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ABV exam - Accredited in Business Valuation (ABV) Updated: 2023
The Accredited in Business Valuation (ABV ®) credential is granted exclusively by the AICPA to CPAs and qualified valuation professionals who demonstrate considerable expertise in valuation through their knowledge, skill, experience and adherence to professional standards. To obtain the credential, you must pass the two-part, modular ABV Exam. The exam requirement is waived for candidates who have passed the ASA credential exam of the American Society of Appraisers, CFA exam level III of the CFA Institute or CBV credential exam of the Canadian Institute of Chartered Business Valuators.
The AICPAs ABV credential is the most rigorous and prestigious of the business valuation certifications. In a short time, it has become an essential marketing tool for the CPA planning to specialize in this lucrative practice area.
Review sources of data, techniques, and methods used to analyze business interest, value drivers, and risk assessment.
Distinguish among the three primary approaches to value (and related hybrid approaches), as well as identify and apply various types of valuation adjustments and the reconciliation of value estimates.
Identify key areas related to valuation in the conceptual framework of fair value accounting, accounting for business combinations, and accounting for goodwill impairment.
Identify the five basic steps of a valuation engagement.
Differentiate among standards of value, premises of value, and levels of value.
Identify valuation related professional standards and guidelines issued by AICPA (for example, VS section 100).
Newly enhanced and closely aligned with the ABV exam, the AICPAs ABV exam Review is the only comprehensive BV examination review program backed by the resources and collective expertise of business valuation professionals associated with the nation's premier membership organization for CPAs.
The AICPAs ABV credential is the most rigorous and prestigious of the business valuation certifications. In a short time, it has become an essential marketing tool for the CPA planning to specialize in this lucrative practice area. A key step towards becoming an ABV, the ABV exam tests a comprehensive range of business valuation knowledge.
The ABV exam is offered in a two-part, modular format. Module 1, "Approaches", covers Content Specification Outline (CSO) section II and chapters 4-7 and 9 of ABV exam Review. Module 2, "Analysis and Related" covers CSO sections I & III and chapters 1-3 and 8 of ABV exam Review. Please reference the CSO before preparing for the ABV exam.
NOTE: Taking this review course does not guarantee that the candidate will successfully pass the ABV exam. This course reviews most of the items on the exams content specific outline and is not meant to teach Topics to the candidate for the first time. A significant amount of independent studying and study will be necessary to prepare for the exam, regardless of whether or not the candidate completes this review course.
Key topics:
Professional Standards, the Engagement, and Standards of Value
Fair Value for Financial Reporting Based on Financial Accounting
a. Internal Revenue Service (IRS) Revenue Ruling 59–60 (fundamental
valuation considerations and the definition of fair market value)
2. Relationship between purpose of the valuation and the standard of value
3. Understanding the ownership characteristics of the interest being valued
4. Premise of value for business interests (i.e., ongoing concern and liquidation)
5. Engagement letters (e.g., purpose and content)
Understanding Business Valuation: A Practical
Guide to Valuing Small to Medium-Sized
Businesses, chapters 3, 4 and 16
Financial Valuation: Applications
and Models, chapter 2
VS Section 100
D. Sources of economic and industry data
E. Macro-economic and environmental alalysis
F. Industry analysis
1. Industry structure and life-cycle analysis
2. Competitive strategies and analysis
G. Subject entity analysis
1. Entity documents (e.g., operating agreements, buy-sell agreements and bylaws)
2. SWOT (strengths, weaknesses, opportunities and threats) analysis
3. Firm economics (cost structure and pricing power marginal analysis)
4. Historic and forecast financial statements
a. Common size
b. Trend analysis
c. Financial ratios (a list of definitions, ratios and formulas provided during the exam is included at the end of this document)
d. DuPont analysis; return on equity and return on assets
5. Adjustments to historic and forecast financial statements
a. Normalizing
b. Control vs. non-control
c. Separation of operating and non-operating items
d. Off balance sheet items
1) Other adjustments
2) Implied tax adjustments
3) Inusual and/or non-recurring items
4) GAAP based adjustments
Section II. Implementation of Valuation Methods (Exam Part 2 — 50%)
This section covers knowledge of the three primary approaches to value; intellectual property and intangible assets; levels of
value; discounts; premiums and the conclusion of value.
