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Susan Tillery
Susan Tillery

Financial Planning — An Orphan Looking for a Home
Financial planning needs to be a "stand alone" discipline devoid of conflicts of interest and the moral dilemmas which accompany them.

December 16, 2010
by Susan Tillery, CPA, PFS

Financial Planning, without national certification, without universally recognized standards and without recognition as a profession, has found itself in the midst of a storm of regulatory inquiry. Everyone from consumer groups to Congress wants to regulate this orphan of professional disciplines.

The sky is not falling; the world is not coming to an end, however the condition of our financial markets may cause one to wonder. The reality of what is actually happening is that the financial services sector is in the midst of a great moral dilemma. The exact meaning of a dilemma is a situation in which you have to choose between two equally unpleasant alternatives.

One alternative has been to manage assets and/or sell products as part of the "financial planning" process. However, as a financial planner there is a fiduciary responsibility to obtain the most appropriate product, at the lowest cost, to address the client's needs. But, what if another broker-dealer or investment program has a better product or offering? Do you send the client to another advisor to implement the planning recommendation? Or do you sell what you have available to you and hope for the best?

The other alternative has been to pursue a "true fee-only" practice without asset management or product sales. Unfortunately, the success rate of this model has been dismal at best. Many planners who opted for this model, suffered financially and returned to asset management and product sales, added tax reporting to their practice or abandoned financial planning altogether.

Reader Note: Susan Tillery will be part of a panel of speakers at an all-day pre-conference workshop implementing PFP in your practice on January 9 at the Advanced Personal Financial Planning Conference. Join us from January 9-12, 2011 in Las Vegas. Early registration ends for the conference on December 17, 2010!

There does not have to be a moral dilemma. Financial planning is able to stand alone as a discipline and has every possibility to succeed as a profession. The new century has brought with it advances in technology which dramatically reduce the need for the typical "bricks and mortar" infrastructure. Collaborative relationships have achieved what the typical hierarchy, which was often "top heavy" and bloated, could not. The regulatory arena within which financial planners operate has become more clearly defined. And most importantly, the consumer has begun to embrace the discipline as a profession.

Clearly, financial planning has not yet arrived as a profession. Its structure (asset management and/or product placement or fee for advice) has not been decided. Perhaps another platform is available. I would propose it's a platform that only CPA's can build. It can be built by CPA's who will seize this moment in time; who will "adopt" financial planning and take it to the professional level by offering "true fee-only" independent, objective financial planning.

You are your clients' trusted advisor and no one is more qualified and suited to offer comprehensive, independent, objective financial planning to your clients than you are. As a CPA, you can attain your PFS credential and help your profession present financial planning as a true profession by taking it to this next level. You can help keep financial planning from being given over to the regulators. The American Institute of Certified Public Accountants (AICPA) has been working very hard to keep this from happening. They recently submitted a comment letter to the SEC strongly opposing the creation of a possible Financial Industry Regulatory Authority (FINRA) or other self-regulatory organization oversight for investment advisers. Why? Because this will take financial planning down a level.

What does this new platform for financial planning look like? It is a model where it will be very difficult for anyone other than a CPA, PFS to offer true fee-only, independent and comprehensive planning. The CPA, PFS will be more than a trusted advisor. Rather he or she will be the professional advisor who helps their clients in all areas of their finances. The CPA, PFS will manage their client's other advisors (attorney, investment advisor, insurance person, banker, trust officer, etc) as well as be their advocate. They will educate their clients and bring the knowledge, skills and tools necessary to assist them in making excellent financial decisions. CPAs are recognized as professionals who have the highest ethics and who hold the greatest respect in the financial community. They can truly say, "We have no skin in the game."

Some CPAs don't want to offer financial planning because they perceive financial planning as an "orphan" or have had bad experiences with this discipline. This is a fair assessment since financial planning has traditionally been offered, as stated earlier, as a sales tool or asset gatherer. Perhaps these CPAs have not yet seen how "true fee-only" comprehensive planning is a valuable professional service that can bring true peace of mind, financial order and advocacy to their clients. When they do, they will hopefully want to be a part of this "adopted" profession.

So where is Financial Planning at this moment? It's at the center of Dodd-Frank Wall Street Reform and Consumer Protection Act. You may say it was the credit market meltdown, the return of the bear market or the irrational exuberance of consumers and their blindness to the upward volatility of the market that caused it. I propose it was the actions of practitioners caught in their moral dilemmas that brought about this tempest which affects us all.

The dialogue about the future of the profession needs to be had among CPA practitioners — not Congress or the regulators. One such venue is the Annual AICPA Advanced Personal Financial Planning Conference in Las Vegas January 10th - 12th. The upcoming conference is a great forum to have this discussion.

In addition, an all day pre-conference workshop — Implementing PFP Services in Your Firm: Developing Step-by-Step Plans for Success — is being offered for CPAs who would like to learn how to start a financial planning practice on their own or within their firm. There will be panel of CPA, PFSes available to share their models and discuss what has worked best for them. Plan to attend the PFP Conference in January and learn more about becoming a Personal Financial Specialist (PFS). In three years to five years, this will be the professional designation consumers turn to for independent and objective financial planning. Don't miss this opportunity to re-invent yourself, re-tool your practice and be a knowledge and thought leader in this "new" profession.

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Susan M. Tillery, CPA, PFS, CFP, is president and CEO of Paraklete Financial, Inc.(TM) Tillery has over 28 years of experience in tax, philanthropy and financial planning. Her firm offers "true fee-only" financial planning; there are no products sold and no assets managed.

The AICPA's Personal Financial Planning Section is the premier provider of information, tools, advocacy and guidance for CPAs who specialize in providing estate, tax, retirement, risk management and investment planning advice to individuals and closely held entities. All members of the AICPA are eligible to join the PFP section. Don't miss the Advanced PFP Conference at the Bellagio in Las Vegas Jan. 9-12, 2011 with a robust agenda tackling the latest issues and a special day-long session on implementing PFP in a tax practice. The Personal Financial Specialist (PFS) credential is exclusively available to CPAs who wants to demonstrate their expertise in this subject matter. If you are Series 7, 65 or 66 licensed, you have until 12/31//2010 to use that license as one of the qualifications to obtain the credential. Visit www.aicpa.org/PFP to learn more.

Important Deadline: After 12/31/2010, Series 7, 65 and 66 licenses or CFA can no longer be used to qualify for the PFS. Don't delay!