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Feb 1992

Costs and benefits of APFS accreditation. (Accredited Personal Financial Specialist; includes related article) (Personal Financial Planning)

by Elsea, John E.

    Abstract- A survey was conducted to determine the advantages and disadvantages of being an Accredited Personal Financial Specialist (APFS). Questionnaires were sent to 320 AFPS, 80% of whom responded. A considerable number of participating accountants view the APFS designation as beneficial because it has improved their professional image, their skills and expertise, and their competitiveness. The major obstacles posed by the accreditation program were identified to be the preparation for the examination, the examination itself, and the preparation for reaccreditation. The majority of the respondents believed that the advantages of accreditation are either equal or greater than its disadvantages.

In December 1990 a survey was mailed to all 320 APFSs. The questionnaire was designed to determine how those CPAs viewed the costs and benefits of accreditation. Two hundred fifty-six responses were returned, an 80% response rate.

A majority of the respondents are experienced accountants who hold positions of authority in their firm:

* Eighty-four percent have more than 10 years of accounting experience;

* All respondents hold positions of at least manager or supervisor level, and 84% are partner or partner equivalents; and

* Fifty-seven percent spend between 20% and 60% of their billable time in the area of personal financial planning.

The respondents are predominantly male (89%), and the largest percentage (43%) is between 36 and 45 years old. Sixty-five percent are affiliated with local firms, and 23% are sole proprietors.

Costs of Initial Accreditation and


When the AICPA approved the APFS program, it established certain requirements for accreditation and reaccreditation. APFSs were asked to what extent they viewed the requirements for accreditation and reaccreditation to be significant obstacles. (The accompanying sidebar gives an overview of the APFS designation and the requirements for attaining it.)

The obstacle rated most significant was preparing for the examination, and yet only 28% viewed this as a significant obstacle. The second most significant obstacle was taking the examination. The greatest obstacle to reaccreditation was the practice review questionnaire. These data suggest that APFSs do not appear to view the accreditation and reaccreditation requirements as major obstacles.


The APFSs were asked to respond to the following two statements about their overall assessment of the APFS program:

* Given what I know now about the APFS program, I would go through the initial accreditation again.

* The benefits of the APFS designation are less than; about equal to; greater than the costs.

Eighty-two percent of the APFSs said they would go through the initial accreditation again, and 69% felt that the benefits of accreditation equal or exceed the costs.

In addition to providing their overall assessments of accreditation, APFSs responded to four specific statements about the benefits of the APFS program. The responses revealed the following:

* Fifty-nine percent of the respondents felt that the APFS designation has enhanced their professional image.

* Seventy-nine percent believed that the program improved their skills and expertise.

* Fifty-four percent felt that the designation helped them to compete more effectively with non-CPAs offering personal financial planning services.

* Forty-two percent felt that the APFS designation helped them to compete more effectively with small and medium-size CPA firms.

Responses to these four statements provide strong evidence that the accreditation has had a positive impact on the quality and competitiveness of the APFSs' practices.

Critics of accreditation have expressed fear that an increased number of accredited specialist designations while larger firms at a competitive disadvantage; small firms may be limited to only a few specialist designations while larger firms would employ specialists in many different areas. However, the responses to two additional statements refute that argument:

* Fifty-five percent of the respondents felt that local practices benefitted from the APFS designation; 21% disagree.

* Only 20% felt that small firms might be hurt if the AICPA accredited additional specialty areas. This is especially meaningful since 65% of the respondents work in local CPA firms.

The APFS accountants who responded to this survey appear to be uncertain whether their legal liability has increased: 37% believe it has, and 37% believe it has not. However, only 6% agreed that their specialist designation resulted in increased insurance premiums; 56% disagree.

Weaknesses of the APFS

Accreditation Designation

The survey revealed several perceived weaknesses in the APFS designation.

Referrals. Only 20% of the APFS members thought that referral business increased because of their accreditation. And only 36% felt that the APFS program has resulted in the development of closer ties with other CPAs who specialize in personal financial planning. One possible explanation for these low percentages is that 84% of the APFSs have more than 10 years experience, so they may have already established their professional ties through the AICPA and other professional memberships.

