If you need help with estate planning, tax strategy, retirement planning, or investment management, a financial planner can help you develop a long-term, comprehensive financial plan to help you meet your financial goals.
Accountants specialize in tax preparation, financial statement preparation, considering tax implications in financial decision-making, and maintaining organized financial records.
In many cases, the services of a financial advisor and accountant are complementary, especially when you want to combine investment strategies with tax planning, you are starting or selling a business, or your financial situation is complicated.
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Financial Advisors
In simplest terms, financial advisors are strategists. These licensed professionals complete rigorous educational and testing requirements to earn their Certified Financial Planner (CFP) and the Chartered Financial Consultant (ChFC) designations.
Financial advisors, depending on their expertise, may offer a wide range of financial planning services, including retirement, business finance, insurance, and succession planning, and debt management.
When you first start working with a financial advisor, they will take an inventory of your financial goals. They use this information to help you develop a long-term investment and savings plan that will help you achieve your goals.
A CFP professional has a fiduciary responsibility to consider your financial goals, risk tolerance, and individual circumstances before offering financial advice.
You may want to consult with a financial advisor if your financial goals include:
- Short- and long-term financial planning and strategy
- Retirement planning
- Investment strategy
- Debt management
- Estate planning
- Insurance
- Portfolio management
- Small business management
Accountants
After meeting their educational and internship requirements, accountants commonly pursue certification as a certified public accountant (CPA). This designation means that they have passed the CPA exam and meet their specific state’s licensing requirements.
Many accountants choose to specialize in fields such as tax accounting, forensic accounting, and public or private accounting.
Accountants tend to focus more on day-to-day financial questions and challenges. Many business owners hire accountants to help them with business tax management, tax returns, cash flows, and financial documents.
You may want to consult with an accountant if your financial needs include:
- Preparing financial statements
- Determining the tax implications of investment decisions
- Completing tax documents
- Preparing payroll deductions
- Making tax projections
- Ensuring compliance with accounting regulations
- Structuring your business to maximize tax savings
- Forecasting future growth
- Assessing depreciation
- Providing representation in the event of an audit
Financial Advisor vs. Accountant
If you are starting a business, buying real estate, or planning for retirement, you may want input from both a financial planner and an accountant.
Financial advisors can help you evaluate your financial and investment plans and work through the implications of each choice. Your accountant can help you determine the tax implications.
Consider consulting with both a financial planner and an accountant if
- You are starting a new business.
- Your business is growing or changing.
- Your business entails making complex financial decisions.
- You need a comprehensive short- and long-term financial plan.
- You are buying a home or other real estate.
- You have significant wealth or a complicated financial situation.
- You need to compare potential investments and determine the tax implications of each.
- You need to project tax-loss harvesting opportunities.
Fiduciary Financial Advisor
Financial planners assist you in making decisions that significantly impact your future and the financial future of your loved ones.
A fiduciary financial planner has a legal and ethical responsibility to act in your best interests. The financial planning field is broad and includes broker-dealers, who have a different financial role.
A broker-dealer makes investment- or transaction-based recommendations according to the suitability standard. Broker-dealers must have a reasonable belief that the products or transactions they recommend are in the client’s best interests in order to comply with the Financial Industry Regulatory Authority’s suitability standard. Broker-dealers buy and sell securities and earn commissions based on their sales.
When choosing a financial advisor, consult the U.S. Securities and Exchange Commission’s advisor database to verify whether your financial advisor is a fiduciary financial advisor. A fiduciary financial advisor is held to a high standard to offer the best financial advice possible based on your individual situation.
Another important consideration when choosing a financial advisor is to check how they are paid. Financial advisors get paid in several ways: fee-only, commission-based, salary, or combination.
Under a fee-only model, financial advisors get paid directly by the client using either an hourly rate, a fixed annual retainer, or a percentage of the asset value. Since they do not earn commissions or compensation from any third party, fee-only financial planners are unbiased and have a fiduciary responsibility to act in their client’s best interests.
Although the financial model a financial advisor uses is not directly related to the advice you receive, it is still important to take this into account.
Working with a wealth manager who uses a fee-only financial planning structure can ensure you make the best financial decisions for yourself and your loved ones. Ready to secure your financial future? Call us today at 866-395-1786 to get started.