A. Valuation approaches
1. Income approach
a. General theory
b. Sources of data
c. Commonly used methods
1) Capitalized economic income/cash flow method (CCF), including Gordon Growth Model (consistent growth model)
2) Discounted economic income/cash flow method (DCF), including Gordon Growth Model (two-stage model)
3) Excess earnings method (hybrid method)
d. Commonly used models — direct equity model versus invested capital model
e. Types of benefit streams and selection
f. Cost of capital concepts and methodology and other models
1) Capital asset pricing model (CAPM) and beta (B) including unlevering and relevering betas
2) Build-up method
3) Duff and Phelps risk premiums
4) Weighted average cost of capital
5) Understanding the security market
6) Understanding option pricing theory
g. Selection of appropriate time (including mid-year convention)
2. Market approach
a. General theory
b. Sources of data
c. Commonly used methods
1) Transactions in subject companys stock
2) Guideline publicly traded company method
3) Guideline merged and acquired company (transaction) method
d. Selecting guideline companies
e. Statistics related to valuation analysis
1) Understanding measures of central tendency (e.g., Arithmetic, harmonic and geometric means and median)
2) Understanding measures of dispersion (e.g., Variance and standard deviation)
3) Understanding statistical strengths of numerical relationships (including covariance, correlation, coefficient of determination and coefficient of variation)
4) Understanding linear regression
f. Equity versus invested capital (including price multiples)
g. Selection of appropriate time periods
h. Selection and adjustment of appropriate multiples
Understanding Business Valuation: A Practical
Guide to Valuing Small to Medium-Sized
Businesses, chapters 9 and 10
Financial Valuation: Applications and Models, chapter 8
3. Asset approach
a. General theory
b. Sources of data
c. Adjusted (net) asset method
d. Considerations in liquidation
e. Issues in valuing intangible assets
f. Tax affecting the balance sheet
B. Intellectual property and other intangible assets
1. Valuation approaches and methods
2. Valuing specific intangible assets
Understanding Business Valuation: A Practical
Guide to Valuing Small to Medium-Sized
Businesses, chapter 20
Financial Valuation: Applications
and Models, chapter 24
C. Discounts, premiums and other adjustments
1. Levels of value appropriate to the engagement
a. Control strategic (public or private company)
b. Minority/control standalone liquid (public company)
c. Control liquid (private company)
d. Control standalone (private company)
e. Minority non-marketable (private company)
2. Discount for lack of control (DLOC) and control premium
a. Sources of data
b. Ownership characteristics
c. Magnitude
3. Discount for lack of marketability (DLOM)
a. Sources of data
b. Ownership characteristics
c. Restrictions and transferability
d. Magnitude
4. Discount and premiums — understanding the empirical studies
5. Allocation between voting and non-voting stock
6. Other valuation discounts and adjustments
a. Market absorption and blockage discounts
b. Key person/thin management discounts
c. Built-in gains tax discount
d. Nonvoting stock discount
Understanding Business Valuation: A Practical
Guide to Valuing Small to Medium-Sized
Businesses, chapters 14 and 15
Financial Valuation: Applications
and Models, chapter 10
D. Conclusion of value
1. Reconciliation of indicated values
2. Reasonableness of conclusion
Accredited in Business Valuation (ABV) Financial Accredited exam
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Financial
ABV
Accredited in Business Valuation (ABV)
https://killexams.com/pass4sure/exam-detail/ABV Question: 319
______________ deals with the liquidation of the subject business ownership interest.
A. Investment
B. Reinvestment
C. Marketability
D. Discount quantification Answer: C Question: 320 The degree to which an asset, business, business ownership interest, or security can readily be converted into cash without significant loss of principal is called:
A. Marketability
B. Liquidity
C. Investor ownership
D. Public leadership Answer: B Question: 321 When non-controlling business ownership interests are valued by reference to the prices paid for guideline actively traded securities, the benchmark for the lack of marketability of the non-controlling ownership interests is the active public securities markets, this publicly traded counterpart value is often called:
A. Freely traded value
B. Restricted traded value
C. Business traded value
D. None of the above Answer: A Question: 322 What is identical in all respects to the freely traded stock of a public company except for the fact that it is restricted from trading on the open stock market for a certain period?
A. Letter stock
B. Empirical shares
C. Raising capital
D. Trading ownership Answer: A Question: 323 What is a publicly traded company that must file Forms 10-K, 10-Q, and other information with the Securities Exchange Commission (SEC)?
A. Stock Exchange
B. over-the-counter capital
C. Non-reporting company
D. Reporting company Answer: D Question: 324 Which study found that companies with stock listed on national exchanges had lower discounts on their restricted stock transactions than did companies with stock traded overthe-counter (OTC)?
