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Does a CPA need CFP certification?

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#1
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Hi,

I am a CPA that pretty much only does tax. However, I am more interested in financial planning/tax planning, so I want to build that part of the business.

Is it necessary to get the CFP certification?

A CPA should be able to give planning advice based on the CPA credential, right?

Any thoughts?
 

#2
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Read your state regulations. In NC, ONLY when incidental to tax advice can a CPA sell financial planning services.

Lot's of gray area in that definition but that's our states take away.
 

#3
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Oh, I didn't realize that.

The CPA exam is so much more difficult than what I imagine the CFP exam and requirements are like, so I am surprised.
 

#4
smtcpa  
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If you want to give advice on investments and you find yourself moving past the "incidental advice" threshold (whatever that looks like) you don't need the CFP but you do need securities licenses, likely the Series 65. There is very little on the CPA exam itself (at least when I took it a million years ago) that would provide the basis for providing investment advice, that's why I imagine the licensing is there. The CPA exam does make it a bit easier to achieve the CFP. You can skip some of the educational requirements if you have the CPA.

I think the PFS designation offered by the AICPA may allow you to skip the Series 65, but I am not positive. That could be a road to go down. I went all in and got the Series 65 and registered an RIA at the state level so I can do what you want to do without any issues.

telaxman wrote:Oh, I didn't realize that.

The CPA exam is so much more difficult than what I imagine the CFP exam and requirements are like, so I am surprised.
 

#5
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Thanks for the insight,

How is it working out for you? did you start with tax and then move more towards investment/financial planning?

I have limited experience, but I feel like the CPA credential is worth so much more with clients than just preparing their taxes.
 

#6
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Are you wanting to actually sell the securities/annuities or just be able to advise what they should do?
 

#7
smtcpa  
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This is my second go-around. I started in taxes in 2002. In 2007 or so I hooked up with a broker/dealer. At that time it was all commission-based mutual funds, insurance, and annuities. I never devoted the right amount of time and I did not like the commission-based business model. In 2015 I moved and sold off any investment clients I had. Late last year I had a renewed interest in financial planning for several reasons. 1) To move away from transactional-based tax returns and more into planning, 2) to move away from tax seasons and have steady work through the year, and 3) to make more money. I found myself being asked where clients should put their money, getting asked questions that were personal financial planning in nature, and I knew I had to get back in for my own sanity. I joined XY Planning Network which specializes in fee-only planning, started an RIA, and I am working with my base of tax clients to move them into financial planning. I have two I am working now with and working on several others that have shown interest. I am truly at the beginning of this process. I offer fee-only planning with investment management as an add-on service. I do NOT sell annuities or other commission-based products and do not accept commissions on investments or anything else.

telaxman wrote:Thanks for the insight,

How is it working out for you? did you start with tax and then move more towards investment/financial planning?

I have limited experience, but I feel like the CPA credential is worth so much more with clients than just preparing their taxes.
 

#8
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smtcpa wrote:This is my second go-around. I started in taxes in 2002. In 2007 or so I hooked up with a broker/dealer. At that time it was all commission-based mutual funds, insurance, and annuities. I never devoted the right amount of time and I did not like the commission-based business model. In 2015 I moved and sold off any investment clients I had. Late last year I had a renewed interest in financial planning for several reasons. 1) To move away from transactional-based tax returns and more into planning, 2) to move away from tax seasons and have steady work through the year, and 3) to make more money. I found myself being asked where clients should put their money, getting asked questions that were personal financial planning in nature, and I knew I had to get back in for my own sanity. I joined XY Planning Network which specializes in fee-only planning, started an RIA, and I am working with my base of tax clients to move them into financial planning. I have two I am working now with and working on several others that have shown interest. I am truly at the beginning of this process. I offer fee-only planning with investment management as an add-on service. I do NOT sell annuities or other commission-based products and do not accept commissions on investments or anything else.

telaxman wrote:Thanks for the insight,

How is it working out for you? did you start with tax and then move more towards investment/financial planning?

I have limited experience, but I feel like the CPA credential is worth so much more with clients than just preparing their taxes.


