CPA firms have several options if they want to add this niche. They can develop a separate subsidiary company (often required under state laws); form an alliance with an independent financial advisory or money management firm; or join one of the many broker-dealer and financial advisory turnkey organizations that are now actively seeking CPAs to join their ranks.

Is this your niche?
Is this a good niche for you? If your firm has yet to develop a formal financial planning niche, the following suggestions, from "A Roadmap to Starting Up Financial Planning Programs in CPA Firms" by Terry Stock, in Financial Advisory Practice, should help you get focused. See if the services appeal first. If so, you will then have to tackle the question of how you want to proceed.

Do you want to go it alone, perhaps developing a subsidiary company as some CPA firms have done? Or would you prefer to form a strategic alliance with a local independent financial advisory and money management firm? Or is getting training and assistance from one of the many organizations, including broker-dealers, the right path for your firm?

• Who will be the champion? Like any other niche or product, usually one partner will be the driving force behind developing a formal personal financial planning (PFP) program. The usual prerequisites of support from the managing partner or management committee and the freedom to develop the program apply. To get involved, the partner probably needs to become visible in the financial planning community through making speeches, publishing articles and getting involved in PFP committees of state societies and the AICPA. This will help build credibility for the practice. The partner will also need to become educated on the technical side--in insurance, investment and economics.

• How will you market these services to existing clients? Once the partner is ready to take on the engagements, you can begin marketing to your clients. You need to understand your new product--the personal financial analyst is in the "helping" rather than the "planning" business. So the best marketing approach is to ask clients how the partner can help them. Finding out about client needs and goals, which is important to every other service your firm provides, is absolutely crucial for this niche. PFP is an individual client-based type of work, so you must understand who the clients are (and will be) and be prepared to deal with types such as young professionals, older "saver" clients, and baby boomers.

• How will you sell to new clients? As with other services, referrals are the best way to bring in new clients. Make sure referral sources for your firm's other services know that you are now offering PFP.

This is an important issue, because some activities relating to financial services are reserved to those who are RIAs (just as only a CPA can perform assurance services).

To tell if someone at your firm should become registered, Federated Investment (www.cpaadviser.com) offers the following helpful answers to some basic questions:

What Is an Investment Adviser?
The Investment Advisers Act of 1940 says this is ". . . any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities." If you fit the definition, you must be registered.

Does the Definition Apply to CPAs at Your Firm?
Read the following list of activities and check those that apply to what you do or plan to do, to see if you fit into that definition. A "yes" answer to any of these (and many CPA firms are likely to have a number of individuals who would say "yes" to the last item, in particular) means that CPAs at your firm may be considered investment advisers under the above definition.

• Analyzing securities or mutual funds and giving advice or making a recommendation regarding those securities or mutual funds, and receiving compensation for this.

• Issuing reports or analyses on particular investments.

• Publishing a newsletter that analyzes and recommends securities.

• Informing clients of the advantages and disadvantages of investing in securities, compared to other non-security investments.

• Providing information about money managers and at times giving your opinion about those individuals.

• Receiving payment for services falling under the definitions of the Investment Advisers Act.

• Receiving only a commission for services falling under definitions of the Act.

• As an attorney or accountant, helping clients with their financial or pension planning and charging a fee for this service.

Even if you said "yes" to one of the above, exemptions apply if:

• The service you provide is only incidental to your main business activity. For example, broker-dealers who receive no special compensation for advice, or accountants whose advice is strictly incidental to their profession. However, if you claim to provide financial advice such as financial planning or pension consulting, that activity is not considered incidental.

• All clients are residents of the state where you maintain your principal office and place of business and you make no reports or analyses regarding securities traded on any national securities exchange.

• All your clients are insurance companies.

• You have had fewer than 15 clients in the past year, you do not hold yourself out generally to the public as an investment adviser, and you do not act in an advisory capacity to any investment company registered under the Investment Company Act.

Are There State-Level Requirements in Addition to Those of the SEC?
Congress passed a law (the National Securities Markets Improvement Act) dividing the regulation of investment advisers between states and the federal government (via the SEC). The law generally makes larger advisers subject to SEC registration and smaller ones subject to state registration. Check your individual state's requirements to find out what you need to do to comply with the regulations and any state licensing requirements.

Also remember that many states still prohibit CPAs from accepting commissions and contingent fees; the AICPA Web site (www.aicpa.org) has a list. Your state society and state board of accountancy will also be able to tell you if it is permissible to handle work on those bases.

Other Certification
Whether you plan to run an independent practice or join a group, you may want to check out having one or more partners or other CPAs become certified financial planners. The AICPA's PFP specialty designation has been in place for years, so an established program and CPE are available, and opportunities are provided to interact with other CPAs who are active in this niche. The AICPA's Web site presents information about PFP.

Risk Management
If you decide to go forward with this specialty, be sure to check with your liability insurance carrier --you may need different and additional coverage to cover the risks relating to this area of practice.