Editor: Theodore J. Sarenski, CPA/PFS
CPAs hold a heralded and honored position within the business community: They are the trusted advisers to their clients. With such a position comes tremendous responsibility. Too often, they work with clients to develop a "how" solution to those clients' needs. This column proposes that the profession transition to an approach of "why" when delivering advice regarding clients' financial well-being.A new conversation
Many clients seek out specific advice on acquiring and selling businesses, taxation on receipt of certain employee benefits, and planning for the transition of their estates to heirs and charities. One of the most powerful conversations you can hold with your clients is discussing qualitative matters in addition to quantitative ones. For example, one of the author's wealthy clients recently asked for an opinion on estate distribution options. After a detailed discussion of "why" he desired certain outcomes with the plan, he quickly realized that his initial approach had been concerned with the "how." He was intrigued that his adviser would ask such a unique question.
Had he considered only the quantitative aspects of his estate, he would have failed to recognize his charitable intentions and the meaning behind the gifts he would convey through his estate. His wife had predeceased him after a significant battle with cancer. To help other families who may need assistance to aid a loved one fighting cancer, he wanted to establish a means of support. The firm discussed the options and determined that his "why" would be served well with a charitable foundation named in honor of his wife. At this point in the discussion, this rugged, tough man began weeping. When asked if the advice rendered had caused him some unexpected pain by questioning his approach to the goal, he smiled through the tears and said, "This is my family's legacy, and I clearly understand why we must make this happen for others."
Simon Sinek's best-selling book Start With Why provides an excellent thesis on the implementation of the most important determinant when initiating a decision. When you start asking your clients "why" they wish to execute a certain plan, you will quickly see a different side of the conversation unfold. The author's clients have responded to this approach in a positive and rewarding manner. When you discover, as the trusted adviser, that your clients are far more worried about the qualitative challenges in life than the quantitative ones, you will deepen your relationships and receive a greater reward for your contribution to the process.
What is holding you back from coaching your clients to reach new pinnacles of success in their life? It is critical that financial planners fully grasp the client as a multidimensional person — not just a financial statement. This column explores the offering of additional, value-added services you may consider that will help guide your clients to a happier life.Integrating your tax practice with comprehensive financial planning services
As tax advisers, CPAs are trained to provide their clients with interpretation, utilization, and reporting of the tax laws. Each client possesses a unique set of circumstances and facts that may require significant analysis and research to achieve an acceptable and/or desired outcome. However, during the discussion of the client's circumstances, the CPA may discover other areas of life that are not strictly tax matters. The adviser is presented with an opportunity to broaden the relationship by discussing critical areas of cash flow, estate, education funding, investments, and retirement planning, along with the intended tax planning requested by the client.
The clients of the author's firm have commented on the comprehensive nature of these services and appreciate that the firm is "not simply focused on my money." To properly implement financial planning services, a CPA must be competent in the field. One of the best methods of receiving the training in personal financial planning empowering you to provide ethically compliant services is the AICPA PFP certificate program that leads to the CPA/PFS (Personal Financial Specialist) credential. The PFS Credential Committee authors the PFP Body of Knowledge, which was recently updated and is available for free download at www.aicpa.org. The certificate program's courses offer excellent guidance and examples on the process of implementing PFP services within an ethical framework.
To efficiently and ethically offer PFP services, consider that many of you, in the past, have been doing so unknowingly. Tax planning is a component of PFP and naturally creates opportunities for broader conversations on other personal finance topics. Taxes are an integral part of life, but there is much more to consider when providing a comprehensive solution to the daily challenges clients face. In many client meetings, the author's firm uncovers underlying concerns that are not evident from initial conversations. In a recent meeting discussing a client's retirement plans, the conversation shifted to a more important topic for the client — the birth of a special-needs grandchild. By watching the client's facial expressions and body language, it was easy to discern the obvious concern for the grandchild.
If the meeting had focused only on the financial aspects of this client's retirement, the client's most important concern would have been overlooked. After a lengthy discussion of the planning and purposes of a special-needs trust, the client was smiling and said that the firm's advice had given him and his wife hope. This is the "why" in providing services to clients that seek solutions to life's monumental challenges.Understanding what life planning is and is not
One goal of this column is to pique curiosity and prompt action. Life planning is a misunderstood yet rewarding area of service by many CPAs. Life planning should be practiced with the sense of seeking greater happiness in clients' lives. It is difficult to quantify happiness on a scale or measure the changes in happiness with a number. Complexities in some client situations would benefit from a professional life planner. However, you are probably more capable than you think when it comes to recognizing your clients' happiness with life, your services, etc.
