Accountant vs. Financial Advisor

If you’re struggling to manage your personal finances, you might consider seeking the help of a financial professional. Most people reach out to either an accountant or a financial advisor for financial planning assistance.

But how do you know which professional to consult? When comparing accountants and financial advisors, it’s important to consider what services you need. You might also do some research to better understand the similarities and differences between the two professions.

Let’s look at how accountants and financial advisors are alike, as well as how they are different, before exploring how to determine which financial planning professional you might need.

As financial planning professionals, accountants and financial advisors are both well-versed in financial regulations and best practices. “Both accountants and financial advisors are trained in financial matters and can help individuals or businesses manage their money,” said Andrew Lokenauth, a professor at the University of San Francisco and founder of Fluent in Finance.

A financial advisor and an accountant might provide some of the same services. Both professionals might be able to offer guidance on matters such as preparing for tax season and managing investments.

If you’re a small business owner, you might find value in working with an accountant, financial advisor or both. Either of these financial professionals can assist entrepreneurs with integrating their personal and business finances.

Both accountants and financial advisors can give you an assessment of your overall fiscal condition, said Certified Financial Planner™ professional William Bevins. They do this by examining documents such as balance sheets and income statements.

Whether you’re looking for an accountant or a financial advisor, you should consider their qualifications. Both accountants and financial advisors can obtain certifications from professional organizations.

Financial advisors can become Certified Financial Planner™ professionals (CFP® professionals), a standard of excellence that is upheld by the CFP Board. Accountants usually obtain the designation of Certified Public Accountant (CPA) from the Association of International Certified Public Accountants (AICPA). Both these credentials require taking courses and passing an exam from a regulatory organization.

The biggest difference between accountants and financial advisors lies in their areas of expertise. An accountant’s main focus is on tax planning and preparation. If you want to ensure you are totally compliant with tax law while making sure you don’t pay more taxes than you need to, you might find working with an accountant helpful.

Financial advisors, on the other hand, mainly focus on planning for retirement and other big financial milestones. A financial advisor can take a holistic look at your financial circumstances and help you stay on track to reach your goals, whether that’s buying your first home, making the most of an inheritance or retiring early.

Accountants and financial advisors also differ in the ways they interact with their clients. A financial advisor will likely have a long-term professional relationship with their clients and work with them over time to implement financial strategies and make adjustments.

In contrast, an accountant can be thought of as a contractor or a specialist. Their relationships with clients might be more transactional. For example, you might only work with your accountant once or twice per year during tax season.

Robert Persichitte, a CPA and CFP® professional, said that accountants and financial advisors often have different approaches to developing their financial expertise. “Accountants are incredibly specialized. In accounting firms, there is pressure to constantly refine and specialize,” Persichitte said. “This gives you the benefit of someone who completely understands their practice.”

On the other hand, Persichitte described financial planners as generalists. “They like to say they are the quarterback who can get competent professionals for everything. They tend to be better at taking a big-picture view of problems.”

Due to the differences in the services they offer, financial planners and accountants use different systems to charge for their services.

Accountants most often charge clients based on how many forms the client needs help completing. According to a study from the National Society of Accountants, the average fee can range from $78 to $1,289 per form depending on the complexity of the form. An accountant may also charge a retainer fee for IRS audits or offers in compromise.

Financial advisors may use one of three compensation models: fee-based, fee-only or commission-based. The fee an advisor charges is usually calculated as a percentage of the assets under management.

A certain type of financial advisor, called a fiduciary, only charges fees and does not receive any commission for recommending certain products. This is because fiduciaries are required to always act in their clients’ best interests, and a commission could pose a conflict of interest in doing so.

The choice of whether to hire an accountant, a financial advisor or both will depend greatly on your needs and priorities.

“If you need help with tax preparation or managing your financial records, an accountant may be a good choice,” said Lokenauth. An accountant is likely to be the most knowledgeable about state and federal tax rules and can help you maximize your tax refund while still being compliant with regulations.

On the other hand, Lokenauth said, “If you are looking for guidance on financial planning, investment strategies or retirement planning, a financial advisor may be more appropriate.” Because financial advisors tend to be generalists, they can help with a variety of financial planning topics.

If you’ve recently experienced a major financial change, either positively or negatively, a financial advisor can help you plan for how to proceed. This includes occurrences like starting or selling a business, getting married, having a child, receiving a large inheritance or retiring.

Many people could benefit from working with both a financial advisor and an accountant. Because their skill sets and services are so different, both professionals can offer unique value to your financial planning. They are different, but also complementary.

An accountant’s expertise comes in handy when preparing your taxes or managing the finances of your small business. A financial planner can help you look to the future with guidance on things like insurance and retirement planning. To give a concise example, your accountant can help you get the largest tax refund possible, and your financial planner can help you decide how best to invest that check.

Some financial professionals combine the services of an accountant and a financial planner. Known as CPA financial planners, these advisors help clients with everything from tax preparation and retirement to estate planning and investment management. Working with a CPA financial planner might be a cost-effective way to get guidance on a wide range of financial topics.

No matter which financial planning professional you work with, CPA Colin Smith recommended taking a hands-on approach. “You still need to oversee and monitor their work and take ultimate responsibility for any financial decisions being made,” Smith said.

“At the end of the day, CPAs and CFP® professionals are best utilized as advisors to help you make smart and informed financial decisions, not as a way to outsource critical financial decisions,” said Smith. “Nobody will care about your money as much as you do.”

Editor Samantha Connell contributed to this article.