A. Trout study
B. Moroney study
C. Gelman study
D. Maher study Answer: A Question: 325 The Johnson study analyzed following factors that might influence the size of the discount EXCEPT:
A. Positive net income
B. Sales volume
C. Transaction value
D. Gross income Answer: D Question: 326 Which model simply estimates a time horizon at which the interest will be liquidated, a liquidating price based on annual percentage growth in value from the valuation date, and interim cash flows to the holder?
A. Qualitative Marketability Discount Model
B. Qualitative Liquidity Discount Model
C. Quantitative Marketability Discount Model
D. Quantitative Liquidity Discount Model Answer: C Question: 327
Which of the following is NOT the factor that affects the degree of marketability?
A. “put” right
B. Dividend payment
C. Potential Buyer
D. Asset capitalization Answer: D Question: 328 The process of ______________ is the analysis of the alternative valuation indications in order to arrive at a final value estimate.
A. Reconciliation
B. Reassessment
C. Revaluation
D. Renegotiation Answer: A Question: 329 Which procedure does not quantitatively justify the valuation synthesis process, it does so in a qualitative manner?
A. Explicit weighting
B. Implicit weighting
C. Business weighted average
D. Procedural weighted average Answer: B Question: 330
Which of the following type of final value estimates may be appropriate, given the purpose and objective of the valuation?
A. A point estimate
B. A range of value
C. A relationship value
D. All of the above Answer: D Question: 331 According to the 2006 edition of the Uniform Standards of Professional Appraisal Practice (USPAP), the definition of an appraisal, the act or process of developing an opinion of value; an opinion of value is called:
A. Evaluation
B. Appraisal
C. Assessment
D. Analysis Answer: B Question: 332 The length, type, and (to a certain extent) content of a business valuation report may be influenced by:
A. The valuation client
B. Any applicable statutory authority
C. The courts, through published judicial precedent
D. All of the above Answer: D Question: 333 The Uniform Standards of Professional Appraisal Practice (USPAP) Ethics Rule is divided into which four sections?
A. conduct, management, confidentiality and record keeping
B. planning, reconciliation, confidentiality and record keeping
C. conduct, management, examining and record keeping
D. planning, management, testing and record keeping Answer: D Question: 334 The price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts is called:
A. Fair market value
B. Appraisal value
C. Standard value
D. Financial value Answer: A Question: 335 Method that is commonly used in the valuation of closely held companies in order to minimize the differences between the subject company and the guideline companies is known as:
A. Product-line valuation method
B. Qualitative adjustment method
C. Invested capital valuation method
D. Market leverage valuation method Answer: C Question: 336 For a non-controlling ownership interest in Warm Chicken, which of the following factor is considered, that have an impact on the selection of the appropriate discount for lack of marketability?
A. Size of the block
B. Transaction activity
C. Dividends
D. All of the above Answer: D Question: 337 Which of the following is the most frequently encountered reason for needing to value debt securities?
A. Purchase or sale for cash
B. Exchange of equity for debt, or vice versa
C. Allocating total enterprise value among classes of securities in a leveraged buyout, recapitalization (including tax-free reorganizations), or bankruptcy reorganization
D. All of the above Answer: D Question: 338 Which theory states that the fair market value of an investment is equal to the present value of the future payments, discounted back to the current time at an appropriate discount rate?
A. Valuation
B. Investment
C. Interest payment
D. None of the above Answer: D Question: 339
The rate of interest that, when applied to the expected future payments on a debt security,
produces a present value of the payments equal to the debt security’s observed market
price is called the _____________ of that security.
A. Maturity of debt
B. yield to maturity
C. Interest maturity
D. Cost Maturity Answer: B Question: 340 Which of the following is the information needed for estimating the value of a closely held debt security?
A. the amount of future payments generated by the debt security
B. the timing of the future payments generated by the security
C. the appropriate rate of interest or yield to maturity to apply to the future payments to estimate the present value
D. All of the above Answer: D Question: 341 If the market-determined yield to maturity for a debt security is equal to the security’s coupon interest rate, the security’s fair market value is equal to its face or par value.
A. True
B. False Answer: A Question: 342
What allows the debtor to repay the debt prior to its maturity?
A. Fund provision
B. Call provision
C. Debt provision
D. Security provision Answer: B Question: 343 Which provision requires the debt issuer to call or retire a contractually determined portion of the entire debt issue periodically over time prior to the issue’s maturity date?
A. collateral provision
B. risk provision
C. sinking fund provision
D. Tax provision Answer: C Question: 344 A debt security that has no pledge of specific property or assets as collateral for the debt is called:
A. debenture
B. indenture
C. convention
D. covenant Answer: A
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https://killexams.com/exam_list/FinancialCPA exam Guide: Everything You Need To Know About the New exam In 2024
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
We don’t blame you. After all, the pass rates for each exam section range from about 40% to 60%, according to the American Institute of Certified Public Accountants (AICPA®)—not the best prognosis. The CPA exam is difficult and time-consuming, but passing it is the most important step of CPA licensure. And at the end of the day, becoming a CPA is worth it to many professionals.