There are some annuities that are based the same as % AUM if you start needing annuities to fit certain clients needs and don’t want to be on a commission. Annuities carry a bas connotation but there are times when they’re the right product for a client and there are some good products, but there is a lot of crap out there as well.
 

#9
smtcpa  
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I did not know that. Great advice, thanks!

TaxMan2020 wrote:There are some annuities that are based the same as % AUM if you start needing annuities to fit certain clients needs and don’t want to be on a commission. Annuities carry a bas connotation but there are times when they’re the right product for a client and there are some good products, but there is a lot of crap out there as well.
 

#10
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smtcpa wrote:This is my second go-around. I started in taxes in 2002. In 2007 or so I hooked up with a broker/dealer. At that time it was all commission-based mutual funds, insurance, and annuities. I never devoted the right amount of time and I did not like the commission-based business model. In 2015 I moved and sold off any investment clients I had. Late last year I had a renewed interest in financial planning for several reasons. 1) To move away from transactional-based tax returns and more into planning, 2) to move away from tax seasons and have steady work through the year, and 3) to make more money. I found myself being asked where clients should put their money, getting asked questions that were personal financial planning in nature, and I knew I had to get back in for my own sanity. I joined XY Planning Network which specializes in fee-only planning, started an RIA, and I am working with my base of tax clients to move them into financial planning. I have two I am working now with and working on several others that have shown interest. I am truly at the beginning of this process. I offer fee-only planning with investment management as an add-on service. I do NOT sell annuities or other commission-based products and do not accept commissions on investments or anything else.

telaxman wrote:Thanks for the insight,

How is it working out for you? did you start with tax and then move more towards investment/financial planning?

I have limited experience, but I feel like the CPA credential is worth so much more with clients than just preparing their taxes.


LOVE IT!!!!
 

#11
Preppie  
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I am not a CPA. I am an EA with a tax business. I am also a CFP® Professional with an RIA.
Just want to put in another plug for XY Planning Network. I, too, am a member. It's a great association/network. Check it out!
 

#12
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Preppie wrote:I am not a CPA. I am an EA with a tax business. I am also a CFP® Professional with an RIA.
Just want to put in another plug for XY Planning Network. I, too, am a member. It's a great association/network. Check it out!


I will check it out, thanks!

Also, on a side note. Does anyone have any recommendations for good books to read regarding tax planning or financial planning?
 

#13
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TaxMan2020 wrote:Are you wanting to actually sell the securities/annuities or just be able to advise what they should do?


At this point just advise what they should do.

I get the feeling that a lot of my client's financial advisors just tell them their take on the market, perhaps what percentage of bonds they should have etc... but don't really get very big picture.

For instance, in my opinion to make good investment decisions before you do anything else you should be taking a good look at the clients tax return. And, I don't think that is happening much, at least for my clients.

I get clients asking me for advice, so I feel like there is a pretty good opportunity to bill for tax planning/financial planning type services.
 

#14
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telaxman wrote:
TaxMan2020 wrote:Are you wanting to actually sell the securities/annuities or just be able to advise what they should do?


At this point just advise what they should do.

I get the feeling that a lot of my client's financial advisors just tell them their take on the market, perhaps what percentage of bonds they should have etc... but don't really get very big picture.

For instance, in my opinion to make good investment decisions before you do anything else you should be taking a good look at the clients tax return. And, I don't think that is happening much, at least for my clients.

I get clients asking me for advice, so I feel like there is a pretty good opportunity to bill for tax planning/financial planning type services.


In my state that would be a series 65 to be able to do that, legally
 

#15
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Preppie wrote:I am not a CPA. I am an EA with a tax business. I am also a CFP® Professional with an RIA.
Just want to put in another plug for XY Planning Network. I, too, am a member. It's a great association/network. Check it out!


What is the benefit of XY????

They provide you with???
 