Billings. The respondents did not believe that the APFS designation had a significant impact on billings. Only 19% of the respondents felt that their hourly billing rate increased, and only 26% felt that their gross billings increased. There are several possible explanations for this result:

1. The APFS accounts may not be actively promoting their specialization;

2. The accredited specialist's practice may be in the maturity stage, with a stable client base; thus, there is little opportunity for significant changes in either gross billings or billing rate; and

3. The APFS designation may not provide significant additional skills that justify billing rate increases.

State Restrictions. The third weakness revealed in the survey relates to state imposed restrictions on a CPA's ability to promote the specialist designation. The respondents appeared to recognize these legal restrictions: 26% agreed or strongly agreed that there were restrictions on their ability to promote the specialist designation. It should be noted, however, that 42% did not believe that such restrictions existed in their state; 32% were unsure.

CEA versus APFS. The fourth problem highlighted by the survey is that the respondents do not feel the AICPA has adequately explained the difference between the APFS and Certificate of Educational Achievement (CEA) programs. Responses show that only 13% agree that the AICPA has adequately explained the difference; 73% disagree.

CEA is a series of integrated courses in a specific area of practice (such as personal financial planning). Completion of the program does not entitle the CPA to use the designation "Accredited Specialist." Completion of the CEA program would, however, provide valuable preparation for the specialization examination and help satisfy the continuing education requirements for renewed of the APFS designation.

AICPA Support. The final problem revealed by the survey is that the AICPA did not appear to be adequately promoting the designation. Only 4% of the respondets agreed that the AICPA has adequately promoted the APFS designation; 83% disagreed.

However, since this survey was sent, the AICPA has become more aggressive in supporting the APFS designation. Promotional efforts include the following:

* The AICPA has taken steps that may improve both the APFS's referral business and the amount of interaction between CPAs who hold the APFS designation. In January 1991, the PFP Division opened a toll-free number (800-966-PFP-9). Members can call this number for information about the PFP Division or the APFS designation. Also, both members and nonmembers can use this number to obtain a free list of APFS designation holders.

* The PFP Division of the AICPA is actively working to reduce the state imposed restrictions on advertising specializations. The Division has made a proposal to a joint committee of the AICPA and the National Association of State Boards of Accountancy (NASBA), who are writing a model Uniform Accountancy Act. The proposal recommends that the Act include rules permitting licensees to use the APFS designation. Of course, state boards are under no obligation to follow the model act, but state regulatory bodies usually consult the model act when they revise state statutes. In addition, state societies can exert some pressure on the regulatory bodies during the deliberations.

* The AICPA provides promotional materials to new APFS members. This material can be given to current and potential clients, and it can also be used for local press releases announcing the CPAs new specialist designation.

* The Communications Division of the AICPA is now promoting the APFS designation through state CPA societies and the popular press.

* The AICPA is advertising the APFS designation in professional journals.

* In the summer of 1991, the Division conducted a direct mail campaign to CPAs who previously expressed interest in earning the APFS designation.

* The AICPA has appointed an APFS representative in each state society to act as an APFS program coordinator. This individual helps promote and support the APFS designation at the state level.

On Balance, the Complaints are


APFSs are dissatisfied with the AICPA's support of the program. Also, some specialists have felt the impact of state restrictions on their ability to promote their designation, and 31% said that the costs of accreditation exceed the benefits. However, in spite of these problems, a majority of the APFSs have a positive overall attitude toward their specialist designation. They feel the designation enhances their image, improves their skills, and makes them more competitive. The specialists do not feel that the accreditation program has hurt small firms, and they have not perceived increases in their legal liability because of the accreditation. Moreover, they do not view the accreditation and reaccreditation requirements as significant obstacles.

Sixty-nine percent of the respondents felt that the benefits either equalled or exceeded the costs, and 82% said they would go through the initial accreditation again, given what they know now about the program. These results suggest that nonaccredited CPAs who specialize in personal financial planning have good reason to consider the APFS designation.

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