The Personal Financial Planning (PFP) Body of Knowledge (BOK) is an outline of the technical knowledge that a CPA financial planner should be expected to know to competently practice in personal financial planning.
The complete PFP Body of Knowledge outline can be downloaded.
For CPAs practicing or desiring to practice in personal financial planning: It provides a roadmap for the various technical competencies that can guide their professional development. We recognize that not all CPAs planners will be experts in all areas, but this outlines the areas in which a fundamental level of knowledge and awareness of the interconnectedness of the major topics is crucial for making competent recommendations.
For CPAs preparing for the Personal Financial Specialist (PFS) exam: It provides a guide for exam takers to ensure they are studying appropriate topics for the PFS exam. (Note: there are three different pathways to the credential that have different levels of experience, education and examination). The range of coverage (percent of total exam) is identified for each major topic in the BOK so exam takers know what to expect. They can have confidence that this will guide their review regimen because both education authors and PFS exam writers use this outline as a basis for their work.
Note: All eligible work experience and education for the PFS credential requirements must fall within the twelve practice areas comprising the PFP Body of Knowledge.
Integration of Income Tax Planning. Individual income tax planning is an integral part of personal financial planning. In previous iterations of the PFP BOK, it has been included as a separate major topic. This approach did not adequately demonstrate the integration of income tax planning within the individual topics throughout the PFP Body of Knowledge. In response to this, the current PFP Body of Knowledge addresses individual income tax planning in the following manner:
Following is a guide to help apply the twelve major topics of the PFP Body of Knowledge in practice (from the PFS Credential Handbook):
Personal Financial Planning Process
Applying any and all steps in the standard financial planning process to clients
Gathering data and helping clients establish their financial goals
Building rapport with client and addressing family dynamics in the client relationships
Professional Responsibilities and Legislative and Regulatory Environment
Applying the principles of the Statement on Standards in Personal Financial Planning Services to any aspect of the client relationship
Complying with any requirements for licensing with the state or federal authorities for the services or products provided
Fundamental Financial Planning Concepts
Reviewing income and spending patterns; developing recommendations for cash flow management and budgeting
Performing “time value of money” calculations for decisions such as refinancing a home or buying vs. leasing a motor vehicle
Determining strategies for tax liability management
Estate Planning
Helping clients develop or refine their financial and personal estate planning goals
Estimating liabilities for federal estate tax, state death taxes and other obligations; determining cash needs upon death
Developing recommendations to meet financial obligations upon death
Reviewing tax and probate considerations of various forms of property ownership; making recommendations on the titling of assets
Developing strategies for minimizing estate and death taxes and achieving the clients’ other estate-planning goals
Recommending or reviewing various instruments (e.g., wills, powers of attorney, trusts) for use in achieving goals
Planning for post-mortem succession of a closely held business (e.g., buy-sell agreements, estate freeze techniques, valuation issues)
Charitable Planning
Evaluating clients assets to use for charitable giving
Determining the advantages and disadvantages of charitable giving through different vehicles (e.g., charitable trusts, life insurance)
Summarizing income tax consequences of various charitable giving options
Risk Management Planning
Analyzing client exposure to risks and recommending methods for managing risk
Advising clients on various types and uses of life insurance
Helping clients minimize their financial risks from disability, illness, property damage, and personal liability
Planning for long-term health care for clients and their families
Reviewing proposed policies to ensure clients’ needs are satisfied
Reviewing income and estate tax aspects of insurance coverage with clients
Employee and Business-Owner Planning
Analyzing and making recommendations on executive compensation and stock options
Evaluating or reviewing various benefits (equity, fringe, insurance) available to employees of public and private companies
Examining tax implications of benefits for employer and employees
Planning with business owners on decisions about their business that affect their current or future personal financial goals
Investment Planning
Year-end capital gain/loss recognition planning; deferral of capital gain strategies
Reviewing client investment preferences and risk tolerance to help them develop appropriate investment strategies
Discussing available investment options with clients
Monitoring the performance of invested assets
Providing asset allocation recommendations
Recommending investments or helping clients build portfolios
Managing client assets
Retirement and Financial Independence Planning
Helping clients develop or refine retirement planning goals; determining cash requirements to realize those goals
Calculating savings needed to meet retirement cash requirements and analyzing available retirement plans
Reviewing limits on and tax consequences of contributions to or distributions from retirement plans
Establishing retirement plans
Planning for retirement plan withdrawals
Assisting clients with maximizing their Social Security benefits
Elder, Special Needs, and Chronic Illness Planning
Helping clients understand the variety of care options that are available to them
Analyzing financial aspects and assisting clients with housing related decisions
Providing bill-pay or other personal financial services for clients
Developing plans to address current and future financial expenses for special needs clients
Education Planning
Assisting clients with understanding the education planning process
Developing recommendations for education funding strategies
Assessing income tax implications for education funding strategies
Special Situations
Defining clients' housing goals
Planning income needs and evaluating division of assets during a divorce
Advising clients on household employees