#16
smtcpa  
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For me, they handled all of the compliance work including setting up and registering the RIA with the state, initial compliance handbook, the client agreement, etc. They also provide a lot of training as well as software (wealthbox CRM, Right Capital, compliance software, AdvicePay, etc) included in their subscription. It is great for starting out. Maybe in a few years, the value won't be worth the monthly fees but, for now, it got me up and going very quickly.

southparkcpa wrote:
Preppie wrote:I am not a CPA. I am an EA with a tax business. I am also a CFP® Professional with an RIA.
Just want to put in another plug for XY Planning Network. I, too, am a member. It's a great association/network. Check it out!


What is the benefit of XY????

They provide you with???
 

#17
Beagle  
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Any investment firm will help you set up your RIA or let you link in with one they have depending on your choice. Charles Schwab is pretty huge in that sort of thing for independent RIA offices and Fidelity is big also. You can go with a local firm very easily who will let you just slide in under their platform for a fee. I work with a local firm who takes 10% of my investment related revenue and I reimburse them for any fees they incur on my behalf (my license fee, some insurance). You want to be in one of the major clearing firms because it makes ACAT transfers easy and quick. Having a firm you work with also helps because they'll help solve problems as they come up. They may also get you significant discounts on quote services, planning software, research, marketing material and such.
 

#18
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smtcpa wrote:For me, they handled all of the compliance work including setting up and registering the RIA with the state, initial compliance handbook, the client agreement, etc. They also provide a lot of training as well as software (wealthbox CRM, Right Capital, compliance software, AdvicePay, etc) included in their subscription. It is great for starting out. Maybe in a few years, the value won't be worth the monthly fees but, for now, it got me up and going very quickly.

southparkcpa wrote:
Preppie wrote:I am not a CPA. I am an EA with a tax business. I am also a CFP® Professional with an RIA.
Just want to put in another plug for XY Planning Network. I, too, am a member. It's a great association/network. Check it out!


What is the benefit of XY????

They provide you with???

I would also add that it provides a service similar to this forum. When you run into unusual situations - and you will - it's nice to have a community of colleagues to ask.
 

#19
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Beagle wrote:Any investment firm will help you set up your RIA or let you link in with one they have depending on your choice. Charles Schwab is pretty huge in that sort of thing for independent RIA offices and Fidelity is big also. You can go with a local firm very easily who will let you just slide in under their platform for a fee. I work with a local firm who takes 10% of my investment related revenue and I reimburse them for any fees they incur on my behalf (my license fee, some insurance). You want to be in one of the major clearing firms because it makes ACAT transfers easy and quick. Having a firm you work with also helps because they'll help solve problems as they come up. They may also get you significant discounts on quote services, planning software, research, marketing material and such.


We do the same. They take 10% and handle a lot of the headaches
 

#20
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TaxMan2020 wrote:
Beagle wrote:Any investment firm will help you set up your RIA or let you link in with one they have depending on your choice. Charles Schwab is pretty huge in that sort of thing for independent RIA offices and Fidelity is big also. You can go with a local firm very easily who will let you just slide in under their platform for a fee. I work with a local firm who takes 10% of my investment related revenue and I reimburse them for any fees they incur on my behalf (my license fee, some insurance). You want to be in one of the major clearing firms because it makes ACAT transfers easy and quick. Having a firm you work with also helps because they'll help solve problems as they come up. They may also get you significant discounts on quote services, planning software, research, marketing material and such.


We do the same. They take 10% and handle a lot of the headaches


This is what I did. I joined a "hybrid" RIA here in Charlotte. I pay them a flat fee NOT a percent. I am 95 percent fee only. They are the RIA. I pay them a fee each month and they do all the compliance etc. My goal was to get X dollars under management and I did that so my FP revenue is now 3K greater than the accounting revenue and I have dropped all tax clients with no assets under management.

I have a deal to "transition" my practice to the RIA for a 7 figure deal when I retire which will be in the next few years. This FP gig works well if done right.
 

#21
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southparkcpa wrote:
TaxMan2020 wrote:
Beagle wrote:Any investment firm will help you set up your RIA or let you link in with one they have depending on your choice. Charles Schwab is pretty huge in that sort of thing for independent RIA offices and Fidelity is big also. You can go with a local firm very easily who will let you just slide in under their platform for a fee. I work with a local firm who takes 10% of my investment related revenue and I reimburse them for any fees they incur on my behalf (my license fee, some insurance). You want to be in one of the major clearing firms because it makes ACAT transfers easy and quick. Having a firm you work with also helps because they'll help solve problems as they come up. They may also get you significant discounts on quote services, planning software, research, marketing material and such.