Earning the CPA credential opens doors to high-paying, advanced accounting careers in numerous industries. The 2024 CPA exam comes with a few changes compared to previous years, so make sure to stay in the know if you plan to sit for the exam in or after 2024. We’ve outlined the new exam here to help you research and prepare.
What Is the CPA Exam?
The Uniform Certified Public Accountant Examination, also known as the Uniform CPA exam or CPA Exam, is for accountants pursuing CPA licensure. Many employers seeking highly trained accountants require a CPA license, which involves rigorous coursework and skill testing to earn.
AICPA develops the CPA exam, and the National Association of State Boards of Accountancy (NASBA) and its included state boards of accountancy assist with reviewing applications, administering the exam and reporting scores.
The CPA exam consists of four sections, testing candidates on Topics like taxation, financial planning, auditing and accounting technology.
What’s New About the CPA exam in 2024?
The 2024 CPA exam introduces a new “discipline” section, including three options:
Business analysis and reporting (BAR)
Information systems and controls (ISC)
Tax compliance and planning (TCP)
Candidates choose one of the three disciplines to test on. Candidates must also test within the three required Core sections:
Auditing and attestation (AUD)
Financial accounting and reporting (FAR)
Taxation and regulation (REG)
The 2024 version of the CPA exam eliminates the business environment and concepts (BEC) section and transitions some portions of FAR and REG into the new disciplines. Since the BEC section was the only one to include a written essay, the essay portion is eliminated from the 2024 CPA exam.
Additional changes include replacing an Excel spreadsheet with a JavaScript-based spreadsheet, implementing new task-based research simulations and eliminating multistage adaptive testing.
CPA exam Requirements
Each state board of accountancy within NASBA sets its own requirements to sit for the CPA exam, so criteria may vary among states. However, many state boards require at least the following from candidates before they’re eligible to take the CPA exam:
Be at least 18 years old
Have a 120-credit bachelor’s degree in accounting or a bachelor’s degree with a certain number of credits in non-introductory accounting courses and business courses
Submit official school transcripts, a credit evaluation application and proof of residency
Education requirements vary the most among state boards of accountancy. For instance, Georgia only requires exam candidates to have a bachelor’s degree with 20 semester hours in non-introductory accounting courses. However, Rhode Island sets more specific stipulations for CPA exam applicants who don’t have a graduate degree in accounting, including at least 24 accounting semester hours covering distinct subjects like auditing and tax accounting.
CPA exam Structure
The three cores and three disciplines of the CPA exam each include both multiple-choice questions and task-based simulations. The exam lasts 16 hours in total—four hours per section—and candidates can take different sections of the exam on different days rather than in one sitting.
Still, test takers must complete and pass all four sections within 18 months—usually beginning on the day a candidate takes their first passed section—to pass the exam. We explore the four sections in detail below.
Auditing and Attestation
The AUD section tests a candidate’s understanding of the technical and ethical aspects of auditing for public and private entities. AUD also covers reporting requirements, risk assessment strategies, obtaining evidence and ethical responsibilities for CPAs.
AUD is divided into four content areas:
Area I: Ethics, professional responsibilities and general principles
Area II: Assessing risk and developing a planned response
Area III: Performing further procedures and obtaining evidence
Area IV: Forming conclusions and reporting
Financial Accounting and Reporting
The questions and tasks in the FAR section target three content areas:
Area I: Financial reporting
Area II: Select balance sheet accounts
Area III: Select transactions
Within these sections, candidates prove their ability to prepare and analyze financial statements, balance sheets with various types of income and expenses, correct accounting errors, and navigate the differences in financial accounting and reporting for for-profit and nonprofit companies.
Taxation and Regulation
The REG section explores tax laws for businesses and individuals within the United States, ensuring that CPA candidates understand the significance of and procedures for compliance. Candidates work with taxation technology and resources to analyze data and determine the correct processes for accuracy and completeness.
This section includes five content areas:
Area I: Ethics, professional responsibilities, and federal tax procedures
Area II: Business law
Area III: Federal taxation of property transactions
Area III: Federal taxation of individuals
Area III: Federal taxation of entities
Discipline
CPA candidates must choose one of three disciplines as the fourth section of the CPA exam.
