Letter from the AICPA President

Financial services is a term whose meaning is far from definitive and becoming less so every day with the appearance of a vast array of providers and servicesfrom the personal financial guidance traditionally provided by fee-only CPAs to the packaged investments individuals can buy from brokers and others on a commission basis. Today, more than half a million people, including CPAs, dispense financial advice. How is the consumer to know whom to trust? Consumers are left to wonder how many are truly qualified to do the best job.

Triggering this explosion of financial advice is unprecedented market demand. The biggest population spurt in the history of the world is coming of agemiddle age, that is. Baby boomers, now in their 40s and 50s, are 76 million strong and will have the largest pool of inherited money ever amassed.

Theres also a longevity revolution under waythe youth segment (those 18 to 34) is shrinking and people are living young life-styles longer.

CPAs clients and employers are increasingly demanding financial guidance on how to maintain an adequate current life-style while saving enough and investing wisely enough to provide for an enjoyable and secure retirement, which now is about a third of ones life. As individuals take more responsibility for their own retirement planning in an age of IRAs, 401(k)s and 403(b)s, professional personal financial planning is becoming a virtual necessity for them and is drawing hundreds of new playersmany non-CPAsinto the field. Only about 20 years old, its a market available for a dominant provider to claim, now handled by financial services specialists in accounting, insurance, securities and other areas.

With eminently transferable skills to bring to such a booming market, the CPA is in the best position to become the leading financial services professional. With a long-standing reputation as skilled and trusted professionals, CPAs already have won the trust of clients. CPAs are uniquely qualified to offer PFP advice because of their comprehensive, analytical and strategic approach to problem solving, decision making and information delivery. CPAs also are accustomed to fulfilling a fiduciary responsibility to clients.

In addition, as the baby boomers approach retirement age, their numbers and wealth are poised for financial planning. Theyll need a CPAs assistance in all areas, including investments, pensions, estates and trusts; brokers, bankers and insurance agents alone will not suffice. As a sophisticated group, boomers want advisers with the integrity of the CPA to help them. The CPA will be their first choice for a professional financial planner. The CPA/PFS (personal financial specialist) designation, in fact, provides a compelling image of just that sort of differentiation of the CPA from other financial plannersa notion the Institute intends to support in an upcoming ad campaign for the designation. PFP is virtually a custom-made opportunity for the CPA profession. And once we demonstrate to clients and employers that we are the professionals of choice, its our discipline to own. If we still hesitate to move into our market niche as the professional of choice in financial services, that position may fall to another. There are certainly enough eager potential players waiting in the wings.

Sincerely,

Barry C. Melancon, CPA