Working with Other Advisers to Provide PFP Services
Working closely with other advisers can mean better recommendations for clients. The delivery of personal financial planning services involves developing recommendations and strategies to help clients achieve financial goals in diverse disciplines, such as budgeting and cash flow management, income tax planning, retirement and education funding, risk management and investment and estate planning. Accordingly, CPAs often find themselves working with a client's other advisers in the course of a PFP engagement. The American Institute of CPAs PFP executive committee issued Statement on Responsibilities in Personal Financial Planning Practice (SRPFP) no. 2, Working With Other Advisers, to guide CPAs in such situations. This article explains the provisions of SRPFP no. 2 and addresses its impact on CPAs providing PFP services. SRPFPs, while not constituting enforceable standards under the AICPA Code of Professional Conduct Rule 202, are published to provide broad guidance on what constitutes good-practice principles for members of the Institute providing PFP services. SRPFP no. 2 does not propose to resolve all issues encountered in providing PFP services in conjunction with attorneys, investment advisers, insurance brokers and others or to replace CPAs' professional judgment. SRPFP no. 2 reaffirms that CPAs providing PFP services are subject to the high standards of the AICPA ethics code. Accordingly, it is incumbent on CPAs to consider all existing professional standards and published guidance, including other published SRPFPs, in all aspects of a PFP engagement. TEAMWORK Depending on the specific circumstances of each engagement, CPAs may interact with other advisers in a number of ways--using the information or opinions of other advisers to develop recommendations, referring clients to other advisers for particular products or services, coordinating the efforts of a team of advisers or some combination thereof. Specific illustrations of CPA interaction with other advisers include * Engaging a real estate appraiser to provide information that will serve as a basis for estate planning recommendations. * Using a broker's advice as a basis for investment recommendations. * Working with a client's insurance adviser to develop a comprehensive insurance program. * Referring a client to an attorney for purposes of drafting updated will provisions in conjunction with estate planning recommendations. * Working with a money manager to determine the appropriate asset allocation for a client's invested funds. CPAs providing PFP services typically have a clear understanding of their clients' overall financial situation. This puts them in an excellent position to identify other advisers with the skills needed to help clients reach their financial goals. CPAs find they need to work with other advisers for a number of reasons, most notably to address the following: Licensing and regulatory issues. Many jurisdictions require advisers to be licensed or registered before they can give advice in areas such as insurance or investments. The unauthorized Practice of law. By agreement between the AICPA and the American Bar Association, CPAs are prohibited from assisting clients in tax matters if doing so constitutes the unauthorized practice of law. For example, CPAs are precluded from performing services such as drafting wills in conjunction with estate planning recommendations. Competency. Rule 201 of the AICPA ethics code generally says AICPA members may provide only services the member or the member's firm reasonably expect can be completed with professional competence. Although CPAs are uniquely qualified to discuss many aspects of PFP, they may not be competent in certain fields such as asset protection or investment planning. Until they develop such competency, CPAs typically provide their clients with comprehensive PFP services by working with other advisers. …