Personal Financial Specialist (PFS)
What Is a Personal Financial Specialist (PFS)?
A Personal Financial Specialist (PFS) is a certification for certified public
accountants (CPAs) that allows them to expand their expertise and offerings to
include financial planning and wealth management.
The American Institute of Certified Public Accountants (AICPA) established the
Personal Financial Specialist (PFS) credential, which is reserved for CPAs,
meaning holding a CPA is a prerequisite.
There are both educational and professional requirements that must be met
before earning a PFS. However, the benefits of holding a PFS are numerous,
which include expanded employment opportunities with corporations, consulting
firms, and the ability to manage or own a wealth management practice.
KEY TAKEAWAYS
A Personal Financial Specialist (PFS) is a certification for certified public
accountants (CPAs), allowing them to expand their expertise to include
financial planning and wealth management.
PFS applicants study estate planning, retirement planning, investing,
insurance, and other areas of personal financial planning.
Individuals with the PFS designation may work for accounting firms,
consulting firms, or run their own wealth management practices.
There are requirements to achieve a PFS designation, including a CPA
license, education, a specified level of experience, and passing an
examination.
An added benefit to the PFS is that candidates know financial planning but
also have extensive tax and corporate finance expertise as a CPA.
Understanding a Personal Financial Specialist (PFS)
A Personal Financial Specialist (PFS) certification is exclusively granted to CPAs.
According to the AICPA, a PFS certification represents "a powerful combination
of extensive tax expertise comprehensive knowledge of financial planning."1
PFS applicants study estate planning, retirement planning, investing, insurance,
and other areas of personal financial planning. Individuals with the PFS
designation may work for accounting firms, consulting firms, or manage their own
firm.
Earning the Personal Financial Specialist (PFS) means that individuals have
earned the right to use the PFS designation with their names, which can improve
job opportunities, professional reputation, and pay.
Personal Financial Specialist (PFS) Requirements
There are four major requirements that are necessary to achieve a personal
financial specialist designation, including a CPA license, education, a specified
level of experience, and passing an examination. Some of those requirements
are outlined below:
CPA License and AICPA Member
Candidates must obtain or hold an unrevoked and valid CPA certification that has
been issued by a state. The candidate must also be a current Regular member of
the AICPA.2
Education and Experience Requirements
There are two pathways that candidates can choose from, depending on their
level of experience.
The Standard and Certificate pathway has the following requirements:
Possess at least two years of full-time teaching or business experience (or
3000 hours equivalent) in personal financial planning within the five years
previous to applying for CPA/PFS
Up to 1,000 hours of tax compliance experience can count towards the
total experience required for the PFS
A minimum of 75 hours of personal financial planning education in the five
years preceding application for the PFS
The Experienced pathway has the following requirements:
Possess five years of full-time experience (or 7,500 hours equivalent) in
personal financial planning
The AICPA states that up to 2,000 hours of tax compliance experience can
count towards the total experience required for the PFS
Earn a minimum of 105 hours of personal financial planning education
within the seven-year period preceding the application date
According to the PFS credential handbook, regardless of the pathway, the
education and experience must be in any of the 12 areas that make up the
personal financial planning (PFP) Body of Knowledge. The AICPA offers
educational courses for personal financial planning covering the topics within
those 12 areas. However, certain approved courses from an accredited university
or college may be accepted as substitutes.2
PFP Body of Knowledge
The 12 areas that comprise the PFP Body of Knowledge for the education and
experience requirements are listed below:3
1. Personal Financial Planning Process: Includes helping clients establish
financial goals, gather data, and build client relationships
2. Professional Responsibilities, Legislative, and Regulatory
Compliance: Includes complying with any licensing requirements from
state and federal authorities
3. Fundamental Financial Planning Concepts: Includes budgeting,
analyzing cash flow, income, and spending patterns
4. Estate Planning: Includes establishing an estate financial plan to
determine cash needs in the event of death and potential tax liabilities
5. Charitable Planning: Involves determining the assets to be allocated for
charitable giving and the various types of products available, such as trusts
and life insurance
6. Risk Management Planning: Includes determining a client's financial
risks, including disability, illness, and property damage, as well as
reviewing the available products to mitigate those risks
7. Employee and Business Owner Planning: Includes executive
compensation, options, the various benefits available for employees, and
tax implications
8. Investment Planning: Involves the review of a client's capital gains and
losses, risk tolerance, and investment preferences to determine an
appropriate investment strategy
9. Retirement and Financial Planning: Includes determining a client's cash
needs in retirement, financial goals, and the savings needed to meet those
goals
10. Elder and Chronic Illness Planning: Includes helping clients
understand the various care and housing options while developing a plan
for financial expenses
11. Education Planning: Involves assisting clients with education
planning and funding strategies
12. Special Situations: Includes defining housing goals, income needs
and determining the division of assets in the event of a divorce
Continuing Education
Also, every three years, PFS professionals must complete 60 hours of continuing
professional education. Annually, they must pay a fee of several hundred dollars
to continue using the designation.4
A personal financial specialist (PFS) designation offers CPAs the ability to stand
out from other financial planners while offering clients an expert who can develop
a well-rounded financial strategy.
