The resources you need to build a strong PFP practice
BY john napolitano
the Cpa community is diverse when it comes to how practices
manage themselves and the services they offer clients. When it
comes to personal financial planning, the diversity is sometimes
as unique from practice to practice as ice cream from escargot.
Some firms do no financial planning, many
dabble and help clients only if they come
begging, and others are pro-active financial
professionals and understand that there may
not be a more valuable service that they can
possibly offer to their clients. The resources
that each of these needs are different.
When I think of resources for the financial
planner, it makes me think of the resources
that would create leverage, scale and profit-
ability for a wealth management business.
But after my 30-plus years of hanging around
CPA financial planners, I’ve learned that
many perceive their needs for resources as
knowledge-based resources. Resources that
demand attention include research on tax
matters or mutual funds, or cool soft ware that
can enhance your ability to get the job done
more quickly and accurately.
John P. Napolitano, CFP, CPA, PFS is chairman and CEO of U.S. Wealth Management
in Braintree, Mass.
THE ROLE OF AN SME
Keep in mind that the financial planner role
is different from the CPA role. As the CPA, you
are expected to be the subject matter expert.
As the financial planner, you are expected
to be the personal financial head coach or
orchestra leader. As such, you should be ac-
countable to see that any allied professional
on the client’s team is competent and doing
their jobs well in pursuit of helping your cli-
ent achieve their goals and objectives.
IRS PROMOTES SAVER’S CREDIT
WASHINGTON, D.C. — The Internal Revenue Service is encouraging more taxpayers to take advantage of the “saver’s
credit,” which enables low- and moder-ate-income workers to begin to save for
their retirement while earning a special
tax credit in 2011 and the years ahead.
The credit helps offset part of the first
$2,000 that workers voluntarily contribute
to IRAs, 401(k) plans and similar workplace retirement programs. Also known
as the retirement savings contributions
credit, the saver’s credit is available in addition to any other tax savings that apply.
Eligible workers have until April 17,
2012, to set up a new IRA or add money
to an existing IRA and still get credit for
2011. However, elective deferrals must
have been made by the end of 2011 to
401(k) plans or similar workplace programs. Employees who were unable to
set aside money may want to schedule
their 2012 contributions soon.
The saver’s credit can be claimed by:
;Married couples filing jointly with incomes up to $56,500 in 2011 or $57,500
;Heads of households with incomes
up to $42,375 in 2011 or $43,125 in
;Married individuals filing separately
and singles with incomes up to $28,250
in 2011 or $28,750 in 2012.
Though the maximum saver’s credit is
$1,000 ($2,000 for married couples), the
IRS cautioned that it is often much less
and, due in part to the impact of other
deductions and credits, may, in fact, be
zero for some taxpayers.
A taxpayer’s credit amount is based on
the taxpayer’s filing status, adjusted gross
income, tax liability and amount contributed to qualifying retirement programs.
Form 8880 is filed to claim the saver’s
credit. The form’s instructions provide the
details on figuring the credit correctly.
In tax year 2009, the most recent year
for which complete figures are available,
saver’s credits totaling just over $1 billion
were claimed on just over 6. 25 million
individual income tax returns. The saver’s
credits claimed on these returns averaged $202 for joint filers, $159 for heads
of household, and $121 for single filers.