PFP Q&A: Planning for change

Experts discuss implications of tax law changes, new standards, and the retirement of the Baby Boomer generation.

With the Baby Boomer generation hitting retirement age, personal financial planning has become an increasingly important service for many accounting firms. But practitioners are dealing with plenty of changes, including the implementation of new tax laws and the landmark rollout of new standards.

The JofA assembled a team of industry insiders for a round-table discussion of the important issues affecting CPAs who advise individual clients in retirement, tax, estate, risk management, and/or investment planning at such an important time. The following is an edited transcript of their discussion.

Participating in the round table were:

  • Clark M. Blackman II, CPA/PFS, CFA, CFP, president and CEO of Alpha Wealth Strategies.
  • Bob Keebler, CPA, MST, AEP, a partner with Keebler & Associates LLP.
  • Sid Kess, CPA, J.D., LL.M., of counsel at Kostelanetz & Fink LLP.
  • Steve Levey, CPA/PFS, senior principal and CEO at GHP Horwath and senior principal of GHP Investment Advisors Inc.
  • Scott Sprinkle, CPA/PFS, CGMA, CFP, a managing member at Sprinkle & Associates LLC and Sprinkle Financial Consultants LLC.
  • Susan Tillery, CPA/PFS, CFP, president and CEO of Paraklete Financial Inc.

What do you think the most important issues are for personal financial planners today?

Kess: I would say that the tax provisions enacted in the American Taxpayer Relief Act of 2012 affecting high-income taxpayers, as well as the provisions of the Patient Protection and Affordable Care Act that became effective in 2013, provide unique opportunities for financial planners. These new provisions impact everyone, not just the financial planner. In addition, the changes in the field of estate planning are also extremely important in the way they impact the high-income taxpayer.

Keebler: I think the biggest two challenges are learning the new 3.8% net investment income tax … and secondly, there are four dimensions to our income tax Code now: the traditional income tax, the alternative minimum tax, the 3.8% surtax, and the additional 39.6% tax bracket and greater capital gain tax if you’re over the higher threshold. And [the challenge is] to develop a 10- or 20-year plan for most taxpayers to smooth out that income and try to avoid these additional taxes. So those are the two toughest challenges, and then the third thing is to create new tax-efficient investing strategies.

Blackman: I think a couple of things continue to get a lot of press and discussion: This whole active-versus-passive investing question, and which is the most appropriate way to go, if there is a most appropriate way to go. And using alternative investments and hedge funds as a way to mitigate risk continues to be a hot topic in the area of investment decision-making.

Tillery: The higher income tax rates are going to affect many of our clients. Quite a few have been surprised to hear how much they will be impacted. I think it will be important to explain to each client how the higher rates will affect their tax liability and begin planning now to reduce the impact on their 2013 tax returns.

Sprinkle: On the investment side, you’re going to see a big push for clients that are seeking more wealth planners versus investment advisers. The tax situation is going to become so important when you’re looking at the investments, and how do I allocate assets between my tax-deferred accounts versus taxable accounts? How do I deal with capital gains? We have some clients who are contemplating large asset or stock sale transactions, and they are looking at using different instruments, like charitable trusts, to defer and spread taxes on assets to stretch the gains or to shelter them and use charitable deductions, while at the same time generating income streams that provide a significantly higher yield than what is available in today’s fixed-income market.

Kess: The interesting thing is a lot of these issues affect people who are not just calling themselves financial planners. … You don’t have to be a financial planner to get involved with every one of those issues that were raised. A good tax person would be doing all those things that were just brought up.

Can you identify some of the technology that personal financial planners now need to stay on the cutting edge of serving their clients?

Levey: I can tell you what our firm is looking for now. We want to get software that can integrate all of the investments, all of the investment statements, and all of the income tax, all at once, so that any changes instantly update across all software. We’re actually hiring a firm to come in and write some software that will let our programs talk to each other so that we don’t have to enter things three or four times.

What size firm do you have to be to justify that expense?

Levey: It all depends on the features you want. But I don’t think it’s going to be that expensive. I believe it is figuring out what you want it to look like in the future. And to give you an idea, we’re using NaviPlan for our financial planning software, and we’re looking to somehow be able to import data through PortfolioCenter, which is our portfolio management application, and integrate that into the asset allocation piece of our financial planning software.

I can’t give you a price on it. I could tell you, we’re doing $700 million [in] assets under management. I could realistically see it costing $25,000 to $50,000, but the way you have to look at it is how much will you save in time and … efficiency, and [be] able to concentrate on other things?

Let’s talk a little about issues regarding the retirement of so many Baby Boomers.