Previous versions of the CPA exam included the BEC section, which explored corporate governance, information technology, financial and operations management, and economic concepts. The discipline section replaces BEC, allowing candidates to test in an area of interest or advanced skill.
This section offers the following testing areas:
Business analysis and reporting: BAR expands on several concepts in FAR, including data collection sourcing, financial analysis and reporting, while closely examining business analysis and local and state governmental accounting.
Information systems and controls: ISC focuses on secure and accurate data collection, storage and analysis procedures used in accounting. Candidates must demonstrate knowledge of information technology audits, security threats and mitigation, and security regulations.
Tax Compliance and Planning: TCP digs deep into taxation for individuals and entities beyond what’s included in REG. TCP Topics and tasks include calculating estimated tax payments, reviewing shareholder debts and investments, and distinguishing types of business entities for tax purposes.
How Is the CPA exam Scored?
CPA exam scoring weighs the scaled scores of multiple-choice questions and task-based simulations of each section equally at 50% of the total score. The only exception is the ISC discipline, in which multiple-choice questions make up 60% of the score and task-based simulations account for 40%.
Each exam goes through a multi-step review process to ensure scoring accuracy.
How Hard Is the CPA Exam?
If AICPA’s pass rate data is any indication, this is a hard test. During the first two quarters of 2023, these were the pass rates for each section of the CPA exam:
REG: 59.22%
AUD: 47.68%
FAR: 42.30%
BEC (eliminated from the 2024 exam): 58.25%
How To Study for the CPA Exam
The CPA exam process is long and rigorous, so planning can be the key to passing each section. Before you begin studying, plan your timeline carefully.
In what order do you want to take each section? How will you space out the various sections to supply yourself ample study time? Keep track of exam application deadlines, and think about when you should schedule study sessions. Also, consider whether you’ll need to take some time off work.
AICPA’s exam Blueprints offer an excellent starting point for your test prep. The blueprints walk you through each section of the CPA exam, filling you in on what to expect and what to study.
CPA exam Study Resources
AICPA offers official resources for continuing education for practicing accountants. Though you aren’t yet a CPA, you might find these materials helpful while studying for your CPA exam. They are categorized into many of the same Topics you’ll work with on the exam, like auditing and financial reporting, and many are free or discounted for AICPA members.
You can also practice with a shortened sample test from AICPA, which familiarizes you with the CPA exam software.
Several other online resources are available to help you study for the CPA exam, although it’s important to ensure courses and materials are up to date and designed or taught by credentialed instructors. AICPA hosts a database of CPA exam preparation resources, including costs and user ratings for each to help you narrow your options.
CPA exam Study Methods
Preparing for the CPA exam takes significant motivation and focus, and studying with other CPA exam candidates could help you stay on track. Consider looking for study group participants at work, through your local professional organization or from your graduating class. You might also find nearby candidates through social media groups.
Collaborate with your study group members to decide which materials you’ll use, whether you’ll host meetings in person or online, and how often you’ll study so everyone can stay on track.
If you’d like to study solo, find a quiet, dedicated space for sessions and make room in your schedule for several hours of exam preparation each week. Consider getting support from a trusted colleague or mentor when necessary.
Frequently Asked Questions (FAQs) About the CPA Exam
Is the CPA harder than the bar?
The CPA exam and bar exam are both known for their challenging content. However, based on the passing rates for each, the CPA exam generally appears more difficult to pass than the bar. Depending on the jurisdiction, the July 2023 bar exam saw pass rates ranging from 58% to 92%, according to the National Conference of Bar Examiners. The highest cumulative passing rate for any section of the CPA exam during the first two quarters of 2023 was 59.22%.
How many questions are in the CPA exam?
The CPA exam comprises between 250 and 282 multiple-choice questions, plus 28 or 29 task-based simulations, depending on the discipline section you choose. ISC has the most questions and simulations in total, followed by TCP and BAR.
Tue, 31 Oct 2023 02:14:00 -0500Amy Boyingtonen-UStext/htmlhttps://www.forbes.com/advisor/education/cpa-exam-guide/Certified Equity Professional Institute
Accounting
Equity Plan Design
Analysis and Administration
Corporate and Securities Law
Taxation
Candidates can elect to complete just the first level of the program - resulting in the ECA designation, or to continue on for the remaining two levels, at which point they will have earned the CEP designation. The CEP designation is granted to individuals who have passed all three exams, and have demonstrated mastery of equity compensation related issues in all of the core disciplines. The CEP Institute also offers an exam solely focused on accounting; the Advanced Equity Compensation Accounting Certificate (AECA) exam is for financial reporting professionals in any organization that offers equity compensation, as well as the accounting professionals who are required to verify proper expensing under ASC 718 and other standards.
