And how to save them from themselves.
CPAs interested in providing personal financial planning don’t need to do it all. The secret to success in PFP is finding the right partners, according to Michael David Schulman, CPA/PFS, third generation owner of a CPA firm bearing his name in Central Valley, N.Y., and New York City. Schulman is a featured speaker at this week’s AICPA Advanced Financial Planning Conference in San Diego.
In these market conditions, what can CPAs do to best help their clients?
CPAs should work with their clients to prevent the clients from making quick and irrational decisions that will have unfavorable consequences.
For example:
— liquidating their portfolios,
— making withdrawals from qualified accounts resulting in income taxes and possible withdrawal penalties, or
— not paying life insurance premiums resulting in cancellation of policies that might be difficult to replace.
They should review their clients’ risk tolerances and work with the clients in keeping a properly diversified portfolio for the long-term.
Long-term, what’s the outlook for CPA PFP services?
The outlook for CPA PFP services is excellent. Many clients who thought they could manage their investments and finances on their own are having second thoughts during these tough economic times. Their CPA financial planner is the ideal person to work with.
And how can CPAs best seize those future opportunities?
CPAs interested in providing PFP services should be:
1.  marketing to their clients now while their clients are uncomfortable with their finances. As times improve, many clients will revert to thinking that they can go it alone, and
2. look to increase their professional skills to be in position to capitalize these opportunities.
What’s the biggest misconception CPAs may have about adopting or expanding their involvement in PFP services?
I think the biggest misconception is that the CPAs must get licensed and do all of the work themselves. One option is to partner with a PFP firm. (Although someone in the firm will have to be licensed if the objective is to share commissions.) Another option is to go the fee-only route.
What else should we be asking?
How does a CPA’s approach differ with the age of the client? After all, older clients who lost 35% of their portfolios are now in serious cash flow danger whereas a younger investor can “ride it out.”
