I was asked recently whether I thought CPAs were really getting into financial planning more than ever. The answer, at least as far as I am concerned, is a resounding Yes!

I strongly believe that the area of CPAs and financial planning will explode upwards within the next 18 months to two years, no matter what you may hear to the contrary. I say this with the utmost confidence having been in this business for some 44 years and knowing many of the top financial planners and CPAs in this country, as well as abroad.

Consider the following:

  • Americans lead the world in preparing for retirement, so says a brand new survey issued by AXA. Nearly 85 percent of working Americans have already started planning for retirement.
  • Most Americans are concerned about the source of income in retirement, as 92 percent believe our current Social Security program is in some degree of trouble.
  • Retirement is becoming a reality for a rapidly increasing number of Americans and they are therefore, turning to "experts" in the field to help get them on the right track.
  • The Baby Boomers are now hitting retirement age and as a result, are looking to more financial planners and financial services advisors to steer them correctly.
  • Behind them are the Barely Boomers (ages 40 to 45) and who, according to financial gurus in the field, have even more sophisticated financial needs than their older siblings.
  • A higher percentage of Boomers are choosing accountants, financial planners, and investment managers as their primary advisors. Many CPA firms have set up separate entities known as a financial advisor services firm to handle this. One accounting group in Pennsylvania and Ohio is a prime example, having started out in the tax and audit area and then setting up a separate financial planning entity which now has $1 billion (that's with a "b") assets under management.
  • The Financial Planning Association used to have a Board of Directors consisting solely of CFP (certified financial planners). Nowadays, CPAs have infiltrated that board.
  • Much of the tax work is being farmed overseas. This is being done not only by the large firms but also by the medium sized ones, as well. Only the storefront sole proprietors are handling 1040s by themselves. (See Thomas Friedman's new book The World is Flat)
  • Consequently, many CPAs are now looking for other niches and financial planning has become the hottest one. The AICPA says that financial planning is the fastest growing niche for CPAs and last year saw a 20 percent increase in CPAs turning to financial planning services. In fact, the Institute has issued some 3,300 members with the PFS (personal financial specialist) credential.
  • Many tax and accounting CPAs are looking toward cross-selling into financial planning and financial services, and most have moved to fee-based arrangements. Keep in mind that financial planners are spinning out people of retirement age for another 25-30 years as more and more individuals are living longer, thanks to medical advancements. Therefore, attention has to be paid to have money outlive people. In fact, according to the insurance industry, a child born today is expected to live until age 120.
  • In addition, many new financial planning firms (which includes estate, tax, and retirement planning) have opened offices to provide a holistic approach and not simply to sell insurance, annuities, mutual funds, stocks, etc. on a commission basis.

And to cap it off, consider that financial planning has become a worldwide matter as more and more countries have leaped into the vat, even China. And if everything is moving Eastward, as the experts predict, it is fascinating to see that China is already at the vanguard.

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