Are you struggling to make sense of your finances and plan for the future? Hiring a personal financial specialist could be the game-changing solution you need. A personal financial specialist (PFS) is a highly qualified expert who can guide you through every aspect of money management. In this comprehensive guide, we’ll explain what a personal financial specialist is, their core services, and the key reasons why enlisting one is essential for your financial well-being.
Skale Money Key Takeaways
- Comprehensive Financial Expertise: A Personal Financial Specialist (PFS) offers holistic financial planning, covering areas such as retirement, estate, tax, investment, insurance, and employee benefit planning, ensuring a well-rounded financial strategy.
- Navigating Complex Financial Situations: PFS professionals can guide clients through significant life changes and complex financial scenarios, such as divorce, inheritance, or selling a business, providing clarity and stability during transitions.
- Tax Optimization and Compliance: With their deep understanding of tax laws, PFS professionals develop tax-efficient strategies and ensure compliance, helping clients minimize tax liabilities and avoid issues with the IRS.
- Retirement and Estate Planning: PFS services include detailed retirement planning and estate planning, helping clients prepare for a secure retirement and effectively manage wealth transfer through wills, trusts, and legacy planning.
- Ongoing Financial Guidance: A PFS provides continuous monitoring and adjustments to financial plans, offering regular reviews and updates to align with changing circumstances, goals, and market conditions, ensuring long-term financial success.
Table of Contents
Understanding a Personal Financial Specialist (PFS)
A personal financial specialist, often referred to as a PFS, is a credential awarded by the American Institute of Certified Public Accountants (AICPA). It represents a CPA’s specialized knowledge and experience in personal financial planning.
Unlike general financial advisors, a PFS has extensive training across multiple financial disciplines, including retirement, estate, investment, insurance, tax, and employee benefit planning. This well-rounded expertise allows a PFS to craft truly holistic financial plans tailored to your unique goals and circumstances.
Why should you hire a personal financial specialist (PFS)?
Gain a Comprehensive Financial Plan
One of the biggest benefits of working with a PFS is receiving a truly comprehensive financial plan. Unlike general financial advisors who may only focus on investments, a PFS has deep expertise across retirement planning, estate planning, tax planning, risk management, and more.
They have the training to analyze your entire financial picture – savings, income, taxes, insurance, employee benefits, and legal situations. Using sophisticated software, they can then model out intricate “what-if” scenarios and create an integrated roadmap. This customized plan acts as your blueprint for reaching your money goals while covering every base along the way.
Navigate Complex Financial Situations
Life comes with many big financial transitions and complexities – getting married/divorced, having children, switching careers, receiving an inheritance, selling a business, and more. A PFS’s cross-disciplinary training allows them to guide you adeptly through these situations.
For example, if you’re going through a divorce, a PFS can analyze topics like splitting assets, tax implications, updating beneficiary designations, and cash flow needs for your new lifestyle. Their expertise provides clarity during these emotional, complex transitions.
Optimize Taxes and Stay Compliant
With a core background as a CPA, a PFS has extensive tax planning capabilities far beyond most financial advisors. They can develop tax-efficient investing, distribution, and estate strategies to minimize what you owe each year.
A PFS also stays up-to-date on changing tax laws and regulations, ensuring your financial plans remain compliant and take advantage of any new tax-saving opportunities. This expertise provides assurance you’re not overpaying taxes or running into issues with the IRS.
Properly Invest and Grow Your Wealth
While investments are just one piece of a PFS’s overall expertise, you can certainly rely on them for comprehensive investment management services. These include analyzing your risk tolerance, constructing an optimized portfolio, providing asset allocation guidance, rebalancing regularly, and conducting performance analysis.
However, unlike other investment advisors, a PFS takes a higher-level view – ensuring your investments sync up with your greater financial plan and goals. Their recommendations aim to grow your wealth effectively while positioning assets in a tax-efficient, risk-aligned manner.
Plan for Your Ideal Retirement
One of the core services a PFS provides is in-depth retirement planning analysis. They can calculate your projected retirement expenses, benchmark your current savings, develop a roadmap to become retirement-ready, and optimize the order of your retirement asset distributions.
A PFS looks at retirement holistically – factoring in sources like 401(k)/IRAs, social security, taxable accounts, defined benefit pensions, real estate, and employment income. Their guidance helps ensure you can retire when desired while mitigating risks of outliving your money.
Implement Estate and Legacy Planning
In addition to retirement, a PFS also focuses on proper estate planning to preserve and transfer your wealth effectively. They can help you set up vital estate documents like wills, trusts, powers of attorney, and beneficiary designations.
A PFS also provides advice on legacy planning, such as tax-efficient gifting and charitable giving strategies to leave money to your heirs or causes you care about. Their expertise aims to ensure your estate is distributed according to your wishes while minimizing taxes.