If you are a current ECA/CEP who'd like to share your story, we'd love to hear from you.We are excited to be sharing your stories on the CEPI LinkedIn page and would love to hear a bit about how the CEPI has helped you throughout your journey.
Wed, 15 Nov 2023 11:46:00 -0600entext/htmlhttps://www.scu.edu/execed/individuals/cepi/Financial Adviser Designations Are Not All the SameNo result found, try new keyword!Just because a financial adviser has credentials after their name doesn’t mean they meet the same rigorous standards as others do. How to figure out who you can trust.Wed, 08 Nov 2023 20:40:31 -0600en-ustext/htmlhttps://www.msn.com/CFP vs. CPA: What’s the Difference and Who Should You Hire?
There are more than 200 designations and certifications available to financial professionals, comprising an alphabet soup of distinctions that confuse consumers and fellow professionals alike. If you are searching for a financial planner, know that quality is more important than quantity. Distinguishing between various distinctions, such as CFP® vs. CPA, is key to making sure you receive the best advice.
Two of the most recognizable financial credentials are the CPA license and CFP® certification. CPAs and CFP® professionals have different but complementary areas of expertise, and some professionals hold both credentials. When considering who to hire, it’s important to understand their roles individually and to know when it makes sense to work with an adviser who has both credentials.
The Certified Public Account’s Role
To earn the CPA license, accountants must complete at least 150 hours of education, pass a rigorous four-part exam and meet experience requirements, according to the Association of International Certified Professional Accountants (AICPA). In a corporate setting, CPAs can offer financial statement audits and other attestation services to help inform investors about the financial health of organizations. Additionally, they often provide tax, financial reporting and advisory services to corporations, small businesses, nonprofit organizations, governments and individuals.
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
A CPA can be helpful in the realm of personal finance as well. A CPA is useful for individuals in tax preparation and for discussing an individual’s tax situation with the IRS. CPAs can also be useful to business owners for bookkeeping and tax matters associated with an individual’s business. Some CPAs even have additional training that may help with business valuation, or detecting fraud, which can be helpful to business owners.
CPAs complete rigorous training and are helpful in very specific circumstances. But most accountants do not feel comfortable advising on the various complexities inherent in personal finance or myriad other important financial decisions that may require advice from a specialized expert. To truly achieve your short- and long-term financial goals, you will likely benefit from working with a professional who is trained to take a more holistic and forward-looking approach to your personal finances.
The Certified Financial Planner’s Role
In short, a financial planner is an individual who advises clients on their personal finances. The CERTIFIED FINANCIAL PLANNER™ certification is the standard of excellence in financial planning.
Much like the CPA license, the CFP® certification requires completing coursework, fulfilling relevant experience requirements, agreeing to adhere to a set of ethical mandates and passing the CFP® exam, which consists of two three-hour sessions over one day. The requirements for CFP® certification are just as rigorous as for the CPA license, and the education requirements include similar foundational topics, such as tax regulations and risk management.
The comprehensive education for CFP® professionals, however, expands into the general principles of financial planning and other personal finance Topics such as investments and retirement planning.
In recognition of the overlap between CPAs and CFP® professionals, the Certified Financial Planner Board of Standards, Inc. (CFP Board) provides an accelerated path for professionals with select credentials, including the CPA license, who are working toward CFP® certification.
While CPAs can assist with examining past financial information to reduce taxable liability retrospectively, financial planners consider a wide range of opportunities to grow and protect your wealth through careful planning. CFP® professionals focus heavily on strategic financial management and maintain a strong interest in budgeting, savings, insurance and estate planning. CFP® professionals closely review your current financial standing and, based on your financial goals, develop an investment and financial plan to help you accumulate wealth.
Although both CFP® professionals and CPAs can help clients maximize their incomes by reducing taxable liability, financial planners are also looking ahead to find new ways to grow their clients’ net wealth.
CFP® professionals are continuously looking for new ways to strengthen and deepen client relations at different touchpoints throughout the year. CFP® professionals understand that discussing your financial future can be emotional and stressful. That is why CFP Board recently added a new section to its exam topics, the Psychology of Financial Planning, to teach the emotional and interpersonal aspects of financial planning. This syllabu prepares CFP® professionals — and CPAs who complete the accelerated path program — to counsel clients who are experiencing monetary conflict or financial stress, helping them to move forward holistically.
Your Financial Goals
If you are looking for a professional to help you evaluate your past financial statements and solve some portion of your tax situation, a CPA may be helpful, especially if you have complicated income streams.
