PFS (Personal Financial Specialist) is the financial planning specialty credential issued by the American Institute of Certified Public Accountants (AICPA) exclusively to qualified CPAs with proven expertise and experience in comprehensive personal financial planning. With a membership of over 330,000, the AICPA is the premier professional association for CPAs in the U.S. In order to obtain the PFS Credential, one must be a member of the AICPA and be in good standing.
How do CPAs qualify for the PFS Credential?
To obtain a PFS, CPAs must prove their broad-based knowledge and business experience in core areas: estate planning, investment planning, the personal financial planning process, personal income tax planning, retirement planning and risk management planning. In addition to experience and education requirements, they must also pass an intensive qualifying examination and commit to life-long learning requirements. This is the AICPA’s effort to ensure that clients’ needs are more fully met through an integrated, holistic approach.
What are other reasons I should hire a CPA who holds a PFS Credential?
Studies by independent groups have repeatedly shown that CPAs are among the most trusted advisors to the public. As such, CPAs have built a reputation over the last 100 years as a profession that provides competent, ethical and trustworthy advice. Personal financial planning is a core competency for CPAs, and PFS is the only personal financial planning credential that is specifically designed for CPAs and the unique perspective we bring to the practice.
How can I be assured that you are serving my best interests?
CPAs adhere to the AICPA’s strict code of professional conduct and ethics. In addition, PFS Credential holders follow the AICPA’s Statements on Responsibilities (SORs) in Personal Financial Planning. These SORs describe specific planning procedures as well as guidelines for developing plans and communicating advice to clients. As a PFS Credential holder, I follow these guidelines when working with my clients and other advisors such as bankers and attorneys.
How are your fees computed?
The primary source of fees for services that I provide is based on a percentage of “assets under management”. Assets under management consist of the financial assets for which clients give me the opportunity (delegate fiduciary responsibility) to help them manage. We use TD Ameritrade Institutional Services as the custodian for clients’ accounts. Therefore, assets under management consist of the account balances (for which I serve as the Registered Investment Advisor) in the clients’ accounts at TD Ameritrade. Although other account balances which are not available to be transferred to TD Ameritrade, such as 401(K) accounts and annuities, are certainly included in the comprehensive financial plan these balances are not considered to be assets under management. My related fee is determined by a percentage per year of the assets under management as follows:
Up to $500,000 = 1%
From $500,000 to $1,000,000 = .75%
Over $1,000,000 = .50%
I ask to be compensated on a quarterly basis. Therefore, the fee is actually computed at one-fourth of the above percentages per quarter. For example, the fee for $400,000 of assets under management would be $1,000 per quarter. Our arrangement is to have the fees taken from the TD Ameritrade client account balance each quarter. Most fee-only advisors that I am aware of ask to be compensated in advance. However, I ask to be compensated after the quarter ends. At the end of each calendar quarter, we simply determine the value of each account and then determine the related fee based on the above percentages. The fee is prorated for assets deposited or withdrawn during a quarter. (Therefore, my motivation is to make my clients’ accounts grow rather than simply to make transactions.) The 1% fee includes basic financial planning which I feel is required to make intelligent decisions regarding the investment management. I encourage my clients to meet with me on a quarterly basis, or as needed, and this meeting is included in the above fee. I send each client quarterly reports (or as needed) and an invoice indicating the computation of the fee.
I also charge an hourly fee for other additional services that are requested by my clients. For example some of my clients request that I prepare their income tax returns. And I am occasionally asked to provide other services in addition to the basic financial planning and investment management, such as comprehensive life insurance analysis, estate planning, business planning, etc. My hourly fee for these services is $110.
Thank you again for considering our services.