The practice of personal financial planning encompasses managing investments, insurance, retirement and estate planning. Each of these components of a family’s wealth can have significant tax implications and must be handled by a knowledgeable financial advisor.
The American Institute of Certified Public Accountants (AICPA) created the Personal Financial Specialist (PFS) credential to ensure that certified advisors are qualified to manage these assets.
What Is a Personal Financial Specialist™?
A personal financial specialist holding the PFS credential is a certified public accountant who has experience and training in financial planning. Candidates seeking the credential must have actual work experience in at least one financial planning practice area before they can attain the PFS credential.
The CPA/PFS Body of Knowledge
- Personal Financial Planning Process
- Professional Responsibilities, Legislative & Regulatory Environment
- Fundamental Financial Planning Concepts
- Estate Planning
- Charitable Planning
- Risk Management Planning
- Employee and Business-Owner
- Investment Planning
- Retirement & Financial Independence Planning
- Elder, Special Needs & Chronic Illness Planning
- Education Planning
- Special Situations
According to the AICPA, the credentialed body of knowledge “has been developed through regular feedback from practitioners to provide a framework of the knowledge that personal financial service practitioners should possess.”
Becoming a Personal Financial Specialist
- Obtain a CPA license
- To obtain the PFS credential you must be a licensed CPA. The credential is not available to practitioners from any other profession.
- Be a current member of the AICPA
- In addition to being a licensed CPA, you must also be a current member of the AICPA in good standing.
- Complete mandatory coursework
- The coursework necessary to qualify for the PFS credential includes 75 hours of financial planning education in any of the Body of Knowledge categories and can be completed up to five years before you apply for the credential. This requirement can be satisfied in a number of ways, including through professional development and approved university courses and completion of all five financial planning certificate programs offered by the AICPA.
- Have practical work experience
- You must have at least 3,000 hours of work experience in one or more of the 12 core Body of Knowledge categories.
- Pass a qualifying exam
- The PFS exam is a computer-based test offered twice a year. It is made up of 160 multiple-choice questions, roughly half of which are based on specific case studies. The case studies vary in length and are designed to test your analytical reasoning skills and ability to apply financial planning theory and methodology in a comprehensive manner.
There are five significant requirements to earn the PFS credential. They are:
In addition to professional development and college-level courses, you can also present lectures or author papers on financial planning topics to satisfy the 75 hours of coursework required for the credential.
Candidates who have completed the AICPA’s five financial planning certificate programs can waive the PFS qualifying exam. So, too, can candidates who possess the CFP® credential or have the ChFC designation. CPAs who are also chartered financial analysts must still sit for the PFS qualifying exam.
What’s the Difference Between a PFS™ and a CFP®?
The Personal Financial Specialist and Certified Financial Planner™ credentials represent two different approaches to personal financial planning.
A personal financial specialist approaches the craft from an income tax perspective. The AICPA’s stated view is that every financial planning decision has a tax implication. Since all PFS holders must first be CPAs, they have unique insight into tax matters.
Certified Financial Planners™ view financial planning as a holistic roadmap that includes 72 distinct areas of potential opportunity or focus, none of which should be of greater importance than another. This comprehensive view seeks to optimize the client’s total financial resources.
With the exception of these subtle differences, there are few matters that separate a personal financial specialist from a Certified Financial Planner™. Both seek to deliver client-centered advice with a standard of care that puts the client’s interest first. All professional certification holders must adhere to a set of ethical standards that would put their livelihood at jeopardy if violated.
More importantly, the two designations are not mutually exclusive. One may be both a CPA/PFS and a CFP®. In fact, many of the most experienced and respected financial advisors hold more than one educational degree, license, and professional certification.
The Bottom Line on the PFS™ Credential
It makes sense for CPAs seeking to expand their practice into personal financial planning to attain the PFS credential. It demonstrates a dedication to the profession because of the time and effort it takes to earn it.
Because the PFS certification can only be earned by licensed CPAs, it provides a truly distinguishing credential that many other financial advisors cannot claim.
The PFS credential does not preclude a financial advisor from obtaining other professional certifications, so attaining it can only increase a financial advisor’s professional esteem and marketability.