What is the Relationship Between an Accountant and a Financial Advisor?

As you look to achieve your financial goals, you may be considering working with a financial advisor or an accountant. Depending on your financial needs and goals, you may need both. So, what is the difference between the two, and when do you need to enlist the help of each?

Let’s discuss.

Financial Advisor vs. Accountant

Let’s identify the differences between a financial advisor and an accountant.

Accountant

An accountant plays a role in recording, summarizing, analyzing, and creating reports of financial transactions. These professionals are licensed to provide tax advice and counsel you on preparing tax returns and estate tax returns. 

Moreover, accountants play a large role in suggesting tax-saving strategies. While accountants help strategize and suggest these strategies, you likely need a financial advisor to help implement these strategies.

Financial Advisor

On the other hand, financial advisors are licensed to give investment advice and develop a plan to grow your wealth. Their role as financial advisors is to construct an effective portfolio for your financial goals and risk profile. This typically includes:

• Retirement planning
• Estate planning
• Philanthropic strategy implementation

Which Financial Professional Do You Need For Your Goals?

Your relationship with each professional depends largely on your financial needs and goals. So, when do you need the counsel of either?

Some view their financial advisors as the architects of their wealth management. Financial advisors interact with their clients more frequently to help implement financial plans, monitor their progress, and adjust the sails as necessary.

Alternatively, an accountant steps into this process as a specialist. Their relationship with clients is traditionally more transactional. These professionals help prepare your financial statements and tax returns when needed. Accountants know and understand the IRS rules and regulations in greater depth than a financial advisor.

Clients typically use an accountant when they have a more complex tax situation; whether that means a business owner, a large family, a rental property owner, or someone with multiple streams of income. Taxes can become complicated, which is when partnering with a CPA can move the needle for you.

Clients use financial advisors when they want to develop a savings and investment plan. Your financial advisor is more involved in your everyday financial planning and decision-making. A financial advisor helps steward you through big life events and helps you plan ahead while working to achieve your specific financial goals.

Financial Advisors and CPAs Complement One Another

Deciding between a financial advisor and a CPA is not a one or the other decision. Financial advisors often work together with CPAs to help you achieve your financial goals. CPAs can offer insight into your financial statements that help guide how your financial advisor helps your plan for your future.

Before you talk with your CPA this tax season, read this article describing a few of this year’s updates to tax deductions.