Personal Financial Specialists: Overview, Requirements, Benefits

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.

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."

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.

Education and Experience Requirements

There are two pathways that candidates can choose from, depending on their level of experience.

The Standard and Certificate pathways have the following requirements:

• Possess 3,000 hours of business experience in personal financial planning within the five years previous to applying for CPA/PFS or be a full-time professor having taught at least four accredited courses, of which 50% of the curriculum is in the PFP Body of Knowledge.
• 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 (Standard Pathway) or study three to five online certificate modules and pass an online exam (Certificate Pathway).

The Experienced pathway has the following requirements:

• Possess five years of full-time experience (or 7,500 hours equivalent) in personal financial planning within the past seven years
• 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
• Completed the PFS Experienced CPA Education course

A Reinstatement pathway is also available and includes agreeing to the Reinstatement terms.

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.

PFP Body of Knowledge

The 12 areas that comprise the PFP Body of Knowledge for the education and experience requirements are listed below:

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 year, PFS professionals must complete 20 hours of continuing professional education. Annually, they must pay a fee of several hundred dollars to continue using the designation.

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.  

The PFS Experience pathway examination includes a total of 60 questions with one part for each of four case studies. Those who are on the Certificate pathway must pass four 100-minute tests.

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. Experience pathway exams take about 100 minutes.

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 or 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.