CPAs as Financial Educators – Lessons for Better Money Management – Wimgo

CPAs as Financial Educators – Lessons for Better Money Management


Financial literacy is sorely lacking for many individuals and families. A [recent survey]( by the National Foundation for Credit Counseling found that only 30% of adults in the U.S. could answer at least four out of five basic financial literacy questions correctly. 

With complex financial products and an increasingly insecure economic environment, knowledge gaps in personal finance can be extremely detrimental. Poor financial decisions can lead to outcomes like excessive debt, inadequate savings, and constant financial stress.

As trusted financial advisors, CPAs are in a unique position to serve as financial educators for their clients. By teaching good money management principles and skills, CPAs can provide huge value to clients beyond just compliance services.

This article will explore how CPAs can effectively serve as financial educators to improve clients’ financial capabilities. It covers:

– The great need for financial education today

– Ways CPAs can provide education tailored to clients’ needs 

– Key topic areas where clients need guidance

– Challenges to overcome as a financial educator

– The immense value of empowering clients with financial skills

Equipping clients with personal finance knowledge and skills is a win-win proposition. Clients gain control of their financial lives while CPAs strengthen trusting relationships and build their reputations.

The Need for Financial Education

Here are some signs that greater financial education is needed for your clients:

– Overspending and undersaving – Clients live paycheck to paycheck, spend impulsively, and avoid thinking about retirement.

– Poor money management – Clients are disorganized financially, do not budget or track expenses, and ignore financial statements.

– Lack of planning – Clients are reactive instead of proactive, dealing with money issues only when they become urgent.

– Bad financial products – Clients use high-fee investments, take out payday loans, or sign up for unnecessary insurance. 

– Financial dependence – Clients rely on you or others for financial decision-making instead of learning skills.

Why are so many individuals and families deficient when it comes to personal finance knowledge? Here are some likely reasons:

– No financial education growing up – Most schools do not adequately teach money management. Parents often avoid discussing family finances with kids.

– Rapidly changing environment – New financial products and technological advances make personal finance more complex.

– Decline of pensions – The shift to defined contribution retirement plans puts more responsibility on individuals to manage their own savings and investments. 

– Easy access to credit – Consumers today can quickly obtain loans or credit cards, sometimes resulting in excessive debt.

– Predatory lending – Some lenders use aggressive marketing and take advantage of consumers’ lack of financial literacy.

CPAs can make a big difference by providing practical financial education tailored to each client’s needs and life situation. A little knowledge can go a long way.

How CPAs Can Serve as Financial Educators

As trusted financial advisors, CPAs have unique opportunities to provide clients with education on personal finance topics:

Understanding Clients’ Financial Situations

– Ask probing questions during tax preparation and advisory engagements to identify strengths and weaknesses in clients’ financial behaviors and knowledge.

– Review brokerage statements, insurance plans, loan documents, and other financial information to spot areas of concern like high fees or interest rates.

– Connect changes in a client’s personal situation like marriage, divorce, new job, or windfall to their financial strategy.

Providing Unbiased Financial Advice

– Explain financial concepts clearly using layman’s terms and relatable examples during discussions.

– Present personalized options around spending plans, emergency funds, debt payoff, retirement contributions, and other money decisions.

– Outline pros and cons of various financial products like annuities, life insurance, 529 plans, and mortgage types.

– Refer clients to trusted financial professionals like insurance agents, investment advisors, and attorneys to build a comprehensive plan.

Teaching Money Management Skills 

– Work jointly with clients on tasks like tracking expenses, budgeting, or calculating net worth to transfer knowledge.

– Send educational articles, podcast suggestions, or your own newsletters to improve clients’ financial literacy.

– Recommend financial books and online resources like courses, calculators, and sample documents to boost learning.

– Conduct workshops, webinars, or one-on-one coaching on topics like managing credit or developing savings habits.

Serving as a financial educator takes time and commitment but is well worth the effort. A disciplined process of discovery, analysis, recommendation, and regular reviews helps instill positive financial behaviors.

Here are some best practices when taking on the role of financial educator as a CPA:

– Set expectations upfront about two-way participation in the process.

– Listen first for clues about the client’s financial knowledge gaps. 

– Use the client’s unique circumstances for personalized examples.

– Present new concepts through simple analogies and stories.

– Check for understanding and have the client explain back the lesson.

– Follow up consistently to reinforce the learning.

– Celebrate wins to build momentum for behavior change.

Key Areas for Client Financial Education

Here are some of the most critical personal finance topics where CPAs can provide education and guidance for clients:

Budgeting and Tracking Expenses

Many individuals and families do not have a good grasp of where their money is going each month. By teaching budgeting and spending tracking skills, CPAs can help clients:

– Gain visibility into their spending patterns and cash flow.

– Make intentional decisions aligning expenses with values and goals. 

– Cut unnecessary expenses through conscious spending choices.

– Plan for expected future expenses in their monthly budget.

– Identify opportunities to pay down debt faster through spending adjustments.

Recommended strategies to teach:

– Creating a monthly expense tracking spreadsheet or using budgeting software.

– Generating spending categories and cost goals based on values, priorities, and income.

– Reconciling projected budgets with actual spending each month.

– Setting periodic calendar reminders to review and update the budget.

– Automating savings transfers and bill payments to support the budget.

Managing Debt 

Excessive debt is a major cause of stress for individuals and families. CPAs can educate clients on smart debt management through the following:

– Assessing all current debt and its key terms like interest rates and minimum payments. 

– Calculating total interest paid over time under different payment scenarios. 

– Prioritizing paying down the most expensive debt first vs. smallest balance first.

– Refinancing debt when appropriate to lower interest costs.

– Monitoring credit reports and scores to achieve better loan terms.

– Avoiding counterproductive options like debt consolidation loans.

