AICPA updates guidance for CPA personal financial planners

The AICPA has updated its guidance on the competencies and information that CPAs who provide financial planning services need to know.

One key change to the Personal Financial Planning (PFP) Body of Knowledge was made to the income tax planning component, which now is integrated throughout all 12 service areas in the document. Previously, the tax planning component was located in a stand-alone section in the document, whose update was announced Tuesday.

The integration of tax as well as other areas of PFP throughout the Body of Knowledge gives the updated document an increased emphasis on the integrated nature of all financial planning services. Updates to the Body of Knowledge shed light on this integration and highlight the importance of understanding how changes in one area of a financial plan may affect other parts of the plan.

The guidance encourages CPA financial planners to take a holistic approach to clients’ needs.

“CPA financial planners know firsthand that changes in any area of financial planning, including tax, can impact other areas,” Susan Tillery, CPA/PFS, chair of the AICPA Personal Financial Specialist (PFS) Credential Committee, said in a news release. “Therefore, when change occurs, we are best able to identify the impact the change has on our clients’ personal financial goals, and develop integrated financial planning strategies to keep them on track to reach those goals.”

In addition, the new Body of Knowledge provides additional focus and clarity on a number of areas increasingly important in today’s planning environment. These include:

• Elder, special needs, and chronic illness planning. CPA financial planners increasingly are addressing diminished capacity issues as the U.S. population ages.
• Closely held business planning. Compensation and benefits for employees, as well as the potential effects of the business decisions on the owner’s personal financial situation, are addressed more thoroughly in the document.
• Education planning. It’s crucial for CPA financial planners to understand this area and raise awareness of the long-term effects of student loans as higher education continues to grow more expensive.
• Client relationship building. CPA financial planners must understand who clients are as people to understand their needs and help them implement a plan suited to their goals. Essential topics such as effective client communication, handling conflict, understanding and diagnosing client situations, and the impact of family dynamics are covered in this area.

The Body of Knowledge serves as a benchmark for the competencies CPAs who provide personal financial planning services must display. In addition, the Body of Knowledge will inform updates to the next version of the AICPA PFS credential exam, which will be launched in July.

The AICPA also plans to release a Global Personal Financial Planning Body of Knowledge this year. The global document will be a detailed blueprint for CPA financial planners in the United States and abroad.

—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.