As previously mentioned, the author's firm began using a "why" approach with its clients many years ago. The transformation in clients' referrals — both in quantity and quality — was remarkable. Most people seek a means from their wealth, not an end. Wealth is only a tool that allows freedom to those who possess it. It provides freedom to choose where you live, what you drive, whom you wish to benefit, etc. Assisting clients in recognizing and taking advantage of these freedoms is one of the most rewarding aspects of practice.
Life planning is educating and coaching clients to realize their ultimate goals in life in conjunction with their financial goals. One of the most difficult conversations to have with clients is about their lack of joy in life. Some clients are very wealthy from a material perspective but lack joy in the other aspects of their lives. Assisting these individuals with goals in all areas of life, and a method of accountability, can bring about positive changes in clients' demeanor, approach to their businesses, charitable aspirations, and overall pleasure in life.
Before offering other planning, the firm researched and attended courses to help gain competence and understanding about the integration of life planning and financial planning. There is always something new to learn and continue improving about sociological issues and integration of the various aspects of one's life.
The market is asking for these services. CPAs are competent advisers and must evolve as the market demands. Traditional financial planning services will continue, but life planning will be demanded as a component to the financial planning you currently provide your clients. When the author's firm first began to offer life planning, it actually happened by accident. A client confided in the author that she was seeking a divorce. It seemed from prior meetings that this couple had a robust and happy marriage. When she began describing her life and the lack of joy she was experiencing, it was a time to simply take notes and listen. She finished explaining her situation and asked if we knew anyone who could help her set life goals, not financial goals. Due to the closeness of the relationship with this client, we asked if she would allow us to help her find solutions to her concerns. When she stated that she preferred that we help her, due to the intimate and private nature of the situation, the firm had its first life planning client.
Life planning is not giving the answers to your clients' qualitative concerns but rather coaching them in the discovery of their own solution. In the previous example of the client seeking a divorce, simply communicating and asking questions that directed her path to finding the solution was the firm's role. Of course, the firm provided a plan for the evolution of her current situation to the desired outcome including financial projections and investment analysis.Implementing life and financial planning services
The journey of a thousand miles starts with the first step. Review your current tax client list and identify a few who may be candidates for life planning services. Ask them to schedule a complimentary appointment in which to review their current tax concerns and provide additional thoughts about their future.
Ask questions that align with the Socratic approach. Take copious notes and inform the client that you will perform some research and want to share the results with him or her in the next meeting. Between meetings, the critical work must be performed. The author's firm enhances its proprietary schedules and graphs with software such as MoneyGuidePro. When presenting findings and recommendations to proceed in the process of life planning, the firm makes extensive use of demonstrative aids such as graphs rather than spreadsheets and schedules to communicate with clients.
Once clients understand the ultimate goals to be attained, next begins the process of coaching and leading them to the result. As retirement planning specialists, the firm has experienced challenging situations that required excellent listening skills in addition to analytical mastery. The process of life planning for specific areas of life, such as charitable foundations, retirement planning, and education funding, requires a deep knowledge of tax laws coupled with a creative mindset to deliver clients' dreams in a tangible manner.
Growing your skills and expanding your excellence by offering life planning and personal financial planning services will provide you the most rewarding benefits of your career — the opportunity to literally change someone's life in a positive manner.
Resources for life planning and PFP professionals
- Essentials of Personal Financial Planning, by Tom Tillery and Susan Tillery, CPE self-study course, AICPA.
- Kinder Institute of Life Planning.
- MoneyGuidePro software by Envestnet.
- Personal Financial Specialist (PFS) Credential, AICPA PFP Credential Committee.
|Jimmy J. Williams, CPA/PFS, CFP, M.Tax., is president and CEO of Compass Capital Management LLC in McAlester, Okla. Theodore J. Sarenski, CPA/PFS, is a wealth manager at Capital One/United Income in Syracuse, N.Y. Mr. Sarenski is chairman of the AICPA Advanced Personal Financial Planning Conference. He is also a past chairman of the AICPA Personal Financial Planning Executive Committee and a former member of the Tax Literacy Commission. For more information about this column, contact firstname.lastname@example.org.