Accountants and financial advisors are experts who help individuals and businesses cope with their monetary affairs. Knowing what is the difference between an accountant and a financial adviser can help you choose the expert who best meets your needs.
L&Y Tax Advisor presents a detailed look at accountants and financial consultants, including when to seek their advice.
What Does a Financial Advisor Do?
A financial adviser offers advice on various personal financial subjects, emphasizing retirement and investment planning. Their responsibilities include:
- Guiding investment plans
- Handling tax strategy
- Insurance preparation
- Estate planning
- Budgeting
Assessing a client’s monetary objectives is one of a financial advisor’s initial responsibilities. Based on this evaluation, the advisor creates a client-specific:
- Savings plan
- Investment strategy
Clients usually schedule monthly meetings with financial advisors to monitor their monetary success and make any required modifications.
Fiduciary vs. Non-Fiduciary Advisors
The best monetary advisors are fiduciaries. They have an ethical and legal duty to act in the best interests of their clients. To provide objective financial advice, fiduciary advisors declare any possible conflicts of interest.
Conversely, insurance or financial firms hire non-fiduciary consultants. This may result in biased recommendations.
What Does an Accountant Do?
An accountant’s main responsibility is to deal with documents’:
- Tracking
- Organizing
- Maintenance
- Financial reporting
- Bookkeeping
- Tax preparation
Accountants mostly help customers during tax season. They also offer continuous assistance to individuals and businesses dealing with intricate financial matters.
Accountants are essential to business owners because they prepare financial accounts and ensure tax laws are followed. However, as their areas of expertise are tax administration and financial reporting instead of wealth creation plans, accountants usually do not provide investing advice.
Read: What is a VAT number in the US?
What is the Difference Between an Accountant and a Financial Adviser?
Monetary consultants and accountants have obvious resemblance. However, there are some differences, which are:
| Features | Accountant | Financial Advisor |
| Certifications | Certified public accountant (CPA) | Can vary, but often certified financial planner (CFP) or chartered financial analyst (CFA) |
| Provided services | Tax prep, audit support, tax strategies | Retirement planning, estate planning, lifecycle planning, tax strategies |
| Communication and meeting frequency | Usually during tax season, but sometimes more often | Year-round |
Read: Can a CPA be a registered agent?
Should You Work with a Financial Advisor or an Accountant?
Working with an accountant, financial counselor, or both might be advantageous in some circumstances. Here are a few typical situations:
When to Hire a Financial Advisor?
- You require help managing your investments and retirement plans.
- Because of the complexity of your financial circumstances, you need advice on insurance, tax strategy, and estate preparation.
- You are searching for a methodical way to pay off your debt.
When to Hire an Accountant?
- You need assistance preparing and submitting your taxes.
- You require help keeping track of financial transactions and documentation.
When to Hire Both a Financial Advisor and an Accountant?
- If you are launching or selling a business, you need assistance with tax compliance and financial planning.
- You need advice on investments and taxes since you are planning a big house purchase.
- Your complicated financial portfolio and significant wealth necessitate thorough financial management.
The Bottom Line
Comprehending what is the difference between an accountant and a financial adviser is essential to regulating your personal and professional finances. Accountants concentrate on tax compliance and monetary record-keeping. Financial counselors develop long-term financial plans and investment strategies.
To attain success and financial stability, you may need the help of either of these professions based on your financial needs. So, make wise choices regarding effective money management.
Read: What is an industry accountant?