– Controlling future debt accumulation by spending within their means.

Strategies to teach clients include:

– Ordering free annual credit reports to review existing debts.

– Using online calculators to run payoff scenarios and interest costs.

– Setting up automatic payments at higher amounts to accelerate payoff.

– Calling lenders to request lower rates threatening to transfer balances. 

– Monitoring credit reports for errors and signs of identity theft.

Saving and Investing

Saving enough for emergencies, goals, and retirement is challenging for consumers today. CPAs can guide clients on: 

– The importance of paying yourself first through automatic transfers. 

– Choosing the right mix of savings accounts, CDs, money market funds.

– Investing extra funds in stocks, bonds, mutual funds, real estate.

– Deciding how much to allocate to retirement vs. short-term goals.

– Proper asset allocation and diversification strategies.

– Implications of different retirement account options.

Ways to educate clients on saving and investing best practices include:

– Using online calculators to estimate retirement savings needs. 

– Setting up automatic monthly transfers from checking to savings accounts.

– Reviewing asset allocation across retirement and taxable accounts.

– Analyzing expected returns and fees for stocks, funds, or ETFs.

– Explaining benefits of retirement accounts like 401(k)s and IRAs.

Retirement Planning

Many clients are uncertain about how to achieve a secure retirement. CPAs can provide education about:

– How to estimate retirement income needs and shortfalls.

– Taking advantage of tax-deferred retirement savings vehicles.  

– Appropriate investment mixes before and during retirement.

– Strategies for withdrawing savings and claiming Social Security.

– Income options including pensions, annuities, and part-time work.

– Managing healthcare and long-term care expenses.

Retirement planning education can involve:

– Projecting future retirement spending needs based on lifestyle desires. 

– Reviewing benefits and contribution limits for 401(k), IRAs, etc.

– Discussing the pros and cons of Roth vs. traditional accounts.

– Running scenarios for Social Security claiming tactics.

– Modeling sustainable withdrawal rates from savings.

Tax Planning 

Taxes are a large expense for most clients. CPAs can help educate them on ways to optimize their tax liability through:

– Contributing pre-tax to retirement accounts to lower AGI.

– Taking advantage of deductions like mortgage interest, donations, etc. 

– Looking for ways to get income taxed at lower capital gains rates.

– Timing of deductions and income recognition to manage brackets.

– Managing taxes on social security benefits and retirement account withdrawals.

Useful strategies CPAs can teach for tax planning include:

– Reviewing income sources to identify tax reduction opportunities.

– Calculating scenarios of how deductions affect tax brackets.

– Setting up estimated tax payments and withholding to avoid underpayment penalties.

– Explaining tax impact of investments like municipal bonds and rental properties.

– Discussing charitable giving approaches, like donor-advised funds, that optimize deductions.

Overcoming Challenges as a Financial Educator

CPAs can encounter some difficulties in serving effectively as financial educators for clients:

Establishing Yourself as a Trusted Advisor

– Clients may see you as focused just on compliance like taxes and accounting.

– They may rely on other advisors like brokers or insurance agents for financial advice.

– Your credibility must be built over time by consistently providing education and guidance.

Ways to overcome:

– Communicate your holistic wealth management capabilities and client success stories.  

– Ask clients for permission to review their entire financial situation.

– Coordinate with clients’ other advisors to integrate the collective guidance.

Finding Time to Educate Clients

– Your days are already packed serving client needs around tax preparation and planning.

– It feels more efficient to make recommendations versus spending time teaching clients.

– Clients may be reluctant to pay for “soft” financial consultations.

Potential solutions:

– Allocate set hours each week for client consultations to discuss financial topics.

– Provide educational seminars, workshops, webinars, and newsletters leveraging your expertise.

– Have junior staff members like paraprofessionals conduct initial financial reviews and coaching.

– Explain the long-term value of financial education in strengthening the advisor relationship.

Staying Within Your Expertise 

– You likely do not have the experience to advise clients on all aspects of personal finance.

– Straying outside your core competencies could lead to client confusion or bad outcomes.

– Knowing when to refer clients to other specialists is important.

Recommendations here:

– Be transparent on which financial areas you can and cannot provide guidance.

– Build a network of trusted professionals like brokers, insurance agents, and attorneys to refer clients to.

– Partner with other specialists for co-created educational content and events.

– Continue your own financial education through conferences, training, and credentials.

Getting Clients to Take Action

– Many clients suffer from inertia and fail to implement your financial education.

– Their long-ingrained money habits are tough to break.

– They may avoid confronting difficult topics like retirement readiness.

Ways to drive action:

– Make recommendations simple and actionable with clear next steps.

– Help clients tackle money to-do items during your sessions together.

– Follow up consistently to reinforce important lessons and hold them accountable.  

– Use behavioral finance strategies to nudge clients towards positive financial behaviors. 

– Celebrate and reward small steps to build momentum.


Financial illiteracy and lack of money management skills are serious problems plaguing consumers today. As trusted advisors, CPAs have a tremendous opportunity to provide clients with tailored financial education.

By teaching positive financial habits and behaviors, CPAs can greatly impact clients’ financial wellbeing and security. Budgeting, smart debt use, adequate retirement savings, and tax optimization are examples of high-value areas for CPAs to guide clients on.

Serving as a financial educator has its challenges, from finding the time to overcoming inertia. However, the long-term benefits for both clients and CPAs make it a worthwhile endeavor. Empowered clients have the knowledge to make smart money decisions, while CPAs strengthen their reputation and client loyalty.

Making financial education a consistent part of the client experience allows CPAs to live up to the trusted advisor role. Knowledge is power when it comes to personal finance. By sharing their expertise, CPAs can be the driving force to fill consumers’ financial literacy gaps and provide a lifetime of healthy money habits.