Receive Ongoing Guidance
Unlike transaction-based financial product sales, a PFS serves as an ongoing, trusted advisor. They closely monitor your financial situation and plan, making revisions whenever your circumstances, goals, or market conditions change.
You’ll meet regularly to review your progress, realign investments, discuss any updates or concerns, and make any necessary adjustments. A PFS provides year-round guidance and accountability, saving you from doing it alone on your important money matters.
Personal Financial Specialist (PFS) Requirements
To become a personal financial specialist, candidates must meet a stringent set of requirements set forth by the American Institute of CPAs (AICPA). These ensure PFS holders have the right combination of education, experience, and expertise. The requirements are as follows:
- Education: A personal financial specialist must also be a Certified Public Accountant (CPA). This means completing a bachelor’s degree or higher in accounting or a related field from an accredited university. They must then pass the demanding 4-part Uniform CPA Examination.
- Experience: In addition to the CPA license, candidates must gain significant experience providing personal financial planning services to individuals. The AICPA requires a minimum of 3,000 hours or two years of equivalent full-time experience in personal financial planning.
- Examination: Prospective PFSs must pass a comprehensive national exam focused solely on personal financial planning. This tests their knowledge across all facets including estate, retirement, investment, insurance, tax, and risk management planning.
- Ethics: A personal financial specialist certification mandates adherence to the AICPA’s Code of Professional Conduct, enforcing high ethical standards. This includes requirements like acting with integrity, objectivity, professional competence, and putting the client’s interests first.
- Continuing Education: Once certified, PFSs must complete at least 60 hours of continuing professional education every 3 years, with a minimum of 20 hours per year, to maintain their active status. This ensures their expertise stays current with the latest laws, regulations, and best practices.
By completing this multi-step process, a PFS demonstrates their commitment to mastering personal financial planning from all angles and angles. You can feel confident that a PFS has the specialized skills to create and implement customized plans for your unique financial situation.
Conclusion
From optimizing taxes and investments to funding your retirement dreams and leaving a legacy, a personal financial specialist has the expertise to simplify and elevate your financial life. With their guidance, you can gain confidence in your money decisions today while building toward long-term goals. If you’re ready to take control of your financial future, partnering with a PFS is an invaluable investment worth making.
Frequently Asked Questions
What’s the difference between a PFS and a CFP?
Both a PFS (personal financial specialist) and CFP (certified financial planner) are credentialed professionals who provide personal financial planning services. However, there are some key distinctions:
- A PFS must first become a certified public accountant (CPA) by meeting education, exam, and experience requirements for that certification. The PFS is an additional credential CPAs can obtain through the American Institute of CPAs (AICPA) by passing another exam specific to personal financial planning.
- A CFP, on the other hand, is a broad certification provided by the Certified Financial Planner Board of Standards. It does not require first becoming a CPA. The education and exam requirements focus solely on personal financial planning.
So in essence, a PFS combines comprehensive personal financial planning expertise with a deep accounting/tax background as a CPA. CFPs have personal financial planning as their sole focus.
How much does a personal financial specialist typically cost?
PFS professionals utilize several common fee structures:
- Hourly fees – You pay only for the time a PFS spends on your specific planning needs, often $200-$600+ per hour.
- Fixed fees – You pay a flat fee for a PFS’s particular service, like creating a financial plan. These can range from $1,000-$5,000+.
- Asset-based fees – For investment management, a PFS may charge an annual fee of 0.5%-1.5% of the assets they manage for you.
- Retainer fees – For ongoing advice and plan monitoring, you may pay a quarterly or annual retainer fee of $2,000-$15,000 or more based on complexity.
Many PFSs also offer free initial consultations to discuss your needs and outline potential costs. Fee levels can vary based on the PFS’s experience, geographic region, and the scope of services required.
Can a PFS directly manage my investment accounts?
Yes, in addition to providing investment advice, many personal financial specialists can directly manage and make investment decisions within your accounts if you grant them that discretionary authority.
As a fiduciary, the PFS must always act in your best interests when managing your investment portfolios. Their services may include developing your asset allocation, analyzing investment options, placing trades, rebalancing regularly, and providing performance monitoring.
How do I find a personal financial specialist near me?
The AICPA has an online Find a Personal Financial Specialist database that allows you to search for PFSs by location. You can search by city, state, or zip code to find PFSs that service your local area.
The database provides the PFS’s contact information as well as details about their firm, expertise areas, certifications, professional memberships, and more. This allows you to vet and research PFSs before initiating contact.
What is the typical personal financial specialist salary?
According to the most recent data from the AICPA: The average salary for personal financial specialists is $119,000 per year. The median salary range is between $74,000 – $150,000 per year.
PFSs with more experience and credentials like the CPA/PFS tend to earn higher salaries at the upper ends. Salaries can also vary based on factors like geographic region, firm/company size, and the specific roles and responsibilities.
