CPAs advising clients in estate, retirement, investment, or risk
management planning need to understand the new Statement on Standards
in Personal Financial Planning Services that was issued in January and
goes into effect on July 1, 2014. The following are some key
provisions personal financial planning (PFP) practitioners should note:
Be
aware that all AICPA members must adhere to AICPA
standards. In addition, state boards of accountancy often
adopt AICPA standards, giving them the force and effect of law.
Therefore, even CPAs who are not AICPA members need to be aware of the
AICPA standards that their state board of accountancy has adopted.
Understand
that the statement applies to the individual, not the firm.
The statement applies to employees in the firm who provide PFP services.
Recognize
that the foundation of the statement begins with the AICPA Code
of Professional Conduct (the code). The hallmark of
the code is to perform services with competency, objectivity, and
integrity. The statement expands on these basic principles and
provides direction for the delivery of PFP services in a way that is
consistent with the code.
Understand
that courts will likely hold members to the fiduciary standard of
conduct when performing PFP services. The statement
provides CPAs with a road map to help ensure this standard of care is
met. Generally, if the following three elements are present in a
client relationship, a member may be deemed to be a fiduciary to his
or her client: (1) The member holds himself or herself out as an
expert in an aspect of business; (2) the client places a high degree
of trust and confidence in the member; and (3) the client is heavily
dependent upon the member’s advice. The code embodies standards of
conduct that are analogous to the fiduciary standard of behavior.
Use
the statement as a road map to help ensure that you and others in
your firm are complying with professional responsibilities when
providing PFP services. The statement provides a framework
within which professional judgments and relationships can be
conducted. Adhering to the statement helps to protect your clients and
your business.
Gain
clear guidance in key areas fundamental to the delivery of PFP
services. The statement addresses the areas of communication,
disclosures, and documentation as they relate to the basics of
planning the engagement, developing recommendations, and working with,
and recommending, other professionals. This ensures that the client
receives the information he or she needs to make good decisions and
that the member is meeting the minimum standards of behavior expected
of a trusted adviser. It also provides a clear path for members to
implement and deliver the level of planning services that clients need
today.
Read
the statement to gain a thorough understanding of when it applies
and what it requires. The AICPA has created tools to help
PFP practitioners understand and comply with the rules. (The statement
and the tools are available at aicpa.org/sspfps. Also see,
“Official Releases,” page 78, for the complete statement.) The
statement is intended to provide authoritative guidance and establish
enforceable standards for members practicing in PFP services.
Questions about the new rules can be directed to the AICPA PFP
Division staff at financialplanning@aicpa.org.
—By Clark M. Blackman II, CPA/PFS, CFA,
CFP, CIMA, AIF (
clark@alphawealthstrategies.com
), president and CEO of Alpha Wealth Strategies and immediate past
chair of the PFP Executive Committee and a member of the
Responsibilities in Personal Financial Planning Services Task Force,
and Andrea Millar, CPA/PFS (
amillar@aicpa.org
), senior technical manager–Personal Financial Planning for the AICPA.
