Power Investing: Financial Advisors Team Up With CPAs
Some people assume that if they have a financial advisor or a CPA, they don’t need the professional direction of the other. However, each of these professionals brings a specific set of skills to the table which, complement each other. Most investors can benefit from having both professionals on their team to provide direction and insight instead of just one or the other. In general, financial advising focuses on financial planning and investments while accounting concentrates pertains to taxation and regulation. Together, financial advisors and CPAs can provide an array of other services that greatly complement one another.
What Does a Financial Advisor Do?
Financial advisors often concentrate on helping clients accumulate and preserve personal wealth. Their main role is to develop an investment strategy based on the client’s financial goals, tolerance for risk, and other individual characteristics. Based on this strategy, the financial advisor then determines which particular investments are most suitable. Financial advisors also assist with retirement, education, estate planning. Since many investments also have tax implications, financial advisors can work with CPAs to structure investments to help minimize tax obligations.
What Does a CPA Do?
CPAs often focus on tax services for individuals and businesses by helping with tax planning and preparing tax returns. Since CPAs stay current on taxation issues and legislation, they can also help clients reduce their taxable income and take advantage of deductions that the average person may not know about. They also make sure that clients are claiming income, losses, and deductions correctly, thereby avoiding issues with tax authorities.
In addition to tax services, CPAs also provide accounting services for individuals and businesses. CPAs that serve businesses also prepare financial statements, provide guidance with business decisions, and help business owners understand complex financial transactions and other matters. CPAs can also provide auditing services in which they determine the validity and accuracy of a company’s financial statements. This can help prevent compliance and legal issues and can also help companies build credit and secure business loans.
How Do Financial Advisors and CPAs Work Together?
CPAs and financial advisors work together to address the most important aspects of an investors financial life. In the grand scheme of working with an investor, the financial advisor provides investment options whose descriptions are in line with the clients goals while the CPA structures the investments in favor of the investor as it pertains to taxation. This way all sides benefit. The client get’s the best of both worlds from each professional and both the CPA and financial advisor either earn a new client or strengthen their already existing relationship.
Although there can be some overlap in skills, CPAs tend to provide the highest levels of expertise on taxation and regulation while financial advisers often are more focused on helping people with personal financial planning, retirement and estate planning, college funding, investing, risk management, and business succession planning.
Today’s economy is more diverse than ever before and as a result, investors should look for financial professionals whose practice or services offers them the most experience, security, and proven results. Professionals who are appropriately licensed and who regularly invest in their own professional development and continuing education are a bare minimum requirement.
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