What Is a Personal Financial Specialist (PFS)?
Let me explain what a Personal Financial Specialist (PFS) is—it's a certification specifically for certified public accountants (CPAs) that lets you broaden your skills into financial planning and wealth management.
The American Institute of Certified Public Accountants (AICPA) created the PFS credential, and it's only available to CPAs, so you need that CPA license first.
You'll have to meet educational and professional requirements to get it, but once you do, the advantages are clear: more job options in corporations, consulting firms, or even running your own wealth management practice.
Key Takeaways
As a CPA with a PFS, you can dive into financial planning and wealth management. You'll study areas like estate planning, retirement planning, investing, insurance, and more in personal financial planning.
With this designation, you might work for accounting or consulting firms, or manage your own practice. To get it, you need a CPA license, specific education, experience, and to pass an exam.
One key plus is that you bring your CPA knowledge in taxes and corporate finance to the table alongside financial planning expertise.
Understanding a Personal Financial Specialist (PFS)
The PFS certification is only for CPAs. The AICPA describes it as a strong mix of deep tax knowledge and broad financial planning skills.
If you're pursuing it, you'll cover estate planning, retirement planning, investing, insurance, and other personal finance topics. Once certified, you can join accounting firms, consulting groups, or start your own firm.
Earning the PFS lets you add that designation to your name, which can boost your job prospects, reputation, and salary.
Personal Financial Specialist (PFS) Requirements
To get the PFS designation, you need to satisfy four main requirements: a CPA license, education, experience, and passing an exam. Let me break down some of these for you.
First, you must have a valid, unrevoked CPA certification from a state and be a current Regular member of the AICPA.
For education and experience, there are different pathways based on your background. In the Standard and Certificate pathways, you need 3,000 hours of personal financial planning experience in the last five years—or equivalent as a full-time professor teaching relevant courses. Up to 1,000 hours of tax compliance can count toward that. Plus, you'll need at least 75 hours of personal financial planning education in the five years before applying, or complete online certificate modules and pass an exam.
If you're on the Experienced pathway, you require five years of full-time experience (or 7,500 hours) in personal financial planning over the past seven years, with up to 2,000 hours from tax compliance. You also need 105 hours of education in that period and must complete the PFS Experienced CPA Education course.
There's a Reinstatement pathway too, which involves agreeing to specific terms. No matter the path, your education and experience have to align with the 12 areas in the personal financial planning (PFP) Body of Knowledge. The AICPA offers courses on these, but you might use approved university classes instead.
PFP Body of Knowledge
- Personal Financial Planning Process: Helping clients set goals, gather data, and build relationships.
- Professional Responsibilities, Legislative, and Regulatory Compliance: Meeting licensing requirements from state and federal authorities.
- Fundamental Financial Planning Concepts: Budgeting, cash flow analysis, income, and spending patterns.
- Estate Planning: Creating plans for cash needs after death and tax liabilities.
- Charitable Planning: Allocating assets for giving, using trusts or life insurance.
- Risk Management Planning: Assessing risks like disability or property damage and mitigation products.
- Employee and Business Owner Planning: Executive compensation, benefits, and tax implications.
- Investment Planning: Reviewing gains, losses, risk tolerance, and strategies.
- Retirement and Financial Planning: Determining retirement needs, goals, and savings.
- Elder and Chronic Illness Planning: Options for care, housing, and financial expenses.
- Education Planning: Strategies for funding education.
- Special Situations: Handling divorce, housing goals, and asset division.
Continuing Education
Once you have the PFS, you must complete 20 hours of continuing professional education each year and pay an annual fee of several hundred dollars to keep using the designation.
Personal Financial Specialist (PFS) Exam
The PFS exam is thorough, covering the financial planning process, professional responsibilities, tax, retirement, investments, insurance, and estate planning.
It has 160 questions: half standalone multiple-choice, the other half based on case studies. For the Experience pathway, it's 60 questions across four case studies. Certificate pathway folks take four 100-minute tests.
The AICPA offers a video tutorial with a mock exam. You can take it at a testing center or online via proctored webcam. You get five hours plus a 30-minute break; Experience pathway takes about 100 minutes.
If you've passed the CFP or ChFC exams as a CPA, you're exempt from the PFS exam.
Benefits of a Personal Financial Specialist (PFS)
Holding a PFS benefits both you as a professional and your clients. You can showcase your financial planning knowledge to attract clients, build your reputation, and potentially increase your income. Plus, your CPA background adds tax and corporate finance expertise.
For clients, a CPA with PFS means integrated financial plans that include tax and accounting services, especially useful for long-term goals, elder planning, estate preservation, and retirement.
PFS vs. CFP
The PFS and CFP certifications share similarities but differ in key ways. PFS holders, being CPAs, have rounded knowledge in accounting, tax, financial statements, and wealth management. A CFP, issued by the Certified Financial Planner Board of Standards, positions you as a financial advisor with fiduciary duties to act in clients' best interests and follow a strict ethics code.
To earn a CFP, you need 6,000 hours of experience and a bachelor's degree. Both allow waiving some requirements with a CFA, but PFS requires a prior CPA, unlike CFP.
Both open doors in financial planning, retirement, and tax, but CFP focuses on investment planning, while PFS leverages CPA skills for corporate-level financial management.
Other articles for you
The text explains what a dividend rate is, how it's calculated, and related concepts like payout ratios and dividend aristocrats.
The butterfly spread is a market-neutral options strategy using four contracts to profit from low volatility with limited risk and reward.
The free rider problem happens when people benefit from shared resources without paying their fair share, leading to underproduction of those resources.
The Ichimoku Cloud is a comprehensive technical analysis tool that helps traders identify market trends, momentum, and support/resistance levels.
Roll-down return is the potential profit from a bond's price increasing as it approaches maturity on a stable yield curve.
A mortgage originator is an entity that initiates and processes home loans for borrowers, often selling them to the secondary market.
A one-stop shop is a business offering multiple products and services in one location for consumer convenience.
A line of credit (LOC) is a flexible borrowing option from banks allowing users to draw funds up to a limit as needed.
A hiring freeze is a temporary stop on hiring to control costs during financial or economic challenges.
An exit strategy is a planned approach for business owners or investors to liquidate assets or sell ownership to minimize losses or maximize profits when specific conditions are met.