Ten “Musts” for Developing a PFP Practice

CPAs interested in careers in personal financial planning or who have established practices and would like to create a niche in this area can follow these steps to get started:

Select a practice structure. Depending on their firm’s purpose or the way they conduct business—including how much liability they are willing to assume or the type of fringe benefits they plan to offer—CPAs can structure their financial planning practices as sole proprietorships, S corporations, C corporations or limited liability companies. Each option has a unique character, set of benefits and legal limitations.

Prepare a business plan. All new and established businesses need a written business plan. A good one describes the objectives, strategies and specific actions a person or firm will need to follow to master the business environment. The plan will answer questions such as these: Where is the business today? Where is it heading? How will it succeed?

Find a mentor. There is no substitute for experience. Having a mentor helps keep start-up problems to a minimum. Local chapters of CPA state societies or financial planning organizations can offer guidance to new personal financial planners.

Get the credentials. A CPA planner needs to master a large body of information to get started or to stay current. Practitioners need to understand financial markets, basic and advanced asset valuation methods, the Internet and macroeconomic principles.

Create an advisory board. No successful PFP practitioner can prospect for new clients, maintain a client base, develop new products and still expect to remain current with the enormous volume of fast-changing information affecting the business. CPAs may need an informal advisory board to bring expertise, information, advice and credibility to their practices.

Build a back-office team. Financial planners will handle sales, product development and implementation. But to create an appropriate firm infrastructure, they will need to hire personnel to manage the other tasks described in their business plan.

Make use of the latest information technology. CPAs need to research how technology can benefit the business. Then they should purchase the best technology and train staff to use it.

Develop a marketing plan. Marketing a professional PFP practice does not need to be expensive, but it should be focused and monitored. An analysis of pricing should be an important part of plan development. For example, does the firm want many less-comprehensive planning assignments at lower revenue per unit or fewer more-comprehensive planning projects at higher revenue?

Comply with all regulations. Personal financial planning is a recognized professional service and is regulated accordingly. The power to influence client financial wellbeing comes with an obligation to protect the public, so the PFP industry has more regulatory and compliance issues to address than many other service professions.

Develop and implement standardized procedures. The planner should use a systematic approach to assessing and achieving client financial goals: He or she needs to set up a preliminary meeting with a client; integrate goal setting and data gathering and put it all together; recommend solutions; and implement and monitor the plan.

Source: Adapted from Getting Started as a Financial Planner by Jeffrey H. Rattiner, 2000 by Jeffrey H. Rattiner. Reprinted with permission of Bloomberg Press, Princeton, New Jersey.


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