However, if you’re looking to begin a relationship with someone who can provide ongoing, forward-looking advice as well as financial peace of mind, a CFP® professional could be a better fit. Whether you’re looking to save for retirement, establish an estate plan or make strategic investments, a CFP® professional will typically be better equipped to evaluate and navigate the best route for you.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Mon, 02 Jan 2023 10:00:00 -0600entext/htmlhttps://www.kiplinger.com/personal-finance/cfp-vs-cpa-whats-the-differenceCertified Financial Planning
The certificate is composed of 18 credits of masters-level graduate coursework with the primary goal of providing students with the education, training and skills necessary to be able to sit for the Certified Financial Planner (CFP) examination.
The curriculum is aligned with the CFP® Board’s Principal Knowledge Topics and covers principles and practices of essential areas of financial planning, including:
Wealth Management
Investment Management
Tax Planning
Estate Planning
Insurance and Retirement Planning
CFP students enjoy the opportunity to work with clients at the Low-Income Tax Clinic for graduate credit and CFP exam experience.
Have Questions? For more information about the CFP Graduate Certificate, including tuition and fee information, please email Justine Tydings, our Sr. Recruiting Coordinator.
The UW College of Business and the certified Financial Planning certificate program are nationally accredited by AACSB.
Students must take the following required courses to receive their certificate*:
*Accelerated path candidates — candidates who bypass the other education requirements — are only required to take FIN 5800: CFP Capstone.
As a CFP® professional, you can assist with developing and executing financial strategies for your clients. You will help others create financial goals based on existing financial conditions and risk tolerance. CFP®s can offer guidance on managing debt, picking investments, preparing for retirement and setting aside money for both short- and long-term goals.
Certified Financial Planner Careers
Here are just a few places our University of Wyoming alumni are making a difference with a certified Financial Planning certificate:
University of Wyoming Foundation
Wyoming Retirement System
Wells Fargo Advisors
Northwestern Mutual
Raymond James
Creative Planning
Merrill Lynch
Golden Tree Asset Management
Frontier Asset Management
Hiltop Bank
Edward Jones
Financial Planning Certificate Program Highlights
In 2021, the University of Wyoming's certified financial planning certificate program had a 100% pass rate on the CFP exam.
100% Online
Due to the entirely online nature of our curriculum, you can continue working according to your usual schedule. We want this program to benefit a wide range of people, whether you're pursuing another graduate degree or acquiring your Financial Planning certificate as a non-degree-seeking student. Developing your career doesn't have to make your daily life more difficult or demanding.
Exceptional Faculty
The CFP Certificate program was the best decision I made in my graduate education. I had no idea how valuable this program would be not only for my personal life, but also my career development. The faculty were highly qualified and always available to help explain concepts and mentor me throughout the program.
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Sun, 12 Nov 2023 08:00:00 -0600entext/htmlhttps://www.uwyo.edu/uw/degree-programs/certified-financial-planning.htmlWant to Achieve Financial Wellness? Get Support from an Accredited Financial CounselorNo result found, try new keyword!An Accredited Financial Counselor is a certified expert in the money game. They’ve passed a challenging AFC exam and met strict continuing education requirements. This isn’t a weekend ...Tue, 03 Oct 2023 12:43:00 -0500en-ustext/htmlhttps://www.msn.com/What is a financial consultant?No result found, try new keyword!If you have questions about your money, a financial consultant may be able to help you achieve your financial goals.Tue, 14 Nov 2023 23:31:00 -0600entext/htmlhttps://edition.cnn.com/cnn-underscored/money/what-is-a-financial-consultantWhat is a certified financial planner (CFP)?
A certified financial planner, or CFP, is a specialized type of financial planner who has met the certification requirements of the CFP Board. A CFP must keep up with continuing education, pass an exam and adhere to the CFP Board code of ethics. CFPs are bound by a fiduciary duty, meaning they must meet the highest standard of care when providing advice to clients.
CFP candidates must have either 6,000 hours of professional planning experience or 4,000 hours of apprenticeship experience under the direct supervision of a CFP professional (among other requirements), as well as complete coursework through the CFP Board program. A bachelor’s degree or higher from an accredited institution is also required, as is an ethics commitment to work in your clients’ best interest.
Key takeaways
The CFP certification is one of the most highly sought-after designations for financial professionals and can add a lot of value to their careers.
The CFP certification requires holders to abide by a fiduciary standard, putting their clients' needs first.
A CFP holder must pass an exam, have demonstrated experience, participate in ongoing education and commit to an ethics standard.
Are CFPs better than fee-only planners?
