Certified public accountants have long acted as teammates of financial advisors. But will they expand their services so much that they start competing instead?
The CPA exam now, for the first time, includes a significant section on financial planning; almost two out of every five questions in the “Tax Compliance and Planning” section of the test deals with the subject. The American Institute of Certified Public Accountants (AICPA) says that including personal financial planning in the exam encourages college and high school students to consider it as a career option that hasn’t generally been known until now.
“At a time when the profession has struggled with a declining number of candidates, this opens up new and exciting career possibilities,” said Daniel F. Rahill, a wealth strategist with Wintrust Wealth Management in Chicago who is both a longtime CPA and financial planner. “Adding a financial planning section to the CPA exam is just further evidence of the evolution of CPAs [providing] a holistic financial services package.”
Offered initially as a sales add-on by some CPA firms about 50 years ago, financial planning has evolved into a structured offering from many accounting and tax firms as clients have requested it. The AICPA, which often stresses that accounting must constantly reinvent itself, calls individual income tax planning “an integral part of personal financial planning” and part of the technical knowledge that a CPA financial planner should know.
“Many CPA practices, including several national firms, have RIA subsidiaries,” Rahill added. Moreover, many of the advisory profession's leading practitioners got their start in the accounting world and found the emerging practice of financial planning to be more interesting and challenging.
Tax-efficient investing has ranked high among investor desires in recent surveys, and more wealthy people seem to think tax and investing specialists should be one and the same. The AICPA says that in one of its surveys, two out of three participants sought advice from a CPA on tax and financial planning topics, and “financial planner” was the term that three out of four respondents used when describing the professional that provides these services.
People’s financial circumstances are changing just as tax regulations are. According to Matthew Goodwin, a CPA, director and family wealth services practice leader at the Seattle office of CBIZ MHM, personal financial planning is more and more “a service that clients are coming to expect from their CPA firm.” At the least, he said, CPAs are expected to have a “holistic and working knowledge in this area.”
“CPAs having a broader knowledge of personal financial planning will help augment existing plans for clients,” Goodwin said. “For example, planning for the changing estate and gift exemption amount at the end of 2025 is an area that’s top of mind right now for our clients.”
“CPAs can provide a significant advantage in financial planning by offering an integrated approach to their clients’ needs,” added Miklos Ringbauer, CPA and founder of MiklosCPA in Los Angeles.
New opportunities for CPAs will bring new accountability: The U.S. Department of Labor’s new Retirement Security Rule, for instance, could create obligations for CPAs who routinely give clients certain investment advice.
Could and should tax questions show up more on tests for CFP and other financial planner designations? The Certified Financial Planner Board of Standards has said that candidates for CFP certification should understand the tax implications of their financial advice.
“Many wealth managers and RIA firms are adding CPAs or CFPs that have experience with income tax planning, estate planning and business transition planning,” Goodwin said. “Financial planners know that taxes can be one of the biggest sources of wealth leakage for clients, so they’re sharpening the focus in this area.”
Regardless of professional organizations’ recommendations, should financial planners increase their tax knowledge to stay competitive with CPAs?
“It wouldn’t hurt,” Rahill said. “Helping clients implement tax planning ideas and running tax projections as part of their financial plans would be a big benefit to clients. While becoming a paid tax preparer may take [advisors’] practice expansion too far, teaming with a good tax CPA on client engagements can add a ton of value.”