Teaching Personal Financial Planning at Business Schools

By Joel I. Gold, Charlotte Pryor, and Philip Jagolinzer

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Personal financial management services are a growing bus ness niche for many companies. Can financial planners expect recent graduates to have taken a course in personal financial planning? What can they expect such a course to cover?

A study of university business programs accredited by the American Association of Collegiate Schools of Business (AACSB) analyzed the relative emphasis on various topics covered in typical personal financial planning courses. Instructors at AACSB schools were surveyed about courses titled either “personal finance” or “personal financial planning.” Only 45.3% of responding schools offer such a course, and only 28.4% of those require the course for a degree. Less than 5% require it for an accounting degree. Financial planners that have a strong relationship with the schools whose graduates they hire should consider encouraging those accounting programs to offer—and perhaps require—a personal financial management course.

Topical Coverage

To find out what topics are covered and their relative importance, the survey asked instructors to indicate the amount of time they spend on 37 different topics. No significant differences in topic coverage or textbooks used were found between personal finance and personal financial planning courses. Two topics—taxes that affect personal finances, and retirement planning (e.g., IRAs, pensions)—are taught at all responding institutions. Topics taught at most responding schools include investment planning strategies, financial planning process, cash flow and budgeting, personal savings and inflation, and risk management concepts. More than half of the schools cover all 37 topics except for commodity trading/futures markets.

The most heavily covered topics, based on the extent of class time, are investment planning strategies and taxes that affect personal finances, each averaging more than 90 minutes of class time. Other heavily covered topics include credit and borrowing, introduction to stocks, and mutual funds. The topics covered by the fewest instructors and assigned the least amount of class time, on average, are commodity trading/futures markets, business law, and professional liability insurance. Exhibit 1 shows all 37 topics and the amount of coverage they received.

Course and Student Characteristics

Exhibit 2 presents the pedagogical methods employed by the respondents. Lecture is unquestionably the preferred method, used by 89% of respondents and comprising about 52% of class time. Exams and discussion of outside readings each averaged about 13% of class time. Employers have long asked instructors to provide students with group or teamwork experiences in their courses, yet only about one-third of respondents appear to be using those activities on a frequent basis.

Exhibit 3 lists the prerequisites for personal financial courses. Most courses had no prerequisite; for those that did, a finance course was most often indicated. Other prerequisites included specific majors, class standing, and other courses, such as accounting.

Class enrollments ranged from as few as five to as many as 800; the median annual enrollment was 40 (see Exhibit 4). Approximately 67% of respondents indicated that 21 to 100 students are enrolled annually. At 40 schools, 57% of respondents indicated that enrollments are increasing. At five schools enrollments are decreasing, and at 29 they are remaining about the same.

Personal Financial Planning in the Accounting Curriculum

The majority of responding AACSB-accredited schools do not offer a course in personal finance or personal financial planning. Graduates are not exposed to the fundamentals of personal financial management.

Those schools that do offer a personal financial course appear to cover a range of useful topics. Certainly, an introductory course will not provide all the information that a professional needs to provide financial planning advice. It can, however, establish a foundation from which new graduates can build the necessary knowledge and skills. One dean stated that the school’s courses “hopefully give [students] the basic vocabulary and understanding of financial planning that they are not getting anywhere else.” Many schools have substantial enrollments in a personal financial management course, and some respondents reported there is a waiting list to take the course. It is not clear why more schools do not offer a personal finance course. Many respondents wrote notes to the researchers stating that they think highly of an introductory personal finance course and, in some cases, propose that it be required of all students.

The topics typically covered in these courses are highly practical. It has been noted that the financial literacy of Americans is declining (see the December 2003 Journal of Accountancy). By hiring graduates that have training in personal financial planning and by encouraging the schools to make these courses available to accounting and finance students, CPA firms can send a clear signal that this subject is an important part of a well-rounded financial education.

Joel I. Gold, PhD, CFP, is a professor of finance, Charlotte Pryor, PhD, CPA, is an assistant professor of accounting, and Philip Jagolinzer, PhD, CPA, is a professor emeritus of accounting, all at the University of Southern Maine, Portland, Me.




















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