First off, it’s important to note that CFPs and fee-only planners might sometimes be one and the same. CFPs may call themselves fee-only as long as the planner and the planner’s firm receive no sales-related compensation and related parties receive no sales-related compensation from services performed by the CFP, according to the CFP Board’s standards of conduct. That can be an especially high standard for CFPs who work at some financial firms.
CFPs are part of a larger, professional network, so they have a lot of resources at their disposal if clients have questions, a resource that independent fee-only planners might not have.
One of the benefits of working with a CFP is that they must meet a fiduciary standard, which means they must put the needs of a client first. Fee-only planners, however, are not required to meet a fiduciary standard. And don’t confuse fee-only advisors with “fee-based” planners, the latter of whom may still recommend products that pay them a commission.
The value of a fee-only planner for clients is that it provides a better alignment of incentives for the client. That is, the fee-only planner is more likely to work on the client’s behalf if there’s no incentive (i.e., a sales commission) to push financial products and services to the client.
While fee-only planners charge clients only for their time or other services, CFPs may also be compensated by the products they sell. In some cases, that compensation can be as much as 100 percent of the commission that the financial institution gets for selling the product.
What does that mean for you? The more products a planner recommends, the more money the planner earns. A plan that includes a lot of high-commission products, then, is probably not in your best interest. While that arrangement may sound bad, the CFP credential explicitly charges the holder to be a fiduciary and act in the client’s best interest.
So the fee-only compensation setup combined with the CFP designation can be a powerful combo that indicates a planner is skilled while being incentivized to act in your best interest.
The CFP is a good designation to have, but it’s not the be-all and end-all. Just because a planner has a CFP certification does not mean that they are the best person to advise you. It’s important to get referrals and reviews for any financial planner you’re considering. Regardless of whether the advisor is fee-only or a CFP (or both), you need someone who understands your needs.
You should expect to be charged a fee by a CFP for providing financial advice on your investments and perhaps for managing your investments for you as well. A CFP’s services don’t come cheaply. Most CFPs charge you an hourly rate for their services, and larger firms or those CFPs with more experience typically charge more.
CFPs charge an average of around $250 per hour, according to a 2020 study by Kitces Research. While it might not seem like a big deal to pay someone $500 or $1,000 for a few hours of their time once a year, it can add up quickly when you’re paying for advice on a regular basis.
As a result, it might make sense to go with a financial planner who charges you a flat monthly or annual rate, so you can budget for the advice you are getting.
Other CFPs will charge you a fee that’s based on how much money you have to invest. They can charge anywhere from 0.5 percent to 1 percent per year on the assets you manage. A planner who charges a percentage of assets under management is typically more expensive than a flat-fee-based planner, as the percentage fee is tied to the size of your portfolio.
It’s worth noting that while these fees may come out of your pocket on the front end, you may end up making much smarter decisions that are aligned with your goals than if you go with the “free” advisors that many financial institutions offer you. They’re often really just salespeople in disguise.
Need expert guidance when it comes to managing your investments or planning for retirement?
Bankrate’s AdvisorMatch can connect you to a CFP® professional to help you achieve your financial goals.
How to become a CFP
A financial planner needs a bachelor’s degree or higher, but no specific concentration or major, to become certified. Additionally, individuals must have 4,000 to 6,000 hours of financial planning experience (as explained above), as well as successfully complete coursework in financial planning and pass a comprehensive exam. According to the CFP Board, the exam covers a range of topics, including insurance, annuities, securities and investment, taxes, retirement planning, estate planning and financial planning practices. Then you must commit to ethical practices and to act as a fiduciary on behalf of your clients.
The CFP exam is administered by the Financial Planning Standards Board, an independent nonprofit organization advocating for consumer protection and financial planning standards.
Those who pass the exam and meet the other criteria are awarded the CFP designation. To maintain the designation, professionals are expected to pay an annual renewal fee of $455, starting Oct. 1, 2022. Candidates must also obtain continuing education (CE) credits, and the CFP Board requires a minimum of 30 hours of CE over a two-year period.
More and more financial planners are earning their CFP designation, which can be a boon for their careers.
Bottom line
A certified financial planner is a professional designation earned through a certification process. CFP professionals can be hired by a financial firm or act as independent planners. But there’s no guarantee that a CFP is the right fit for all of your financial needs. It’s vital to ask questions and understand the provider’s qualifications and expertise to be sure they meet your needs.
Correction, Feb. 10, 2023, 3:00 pm ET: A previous version of this article didn’t fully explain the details of the experience requirement for CFP certification. The article has been corrected to better reflect the number of hours needed for both professional experience and apprenticeship experience.
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