In an article, entitled, "Unsettling Accounts," which appeared in the October issue of Financial Planning magazine, authors Bruce P. Conrad and Dr. Bob Brown reported the results of a their survey of 115 CPAs aimed at assessing the accountants' level of understanding  pertinent financial issues.

The authors cited as their catalyst a poll that reported that 38 percent of small accounting firms contemplating adding investment services to their practices felt that they could do so without hiring additional staff.

Their results were based on a survey in which they gave 115 CPAs a 21-question multiple-choice quiz. The questions dealt with issues surrounding the relationship between risk and return, general financial topics, and personal information, such as age, level of education, and self-assessment regarding financial issues.

Nine percent of the survey participants classified themselves as having a "below average understanding" of basic financial topics, 53 percent thought they had an "average" understanding, while 38 percent felt they had an "above-average understanding," according to the article.

According to the authors, "As the questions became more technical or more sensitive to current economic events ... the respondents had a much lower success rate."

The article notes that only 17 percent of the group chose the correct answer for a question related to price-to-earnings ratio, and only 16 percent correctly answered a question related to the effect of a 1 percent interest rate increase on the market price of long-term bonds. According to the report, only 5 percent of participants accurately answered a question concerning how often the stock market declines by 20 percent or more. It also states that, "All of the respondents significantly underestimated the risk of owning both bonds and stocks."

The text of the article is available at: http://www.financial-planning.com/Practice_Management/Operations/20001001031.html.

The authors concluded: "Those firms considering investment services without additional staff should carefully analyze and develop the skills and background of their current personnel to ensure the high level of service their clients expect."

The story has drawn the ire of at least one CPA financial planner.

Responding to the article in a letter dated Nov. 3 to Financial Planning magazine chief editor Thomas Johnson, Andrew Blackman, a CPA Personal Financial Specialist and Certified Financial Planner with Shapiro & Lobel in New York, called the publication of the article "irresponsible journalism."

Blackman took issue with the article's conclusion, saying it is "inadequately supported by the results of a blatantly amateurish survey masquerading as serious research."

"That you would lend credence to this type of unsubstantiated propaganda, more suited to a public lavatory room wall than the pages of your publication, which purports to empower advisers, is a disservice to the general public at large, as well as the entire financial planning community," Blackman wrote.

"How can a sample size of a mere 115 CPAs (from a universe that exceeds 400,000) be considered representative, much less statistically valid, to render any conclusions?" Blackman asked.

"There are several additional significant questions that are begged by what the article did not reveal to your readers," he continued. "For instance, how were the surveyed CPAs selected and how were they contacted? Were the CPAs informed of who sponsored the survey or why? Were they informed that the survey would be used to render conclusions about the collective financial planning capabilities of the CPA community? How many CPAs indicated they felt unqualified to respond or otherwise refused to answer the questions? Most importantly, what was the demography of the CPAs in the survey (e.g., were any, or even most, of the CPAs primarily auditors; were these CPAs who currently practiced in, or even intended to enter, the planning area)?"

"Unless your goal was to sabotage the image of CPAs who render planning services, should not any credible study attempt to assess the knowledge of CPAs who profess that they have the necessary skill sets and do in fact provide the service? CPAs who have attained additional credentials, such as PFS, CFA, or CFP ought to be included in any meaningful research that attempts to assess a profession's readiness to serve the public. All the authors accomplished is to smear the abilities of an entire community of professionals among whom many are exceedingly qualified. That you would dare to be associated with such an obvious hatchet job defies logic," Blackman concluded.

He added, "I suggest you take a second look at some of your questions and answers. While in my opinion many of the questions are poorly phrased and otherwise inappropriate, the answer to Question 5, for example, unarguably should read $700, rather than the $300 given as the 'correct' response on page 222."

Still, another CPA planner believes that the article contains some truth.

Bernard Kiely, a CPA and CFP at Kiely Capital Management Inc. in Morristown, N.J., says insufficient knowledge is one of the primary reasons many CPAs don't get into financial planning.

While some members of the CPA community "claim that CPAs are uniquely qualified to offer financial planning services by virtue of their education and experience," Kiely said. "It's not true."

The reason, he said, is because it's not a part of their training as accountants. "There aren't many financial planning and investments courses in an accounting curriculum," he said.

While Kiely concedes that a sample of 115 CPAs isn't statistically valid, and that some of the survey questions were loaded, he said, "Most CPAs have as much knowledge about financial planning as the general public."

Kiely isn't saying that CPAs can't be good planners. Rather, his point is part of what it takes to become a good planner is having a real zeal for doing planning.

"The ones that are really interested in it read a lot about it, and know a lot," he said. "If a CPA really wants to be in financial planning, he's probably been doing it for ten years," he said.

-- By Melissa Klein

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