AICPA Competition: Portland Students’ Creative Financial Plan Nets Top Honorsby
By Deanna C. White, Correspondent
University of Portland accounting student Ingrid Nelson said she became interested in a career as a CPA because it offered her both credibility and flexibility – a solid foundation in the world of business – in addition to a multitude of career opportunities within that arena.
But Nelson stated her recent participation in the 2013 American Institute of CPAs (AICPA) Accounting Competition opened her eyes to a whole new realm of possibilities within the field of accounting: personal financial planning.
Last fall, the AICPA asked student teams from across the country to enter the competition by submitting a financial plan for “James,” a fictional 26-year-old in need of expert guidance on taking control of his finances and paying off his debt.
Because of its creative financial plan designed to dig James out of debt and set him firmly on the road to a solid financial future, the team from the University of Portland in Portland, Oregon, of which Nelson is a member, won the AICPA competition and received a $10,000 award.
Members of the University of Portland team are:
- Ingrid Nelson
- Martin McMahon (captain)
- Tyler Desmarais
- Michelle Siegal
- Ellen Lippman (faculty advisor)
Students from the University of Santa Clara in Santa Clara, California, took second place, earning a $5,000 reward, while students from the University of Southern Indiana in Evansville, Indiana, received $2,500.
Nelson believes the subject of this year’s competition, which challenged students’ as-yet-untested financial planning skills, was especially appropriate for the next generation of aspiring CPAs.
“Financial planning is especially relevant to [future] CPAs because it allows us to utilize our accounting skills to create financial plans for ourselves and our clients,” Nelson said. “Since financial planning is a combination of accounting and tax knowledge, as well as investment and economic factors, this topic was a good way to incorporate related disciplines into a real-life scenario.”
The financial planning topic was also “advantageous,” according to Nelson, because it gave the students exposure to a relatively unknown career option within the CPA profession and taught participants about the importance of debt management, the power of saving, and compound interest.
Richard Caturano, CPA, CGMA, immediate past chairman of the AICPA, said the field of financial planning is rapidly becoming a growing area of interest for many CPAs and their clients.
“Americans are looking for this type of well-reasoned, holistic planning advice as they contend with uncertainty and complexity in their lives. Increasingly, they are turning to CPAs as their trusted advisors, who help them navigate a wide array of financial issues,” Caturano said.
CPAs serving as financial planners provide comprehensive advice for their clients, taking into account taxes, retirement, investments, estate planning, and risk management. CPAs with the Personal Financial Specialist (PFS) credential in particular have advanced knowledge and experience in this area, according to the AICPA.
The University of Portland’s winning submission was one of fifteen entries chosen to participate in the competition’s semifinals. Semifinalists were challenged with creating videos of their plan for the next step of James’s life, as he is married and his wife is pregnant with twins.
The three teams of finalists then traveled to Washington, DC, where they presented their plans for James’s retirement to a panel of judges.
The University of Portland’s team suggested investment options for James and his wife throughout their life, as well as estimates of retirement income and overall net worth. In addition, the winning plan suggested a number of different options for their estate and steps they could take to reduce their tax burden while securing their children’s financial future.
Nelson felt the fictional character of James (as defined by the parameters of the competition) was typical of many young adults who are saddled with crushing debt as recent college graduates. But the character soon distinguished himself by slipping into a well-paying job as a computer programmer and eventually becoming a successful entrepreneur.
“What made James different from his peers were his entrepreneurial drive, his high risk tolerance, and his ability to turn his mobile app venture into a successful business,” Nelson said.
The University of Portland team, named Competitive Pilot Accountants, developed a financial plan that evolved with James’s profile, allowing him to best capitalize on – and shelter – his significant worth and develop a solid estate plan to secure his legacy.
According to Nelson, as James developed from an indebted 26-year-old college grad to a successful entrepreneur, then to a high-net-worth individual (all by the age of forty-five), the team advised him to:
- Pay off his high-interest credit cards.
- Take out a smaller business loan than originally proposed.
- Sell his business (for which he was offered $50 million) as a patentable item while a resident of the state of Texas (because Texas has no state income taxes and the transaction would qualify for a 20 percent capital gains rate).
- Consider various estate-planning tools, such as dynasty trusts and donor-advised funds, as well as charitable remainder and charitable lead trusts, to leave a lasting legacy with his estimated $76 million net worth.
Nelson said the greatest challenges the University of Portland team faced were sorting through the mountain of reference material for estate planning and deciding when and how much asset allocation was needed for each of the estate-planning tools to meet James’s goals.
Her favorite part of the competition? Learning how to structure a client’s estate and investment portfolio in the most tax-effective way possible, and working in a team environment over an extended period of time.
There also was an unexpected boon to the competition for Nelson, as well.
“I also learned that I really enjoy financial planning as it incorporates accounting, tax, legal, investment, and economic factors in order to create a solution to help achieve a client’s goal,” she said.
All awards from the 2013 AICPA Accounting Competition are fully funded by the AICPA Foundation.
For more information about the competition or to watch the video submissions, visit www.ThisWayToCPA.com.