What it means
A certified public accountant, or CPA, is a licensed accounting professional in the United States. Many CPAs prepare personal tax returns and so already know a client's income, assets and tax position.
The PFS credential recognises those who go further and advise on investing, retirement, insurance and estate planning. To earn the credential, a candidate must hold a valid CPA licence and be an AICPA member in good standing.
They must also show relevant education and work experience in personal financial planning and pass an examination, or hold an accepted equivalent such as the Certified Financial Planner exam. The exact route and hours are set by the AICPA and can change, so the current requirements should be checked on its website.
Holders must keep the credential current by completing continuing education and renewing it on a schedule. They are also bound by the professional standards that apply to CPAs, including rules on ethics and independence.
For clients, this adds a layer of oversight beyond that of a typical financial salesperson. The credential is useful where tax and planning overlap.
A PFS holder can look at how selling a business, taking a pension lump sum or exercising share options affects tax and long-term goals together. That joined-up view is the main selling point compared with advisers who focus only on investments.
The nuance is that the PFS is one credential among many. It does not replace a registration to give investment advice where one is required, and it is available only to CPAs, so an adviser without a CPA licence would hold a different designation.
Clients should ask which credentials a person holds and what each one required.
In practice
Real-world examples.
Example
A CPA who prepares tax returns for 120 families completes the PFS requirements. She now offers retirement and estate planning to the same clients, and describes herself as a CPA/PFS. Clients value having tax and planning advice from one trusted person. She also finds that her tax work becomes more proactive.
Example
A software founder planning to sell his company looks for an advisor who understands both tax and wealth planning. He chooses a CPA with the PFS credential because the sale will have large tax consequences. The advisor models different deal structures and shows him the after-tax result of each. He then uses that analysis in his talks with the buyer.
Example
A mid-sized accounting firm encourages its senior staff to earn the PFS. The firm then markets a personal financial planning service to its existing business owner clients. The service is priced as a separate engagement from the tax work. Senior staff who earn the credential receive a bonus.
Case study
Seen in the real world.
Whitfield and Associates is an illustrative, fictional accounting firm with 400 individual tax clients. The partners noticed that clients asked for help with retirement and investment questions at tax time, and often took the questions elsewhere.
The firm sponsored two of its CPAs to earn the PFS credential. Over two years, 35 clients moved their planning work to the firm, paying an average fee of $4,000 a year, so the new service earned 35 x 4,000 = $140,000 a year.
The partners also found that the planning work improved tax outcomes, because the advisors saw the whole picture. The illustrative lesson is that a credential can open a new line of business when it matches questions clients are already asking. The partners now plan to sponsor two more staff each year, and they track the fees earned by the service against the cost of training.
Watch out
Common mistakes.
- Thinking anyone can earn the PFS, when it is available only to CPAs who meet the AICPA requirements.
- Assuming the credential replaces the registration needed to give investment advice, when separate registration may be required.
- Using old requirements, when the AICPA changes the pathways and details over time.
Questions
People also ask.
Who awards the PFS credential?
It is awarded by the AICPA, the professional body for certified public accountants in the United States.
How is the PFS different from the Certified Financial Planner designation?
The PFS is for CPAs and combines accounting with planning, while the CFP is open to people from many backgrounds and focuses on financial planning.
How do I verify that someone holds it?
The AICPA can confirm whether a person holds the credential and whether it is current, and your state board of accountancy can confirm a CPA licence. It is sensible to ask for both before you hire an advisor. You can also ask the advisor to explain in writing what services the credential covers and how they are paid for them.
From the founder's library
Take it further with the book.
Build your financial confidence beyond this definition. Shihan's full-length guide, Accounting Fundamentals, takes the same plain-English approach and turns it into a complete, practical playbook for non-finance managers, business owners and students - with chapter-end quiz answers and presentation slides included.
25% off with code MMHQ25, applied at checkout. Priced in USD - checkout may show the equivalent in your local currency.
View the book and save 25%Related