We do the same. They take 10% and handle a lot of the headaches


This is what I did. I joined a "hybrid" RIA here in Charlotte. I pay them a flat fee NOT a percent. I am 95 percent fee only. They are the RIA. I pay them a fee each month and they do all the compliance etc. My goal was to get X dollars under management and I did that so my FP revenue is now 3K greater than the accounting revenue and I have dropped all tax clients with no assets under management.

I have a deal to "transition" my practice to the RIA for a 7 figure deal when I retire which will be in the next few years. This FP gig works well if done right.

What was your growth like on the FP side?
 

#22
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Taxman... Not sure why I can't respond directly... BUT

I was stuck at 20 MIL forever. In 2015 I joined a hybrid LPL RIA and rebranded myself. Hit 50 MIL by 2019 or so.
 

#23
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southparkcpa wrote:Taxman... Not sure why I can't respond directly... BUT

I was stuck at 20 MIL forever. In 2015 I joined a hybrid LPL RIA and rebranded myself. Hit 50 MIL by 2019 or so.


How’d you rebrand? That’s a good jump in that time frame
 

#24
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TaxMan2020 wrote:
southparkcpa wrote:Taxman... Not sure why I can't respond directly... BUT

I was stuck at 20 MIL forever. In 2015 I joined a hybrid LPL RIA and rebranded myself. Hit 50 MIL by 2019 or so.


How’d you rebrand? That’s a good jump in that time frame


I literally stopped doing tax work for non asset clients. Created a foldout 4 color brochure talking about the advantages of using a CFP/CPA on distribution planning etc. Put it in each client tax folder from 2015 to 2019 when we had a paper deliverable. Honestly, confidence and the way I carried myself as well.

I stopped doing almost anything accounting related, got rid of my CPA website and created a CFP website. Sent out an E mail blast 2-3 times a year so people would think of me as the financial planner that does taxes and NOT the reverse.

If a client had 750K with me, all 1040 work was free. Many times a client had 300 to 400 in an IRA at another RIA. I offered them free 1040 tax work to roll it to me and I would invest it exactly like I was invested. I use models for myself and clients.

300K at 1 percent was 4 times his tax prep fee. So I now do about 50 tax returns free..... but each of those clients, on average brings in 4-8K in AUM fees.
 

#25
smtcpa  
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This is great stuff. For me, in my first attempt, people thought of me as the tax guy dabbling in financial planning. That does not work. Totally agree that the focus has to change to what you said: a financial planner who does taxes.
Thanks for your perspectives!

southparkcpa wrote:
I stopped doing almost anything accounting related, got rid of my CPA website and created a CFP website. Sent out an E mail blast 2-3 times a year so people would think of me as the financial planner that does taxes and NOT the reverse.

 

#26
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southparkcpa wrote:
If a client had 750K with me, all 1040 work was free. Many times a client had 300 to 400 in an IRA at another RIA. I offered them free 1040 tax work to roll it to me and I would invest it exactly like I was invested. I use models for myself and clients.


My dollar figure is less than 750k but it's exactly how we've done things. I only do accounting for 1 client and that's minimal.

One thing I noticed immediately, once a client has taxes and investments they never leave. In 15+ years I haven't lost a single client I didn't force out. When the hot salesman broker / rep calls with ideas wanting assets moved, clients don't fall for it because the work of finding a new tax person is substantial. I've been in investments since 1992, EA since 2005. Most of the other advisors had me doing their client's taxes also so I have a relationship as strong as the advisor.
 

#27
MilesR  
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In CA at least, it seems that a PFS would also qualify to get an RIA and it seems pretty similar to a CFP (maybe someone feels strongly that one is better than the other?). Getting a PFS, although requiring a CPA license, seems to require less hours/experience in financial planning, but how does a CPA practicing tax get this required experience in financial planning?
 


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