Portfolio Management
- Professionally Managed Assets
- Real Estate Investment
- Case Studies in Wealth Management
- Tax Planning for the Owners of a Closely Held Business
- Tax Planning for the Highly Compensated
- Tax Practice
- Case Studies in Tax Planning
- Preretirement Financial Planning
- Financial Planning for the Retired
- Qualified Retirement Plans
- Case Studies in Retirement
- Advanced Estate Planning
- Estate and Insurance Planning for Business Owners
- The Use of Trusts in Estate Planning
- Case Studies in Estate Planning
Upon completion of the AICPA course or the College for Financial Planning program, AICPA members may take the examination to become an Accredited Personal Financial Specialist (APFS). To meet the requirements for taking the PFP examination, an applicant must:
- Be a member in good standing of the AICPA.
- Hold a valid and unrevoked CPA certificate issued by a legally constituted state authority.
- Have at least 250 hours of experience per year in personal financial planning activities for the three years immediately preceding the application. This experience must include Personal financial planning process, Personal income tax planning, Risk management planning, Investment planning, Retirement planning ,Estate planning
- Submit a written statement of intent to comply with all the requirements for reaccreditation.
- Pass the APFS examination.
- Submit six references to substantiate working experience in personal financial planning.
- The personal financial planning process
- Personal income tax planning
- Risk management planning
- Investment planning
- Retirement planning
- Estate planning
Advantages The designation "Accredited Personal Financial Specialist" may provide a specialty niche for the sole practitioner and others who have an interest in financial planning for individuals. It is an area that is well suited to accountants because of their financial background and training. The accreditation may become a marketing tool as more people become familiar with it.
Two major organizations exist for financial planners. They are the International Association for Financial Planning (IAFP) and the Institute of Certified Financial Planners (ICFP). The IAFP was founded in 1969 and has 15,000 members. The ICFP was founded in 1973 and currently has 7,500 members.