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A significant paradigm split divides the financial planning profession, creating two avenues by which advisors historically approached their practice. Financial planning that emerged from the investment industry viewed it through an investment-centric lens, where the primary focus was on managing assets or selling products. By contrast, the CPA financial planning community, which developed from a client-centric approach, followed that trajectory and adopted coaching techniques to guide clients to their preferred future.
The American Institute of CPAs’ (AICPA) Personal Financial Planning (PFP) section approaches its 40th anniversary, and the engagement of CPAs in providing personal financial guidance has deep professional roots. In 1906, a Journal of Accountancy article referred to CPAs as “financial physicians.” This fundamental mission has stayed the same over a century as personal finance has grown increasingly complex.
The federal income tax came along in 1913, and by the 1980s, a multitude of tax-advantaged accounts turned financial planning into an evolved discipline that now encompasses estate, retirement, education, and healthcare planning as well as risk and investment management. Then, in 1983, the AICPA initiated a plan to offer guidance to CPAs in Personal Financial Planning (PFP) practices. In 1984, it held its first PFP conference. And in 1985, its PFP committee gathered for the first time.
Throughout this evolution, taxation continued to impact every aspect of financial planning, anchoring CPAs as holistic personal finance advisors. That role and the quest for excellence in the CPA code of conduct is deeply ingrained in client-centricity. The fundamental question guiding this approach has always been: How do we best serve the client? This question drives CPA financial planners to consider their role and purpose in the lives of those they assist. The answer involves embracing both the quantitative and qualitative aspects of personal finance.
Alfred Kyle, who was the dean of the MIT school of engineering, made a compelling analogy when he said, “We know how to build any ship we choose to build, but we don’t know how to choose what ship to build.” Likewise, in financial planning, it's about not just crafting technical plans for clients, but defining the life and legacy they choose to pursue. Clients are the foremost experts on their own lives, and this realization transforms how financial planners engage with them.
Enter the concept of a discovery conversation, a pivotal aspect of the client-centric approach. Unlike an invention where something entirely new is created, discovery implies becoming aware of something that’s already there. And unlike simple data-gathering, such discovery engages clients in a thought-provoking process by which they become aware of values, purpose, and a preferred future set in their true self. In essence, it's a conversation driven by questions that stir clients’ imagination and lead them to their own answers. This conversation, which aligns with coaching principles, is about activating clients' ability to envision their preferred future and legacy.
The PFP section, under Andrea Millar's visionary leadership, has been at the forefront of pioneering the integration of coaching tools and techniques into financial planning. Millar's strategic guidance has significantly shaped financial planning, infusing it with a more client-centric and coaching-driven approach.
Coaching in financial planning fosters client engagement and satisfaction. It moves beyond just managing investments and focuses on understanding clients' aspirations, values, and purpose. By guiding clients through a true discovery conversation, financial planners empower them to take charge of their life’s design. This aligns their plans with their unique visions of a desired future.
The CPA financial planning community's deep roots in a client-centric approach, which became coaching-driven, testify to the profession's dedication to serving clients in the most effective manner. By prioritizing the client's needs, aspirations, and goals, the CPA community has heightened financial planning, redefining success beyond mere financial metrics and pursuing a holistic perspective that enriches the lives of those they serve.
Jean-Luc Bourdon, CPA/PFS is the founder of Lucent Wealth Planning, a wealth management firm located in Santa Barbara, California. In the past, Jean-Luc served on the PFS Credential Committee and on the Personal Financial Planning Executive Committee of the AICPA. He has written numerous financial planning articles for professional and consumer publications.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
