Personal Financial Planning

Compensation Clarified

Do you accept commissions? Contingent fees? Is your practice fee-only 
or fee-based—and whats the difference? CPAs can find guidance on key concerns in Compensation and Disclosure Issues in Personal Financial Planning , a white paper issued by the AICPA PFP executive committee. This four-page document discusses various compensation methods, market considerations, regulation and disclosure. Financial planners should note that the Federal Trade Commission issued a staff opinion on the white paper: It does not violate the consent order that generally prohibits the AICPA from advising members against commissions and contingent fees.

PFP executive committee chairman William J. Goldberg said that the Institute asks for disclosure, although it cant recommend one payment or compensation plan over another, because of the consent decree. Different norms apply to different practice niches. “I expect our members will use different methods—a practitioner may use several. But, no matter what method the practitioner uses, at the end of the day the client should have a complete understanding of it.” Goldberg is a partner at KPMG Peat Marwick, a fee-only firm, meaning practitioners are compensated solely by fees in all engagements.

The AICPA sent copies to all PFP section members. Others can get copies by calling 201-938-3659.