Personal Financial Specialist (PFS) Exam
The exam requirement for the PFS is extensive, covering the financial planning
process and professional responsibilities with topics such as tax, retirement,
investments, insurance, and estate planning.
The PFS exam consists of 160 questions, half of which are standalone multiple-
choice, while the remainder includes case studies with accompanying multiple-
choice questions. These include short scenarios followed by 2-5 multiple-choice
questions and longer cases with 12-18 related multiple-choice questions.5
The AICPA provides a brief video tutorial that features a mock exam session.
The exam can be taken at one of the testing centers or online with a laptop or
through a proctored exam via webcam. Candidates are allocated five hours to
complete it, as well as a 30-minute break.5
Exempt from the PFS exam are CPAs who have passed the Certified Financial
Planner (CFP) or Chartered Financial Consultant (ChFC) exams. They are
deemed to have met the exam requirement.
Benefits of a Personal Financial Specialist (PFS)
Benefits exist for those who hold a PFS certification and clients looking for a
financial professional to help them develop a financial plan for the long term.
Professionals have the ability to display their financial expertise by demonstrating
their knowledge of financial planning, which can help attract new clients. The
PFS certificate can enhance a professional's reputation and professional brand,
thus improving career opportunities with the potential of boosting income. An
added benefit to the PFS is that candidates have knowledge of financial
planning, but they have extensive tax and corporate finance expertise as a CPA.
A CPA who holds a PFS can be particularly beneficial for clients who are looking
to develop a financial plan that aligns with their long-term goals while also
receiving the benefit of tax and accounting services. Another benefit to clients is
that they gain access to a professional who is an expert in elder and estate
planning and wealth preservation and retirement income.
PFS vs. CFP
Although the personal financial specialist and certified financial planner (CFP)
have many similarities, there are distinct differences between the two
designations. CPAs with a PFS certification have a well-rounded knowledge of
accounting, tax, financial statements, and wealth management. However, a CFP
is considered a type of financial advisor since it is given out by the Certified
Planner Board of Standards, Inc.
As a result, there is a fiduciary responsibility that CFP's must adhere to, meaning
they must provide financial advice that is in the best interest of their clients. CFPs
must follow a strict code of ethics as outlined by the Certified Planner Board of
Standard’s code of ethics.
Similar to a PFS designation, to earn a CFP, an individual must have 6,000 hours
of professional experience and hold a bachelor’s degree from an accredited
university. Also, both the CFP and PFS certifications allow candidates to waive
some of the requirements if they hold a CFA. However, the CFP does not require
candidates to have a prior certification, which contrasts with the PFS prerequisite
of holding a CPA certification.
The benefits and employment opportunities of holding a CFP in PFS are
numerous, and both certifications offer careers in personal financial planning,
retirement, and tax planning. While a CFP allows an individual to offer investment
planning, a PFS allows an individual to offer financial management at a corporate
finance level due to the CPA certification.
