Scott Floersheim

Enhance Your Most Trusted Adviser Status

How to become a CPA financial planner by integrating financial planning services in your CPA practice.

March 26, 2012
by Scott Floersheim, CPA, PFS

Ever wonder whether adding financial planning services to your CPA practice makes sense? Whether you will find the time in your already busy schedule to figure out the nuts and bolts of registration, training and marketing? If offering financial planning would jeopardize your status as your client’s most trusted adviser? What would be the best way to be compensated? Or whether your clients even want these services?

Getting Off the Ground

The most important question is actually whether you have a genuine interest or even passion for financial planning in the first place. For most other questions, there are excellent resources to assist you in integrating financial planning with your practice, if you are so inclined. With some due diligence, you can identify these service providers who best meet your needs and can assist you in completing the registration process, selecting from compensation alternatives, identifying best practices, implementing technology and developing practice marketing.

Although there are numerous organizations that can help you with implementation, training and ongoing support, some of the ones that CPAs have commonly used:

  • Membership organizations like the AICPA Personal Financial Planning Division, Financial Planning Association (FPA) and National Association of Personal Financial Advisers (NAPFA).
  • Training programs that are similar to those ACA, Fox Financial Planning Network and Garrett Planning Network offer.
  • Turnkey asset management providers (TAMPs) like BAM Adviser Services, Genworth Financial and Loring Ward.
  • Independent broker-dealers like 1st Global Capital Corp., H.D. Vest, and ING Financial Partners.

If after performing your due diligence you determine that incorporating financial planning into your existing practice is not desirable, you can still provide a solution for your clients that will enhance your profitability by either partnering with an existing planner or hiring someone to champion the development of the financial planning side of your practice.

A key component in any decision will be assessing the viability of a standalone planning practice. A common guideline in the investment industry is that for every $100,000 in gross revenue of a CPA practice there will be approximately $10 million of potential client investable assets. Under a percentage of assets under management model, a 1% assets-under-management (AUM) fee would result in another $100,000 in gross revenue per $10,000,000 of client investable assets.

On the flip side, it will take several years for a financial planning practice to fully mature from marketing to the existing CPA practice base. In the early years, just breaking even may be the outcome once all of the initial and ongoing costs are considered. The time required to reach an acceptable practice scale may be reduced by partnering with a TAMP or independent broker-dealer, but the additional ongoing costs will also need to be modeled prior to making any commitment.

How You Can Help

There was a time when the closest a CPA came to a client’s investment portfolio was at tax time to gather data for the preparation of Form 1040, Schedules B and D and when insurance needs were largely ignored because there wasn’t any current tax implication. Fortunately, the days of a CPA standing idly as clients select financial solutions that only stockbrokers and insurance agents offer are long gone.

Not only do clients need your assistance, they actually want it. In my experience, nearly all of my financial planning clients were originally clients of my CPA practice. The trust earned over many years of delivering tax compliance, tax planning and business consulting made the offering of financial planning services a natural extension of my service model.

You can take an active role in shaping your client’s income, deductions and taxes. By understanding the relationship that taxes have on wealth, as a CPA financial planner you can bring a unique value to your client’s success by implementing tax-optimized strategies. There are a multitude of financial planning decisions where you can bring unique value to the client relationship:

  • Retirement withdrawal strategies that seek to maximize wealth by customizing the combination of distributions from taxable, tax-free and tax-deferred investments to minimize taxes, while extending the longevity of resources.
  • Roth IRA conversion evaluations that annually optimize the amount to be converted based on a precise projection of a client’s year-end taxes.
  • Pension plan selection to identify the plan that is optimal for the business owner, while considering the ongoing administrative costs of various alternatives.
  • Harvesting short-term capital losses and long-term capital gains in each client’s investment portfolio by maintaining detailed tax lot accounting of each taxable position while also avoiding wash sales.
  • Portfolio asset allocation to meet a client’s needs given their particular risk tolerance and taken in context with their existing legacy holdings, while at the same time locating investment assets in the most tax-efficient accounts based on the portfolio taken as a whole.
  • Budgeting for each client’s lifestyle expenses, while developing a Monte Carlo analysis (A problem solving technique used to approximate the probability of certain outcomes by running multiple trial runs, called simulations, using random variables.) for the assessment of each client’s ability to not outlive their resources.
  • Insurance needs analysis based on actual client needs without any conflict of interest.
  • Estate planning in collaboration with each client’s attorney to ensure that the client’s wishes are tax-efficient and well-documented.

Acting As a Fiduciary

After identifying and integrating best practices, as a CPA financial planner, you no longer have to worry about losing your status as the client’s most trusted adviser. Although some financial planners elect to receive commissions on product sales, many CPA financial planners have established practices with compensation based on a fee-only basis. Fee-only compensation can take a variety of forms from a percentage of assets under management (or of net worth) to ongoing and project retainers to simply hourly consulting. Some planners even choose to be fee-based as a hybrid of fees and commissions to best accomplish adequate compensation for their services.

A financial planner’s method of compensation is less important than the standard of care for each client. Although any form of compensation has, to some degree, a conflict of interest, a financial planner who adopts the fiduciary standard, as opposed to the suitability standard, agrees to act in the client’s best interest in all matters. The fiduciary standard of care means doing what is best for the client; namely, always putting the client’s interest before the advisers. It also means disclosing any possible conflicts of interest including compensation related to products or referrals. Suitability standard of care usually means an adviser need only suggest products that are suitable for your objectives, your income level and your age. Also, no disclosure is required for possible conflicts of interest. In the U.S., financial professionals who are registered with FINRA (Financial Industry Regulatory Authority) have a duty to take steps that ensure that an investment is suitable for a client. 

Readers should note that currently, only independent Registered Investment Advisers (RIAs) are required to act in a fiduciary capacity. Brokers or “financial advisers” working for a broker dealer firm or an insurance company are only held to a suitability standard (not a fiduciary standard).

CPAs have a fiduciary duty to their clients when engaged in personal financial planning activities because the AICPA Code of Professional Conduct (most state boards of accountancy adopted) embodies standards of conduct which are closely analogous to a fiduciary relationship. This higher duty of care positions the CPA financial planner to remain the client’s most trusted adviser.


By developing even stronger relationships with your clients, learning what their goals and concerns are and then proactively helping them identify optimal solutions and implement prudent strategies, the CPA financial planner can develop a client for life. Even if you choose not to directly integrate financial planning into your own practice, you can still bring great value to your clients and enhance your own profitability by carefully identifying a financial planner in your community with whom you can develop a collaborative partnership.

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Scott Floersheim, CPA, PFS, is principal at Meridian Wealth Advisors, LLC. He provides wealth preservation strategies using only passive investments combined with sound tax and legal solutions. He has over 20 years as a CPA, over 15 years as a Certified Fraud Examiner and over 10 years as a Certified Financial Planner.

* The AICPA’s PFP Section provides information, tools, advocacy and guidance to CPAs who specialize in providing tax, retirement, estate, risk management and investment advice to individuals and their closely held entities. The AICPA PFP Division has added the Fox Financial Planning Network partnership to the online PFP Practice Center. This is a new program designed for the CPA practitioner to help systematize and organize the planning process, administration and delivery of your financial planning or wealth management services.  All members of the AICPA are eligible to join the PFP section. For CPAs who want to demonstrate their expertise in this subject matter, apply to become a PFS Credential holder.