Close-up: Personal Financial Specialist

Physician's Money DigestNovember 2005
Volume 12
Issue 15


Personal Financial Specialist: A certified public accountant whoalso offers financial planning services.

The value of a financial plannercannot be understated.Many individualsare convincedthat they don't needa financial plannerand that they cando their own researchand maketheir own decisionsregardingthe best way toinvest their money.For some people, thatmight be true. Most of us,however, are not well versed inboth the legal and financial consequencesof handling our own finances.

Enter the financial planner—or, in this case, the personalfinancial specialist (PFS). PFS accreditation is issuedexclusively to certified public accountants (CPAs) holdinga valid CPA license. To achieve the PFS designation, a CPAmust complete an exam, have at least 3 years of financialplanning experience, and submit recommendations beforethey can be certified. In addition, accreditation must berecertified every 3 years to make sure the specialist continuesto meet the strictest accreditation requirements.

Picking the Right PFS

Not all financial planners are created equal. TheAmerican Institute of Certified Public Accountants pointsout that when you decide to put your financial trust insomeone, you want an advisor who can help sort throughcomplex financial decisions and develop sound strategiesthat can help you achieve a secure financial future.

At present, approximately 3300 professionals hold theCPA/PFS designation. A CPA/PFS must be able to assessyour current financial situation, help you determine yourfinancial goals, and help you monitor a plan to attainthem. The CPA/PFS candidate must demonstrate all ofthese attributes before they can be certified. According toan article on the Lifetime Planning Concepts Web site(, the specialist musthave provided financial planning services for at least 250hours in each of the 3 years prior to taking the PFS exam.

Working with a CPA/PFS also can give physician-investorsthe best of all financial worlds. John Bogle, thefounder of the Vanguard Group, speaks highly of the dualdesignation. "As personally impressed as I am with thework and study that go into earning the accounting certificate,I am also impressed with the integrity that is the hallmarkof the designation embodied in those three magicletters: CPA," Bogle writes in the Web site article. "Whenyou add those other three letters—PFS—to that imprimatur,you convey your extensive training and broad experiencein at least six different areas of financial planning,professional credentials that you validate with recertificationevery 3 years."

Payment Plans

According to an article on Web site, decidinghow to pay for the personalfinancial planningservices you receive isthe first, and mostimportant, decision youwill need to make whenselecting a financial advisor,whether you select aCPA/PFS or not. The twooptions are usually a fee-basedservice or commission.

Fee-based service means thatyou pay your advisor for their time andservices provided. It is an approach that hasgained significant professional acceptance over the past 2decades because it enables the planner to be truly independentand free to make the best possible recommendations. Thething to check in fee-based arrangements is whether you willbe charged an hourly rate, a flat rate, or a percentage of yourassets or income. The difference can be dramatic, dependingon your financial status and income level.

Commissions Received

With commission-based arrangements, advisors earntheir income when their clients implement various aspectsof their plan, such as purchasing an insurance policy orinvesting in a loaded mutual fund. As a result, commission-based planners do not get paid for their work unlesstheir clients follow through with their recommendations.Fee-based planners are paid whether their clients decideto follow their advice or not.

Regardless of the method of payment, you want tomake certain that the financial advisor you work with is abona fide expert. Adding a PFS designation to the CPA titlecan help ensure that you're working with one of thebest.

Choosing a Financial Planner

Deciding with whom you want to entrust yourfinancial future is not a decision to be taken lightly.Care and caution are essential. Some key questionsto ask of a prospective advisor include the following:

  • What are the advisor's qualifications? Individualsare allowed to use the term "financial planner" even if they hold no particular designation,such as CPA/PFS or Certified Financial Planner™practitioner. Make sure you ask about what specificcertifications the candidate has.
  • Does the financial planner represent theinvestment products of one company or many?When you shop for a car or major appliance, it'snice to have choices. Is your financial plannerlicensed to sell securities and stocks? Do they sellproducts or simply provide advice?
  • Does the advisor work alone or with otherprofessionals? Working alone is not necessarily abad thing. However, when building a financialteam, it's nice to know that your financial plannercan reach out to other professionals—such asattorneys, insurance agents, and estate planners—as needs arise.

Before you decide on working with a financialplanner, contact one of the following groups tomake sure you are dealing with a reputable professional:Certified Financial Planner Board ofStandards (888-237-6275); North AmericanSecurities Administrators Association (202-737-0900); National Association of InsuranceCommissioners (816-842-3600); or the NationalAssociation of Securities Dealers (800-289-9999).


1) PFS accreditation is issued exclusively to

  1. CPAs
  2. CFPs
  3. MBAs
  4. DDSs

2) How many years of financial planning experience areneeded for the PFS designation?

  1. 1
  2. 2
  3. 3
  4. 5

3) Fee-based planners are paid only when you implementtheir plan. True or false?

  1. True
  2. False

4) Fee-based arrangements can be based on

  1. An hourly rate
  2. A flat rate
  3. A percentage of your assets and/or income
  4. All of the above

5) Approximately how many professionals currently holdthe CPA/PFS designation?

  1. 2300
  2. 3300
  3. 4300
  4. More than 5000

Answers: 1) a; 2) c; 3) b; 4) d; 5) b.

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