Keebler: I think as we become more of a service economy, and people are working at desks rather than at workbenches, people are going to be able to work later, till their mind no longer permits them to work. That means a lot of people will be able to work well into their 80s. That’s part of what’s causing the situation with our young people not being able to find jobs: Older people continue to work, and they’re good, and they add value. And the other thing we’re seeing is that more and more of our clients are asking about putting a portion, maybe 10% to 25% of their net worth, into annuities when they retire so that they receive a payment each month and they’re pretty much guaranteed some level of cash flow.

What will be the impact of the retirement of Baby Boomers working in the CPA profession, especially personal financial planners?

Sprinkle: I think for the profession as a whole, people are working longer, but you are going to end up in a situation where we’re going to have a brain drain, and you’re going to have to start developing younger individuals.

And for whatever reason, maybe it’s complexity, maybe it’s because of the way the financial markets have gone, or some of the larger firms are not doing financial planning the way they used to, but the avenue to get into this profession is difficult, because there’s so much you have to learn. There’s such a broad knowledge base that you have to develop. And there are not a lot of universities that offer programs that can get you up and running. There are a few universities that have financial planning as a major, but even then, there is no substitute for experience.

It’s going to be a challenge for a lot of firms; the succession issue is going to become a large issue, and you are going to end up seeing bigger firms emerge, as they will be the only ones with enough capital to consolidate smaller practices. The lack of succession planning along with a limited market could result in retiring advisers settling for a lower market price for their firms.

Levey: I’m 61. I’m pleased to tell you that the president of our investment company is 45 years old. We have three new partners who are in their mid-30s.

What we needed to do was provide a career path for them, including incentive compensation and ownership in the company. You’ve got to plan, and as much as people are working longer, accountants also have to understand that they don’t want to stand in the way of other people. They have to [create] a culture [where] they’re willing to train and develop new leaders and give those people new responsibilities.

Tillery: Our succession plan is to duplicate ourselves. This allows us to build more and more value into our firm, as well as train the firm’s next group of leaders. When my business partner and I decide to sell the firm, not only will we know the firm is in good hands, but the new owners will have value worth purchasing.

Kess: I wanted to bring out something that I think is very important. Just sending someone to a meeting, like a financial planning conference or a tax strategy conference—people really can’t learn enough. And I think the training for many people is really inadequate to be an outstanding financial planner. You just don’t come to a lecture on estate planning and now you’re an estate planner. There’s a tremendous need to give more intensive training to personnel to really be outstanding in different phases of this work.

Keebler: It is a major-league challenge, training young people, because most of us put together this skill set over 20, 25 years. The only way to walk in relatively competent—a person would probably need their CPA and some type of additional finance training.

There’s been a lot of talk about double inheritors recently. These are often women who inherited money both from deceased parents and spouses. What are the best practices that you are seeing on reaching those clients and meeting their needs?

Sprinkle: I think it gets back to listening and being able to communicate to your clients. I think CPAs are very analytical, and we’re very good with the numbers, but we’re terrible at understanding the client’s true needs and what’s really bothering them. I think where we fall short in a lot of instances is the listening skills, the soft skills, and the understanding skills, the counseling skills. That’s what keeps a client, and that’s what clients are really looking for, and your people skills are what really differentiate you from your competitors.

The PFP Section is working on a new set of standards that will be rolled out soon. How will those standards impact personal financial planners?

Blackman: I think that the impact on CPAs in general is going to be very positive … all these years—we’ve had a specialty designation, and yet without standards—I believe [financial planning] has been considered something that CPAs do on a part-time basis. This is a watershed event for us, especially those of us that are CPAs and have been practicing full time as financial planners. The standards themselves … they really don’t require much more than what a reasonable, conscientious CPA planner would be doing in the first place. It’s essentially codifying common-sense practices. (For more detail on the standards, see “From The Tax Adviser: Proposed Statement on Standards in Personal Financial Planning,” JofA, June 2013, page 82.)


Changing tax rates, especially the new 3.8% net investment income tax and the new 39.6% tax bracket, create one of the most important issues for personal financial planners right now. The changes are prompting personal financial planners to create new tax-efficient investing strategies and to put together multiyear plans to smooth out income.

Succession planning is a major challenge for many firms. The impending retirement of Baby Boomers may result in a wave of consolidation because bigger firms are going to be the only ones able to buy out some of the retiring practitioners.

For the first time, the AICPA is rolling out a new set of standards for personal financial planners. This initiative will codify common-sense practices in the profession.

Chris Baysden is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact him at or 919-402-4077.


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Membership in the AICPA Personal Financial Planning (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. For more information, visit the PFP website at Members who want to demonstrate their expertise in this subject matter through testing, experience, and education may benefit from seeking the Personal Financial Specialist (PFS) credential. Information about the CPA/PFS credential is available at

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