The Elusive Holy Grail

Abstract

While many of the available products are useful even essential none can replace the knowledge and experience of the practitioner. If you're planning to get into personal financial planning, don't expect to find the holy graff the profession's jargon for the single, off-the-shelf software product that not only asks all the right questions of clients but also provides all the right answers and then automatically generates the necessary reports. To be sure, the market is awash with PFP software products--some costing as little as $15 and others priced in the thousands. The number of products in this field is no surprise: It follows the meteoric rise of professional interest in PFP, especially among CPAs who see it as the hot new professional field and the place to be. And that, too, is no surprise: With some of the major areas of accounting showing either little or no growth, many CPAs are turning to PFP as a way to expand or at least offset softness in those other service areas. As a result, many PFP wannabes are signing up for continuing education workshops in the subject and seeking guidance from experienced practitioners. Invariably, at some point in the learning curve the novices all ask the same question: What software should I use? TRUSTING SOFTWARE Bart Francis, a Hershey, Pennsylvania, CPA, a PFP teacher, practitioner and consultant, frequently fields that question, triggering a fatherly lecture warning against relying too heavily on any software package. "Don't buy software to become a planner," he explains. "You must first get the technical essentials under your belt. Only then will you be able to use the software with any degree of effectiveness." Francis is managing partner of the CPA firm Schellemhamer & Co. and president of Wealthquest, a registered investment adviser. He also has a personal financial specialist (PFS) certificate issued by the American Institute of CPAs. Concurs Terry Stock, a Friendswood, Texas, CPA, who holds one of the first AICPA PFS certificates and is also a PFP teacher, practitioner and consultant: "I use a comprehensive PFP program to give me a trend line for a client. It helps me see some of the possible future problems--such as an estate tax problem that may develop 10 or 15 years from now." But, he adds, the software cannot provide all the answers--nor can it even raise all the questions. "For that," he adds, "you need to develop personal knowledge." For many just starting out in the field, the issue is not just whether the software can perform the planning and do all the calculations, but something more fundamental: Can it raise all the pertinent questions? For example, an effective personal financial planner should ask a client about everything from annuities to zero-coupon bonds, including queries about insurance, the existence of stock options, plans for the children's college expenses, terms of a will and myriad other issues. What makes such questioning complicated is that each answer often prompts a whole series of new questions, which is where even the most comprehensive package misses the mark. It's not good enough to pose most of the questions; to be effective, a program must be able to ask all of them, because to miss one could lead the planner in the wrong direction. For example, if the planner failed to recognize that a client had a future expense some years out or even another source 0f future revenue (such as a trust), the future cash flow analysis would be based on an incorrect premise. However, that's not to say the PFP holy grail will never be attained. Considering the continuing gains in software technology, a fully comprehensive product may someday actually be able to ask all the right questions and then, based on a client's answers, prepare a comprehensive advisory that covers all the main points of personal financial planning: tax consequences, retirement, estate planning, etc. …