Financial advisors have similar roles and functions as those of Certified Public Accountants, however there are some significant differences between the two careers. For starters, financial advisors receive a majority of their income from commissions which, because of a mostly-unpredictable stock market, can mean a paycheck that is here today and gone tomorrow. Especially at this time. CPAs on the other hand experience many of the same career benefits with a much more robust and stable income.
A financial advisor’s main duties include developing a comprehensive profile of their client’s financial status with a focus on identifying areas of portfolio strengths and weaknesses. An advisor can also be a voice of reason to clients, as usually money is an emotional subject and, from these emotions, bad decisions can be made. A financial advisor can help investors allocate resources to achieve both short-term and long-term goals, as well as shape investments in ways that minimize tax burdens. And finally, financial advisors help with estate planning to ensure finances are passed on to loved ones in a way that protects the monetary value as much as possible.
There was a time CPAs were thought of as glorified number crunchers but that is really no longer the case. Today’s CPAs are financial strategists that offer tax and financial planning services, investment advice, estate planning, account auditing, business consulting as well as consulting on mergers and acquisitions.
According to the U.S. Bureau of Labor Statistics (BLS), employment of financial advisors is expected to grow 32% from 2010 to 2020. One of the reasons for this remarkable growth is the rise of the baby boomer population who are reaching retirement age and seeking financial planning advice. Another reason for the high growth rate is that many people are now looking for secure ways of building their financial security after the recent recession wiped out their savings. Now more than ever, people are turning to financial advisors for guidance.
The BLS also reports a projected growth rate of 22% for CPAs over the next five years resulting from an increase in business growth as well as the changing financial laws and regulations which require more scrutiny regarding company finances.
Both projected growth averages for financial advisors and CPAs are much higher than the national average for all other occupations.
According to Payscale in 2015, the median annual income for financial advisors is around $90,000. However, the company an advisor works for determines if that salary is fee-based or performance-based. Some firms such as Merrill Lynch will pay a partial salary for up to three years from an advisor’s start date, but thereafter the yearly salary would be mostly based on a percentage of sales. This means, as much of an earning potential as there is, a salary is simply not guaranteed.
CPAs on the other hand benefit from a competitive salary that is guaranteed. In a report put out by the Bureau of Labor Statistics, the median income of an accountant was $62,850 in 2011, with the top 25% reporting earnings of $109,870 or more. CPAs can expect to make 10-15% higher wages than that of their non-credentialed peers.
Of course, these figures represent a national average and may not be reflective you’re your immediate area.
The BLS notes that financial advisor candidates generally major in various fields such as finance, accounting and mathematics. Some degree programs offer candidates the opportunity to specialize in areas like personal wealth management, investment management and financial management.
Financial advisors must also obtain a license for the products they sell, and must also take exams which allow them to sell various kinds of securities. Once an advisor becomes licensed, they can become a certified financial planner as long as they meet the minimum requirements for education and experience and continue following industry standards.
Obviously a financial planner that has taken the time to become licensed is a good candidate to become a CPA, a career which also requires licensing certification. Specifically, to become a CPA a candidate must earn a bachelor’s degree with 150 hours of education, pass a licensing exam, fulfill a 1 year audit requirement, follow a strict code of ethics and continue their professional education to stay on top of any licensing changes. Check with your own state board of accountancy for all requirements.
The role of financial advisor comes with quite a few benefits. For starters, the salary package may include car allowance as well as insurance and pension benefits. And, although advisors are still subject to SEC regulations, they have freedom in how they charge for their services if they work for themselves. This freedom means being able to drum up more clients and cater to those clients individually. Financial advisors also have job satisfaction in being able to help people reach their ultimate financial goals.
CPAs can expect a whole host of career benefits including a yearly salary that is 10-15% higher than their non-certified peers; getting to travel for free around the world while tending to international business, having the respect and admiration of peers and clients, and being challenged daily by rewarding work.
As a financial planner, you already have a lot of the knowledge and determination required to become a Certified Public Accountant. If this is a career path you’d like to follow, you’ll need to begin preparing to take the 4-part CPA licensing exam.
As the Bureau of Labor Statistics has pointed out, the employment growth rate for CPAs is expected to climb 22% in the next ten years. That means there’s no better time to prepare for a career that can bring you a bigger and more stable paycheck, industry prestige, and the ability to help people while tackling the daily challenges of an exciting career.
Readers of this article also read: What are the CPA Exam Requirements & What Is the Process of Applying for the CPA Exam and for Licensure.