Do I need a CPA, financial advisor, or someone else?
I am interested in hiring an accountant to thoughtfully prepare my taxes and look into investment opportunities for me. I would also like advice on how to manage my finances. However, I'm not sure which professional I would need (or multiple). Is there someone that performs a mixture of these services?
There are professionals who provide a mixture of services. However, in my opinion, there are few who do it well. Personally, I prefer to use a CPA for taxes, and an investment advisor (possibly a CFP) for investment recommendations. There are firms who offer both services, but with individual specialists. I like this arrangement because direct communication between the CPA and investment advisor can be very valuable.
All the best,
Wyatt A. Moerdyk, AIF®
I prefer a team approach to assisting clients, since each professional concentrates and is an expert in their respective field. Every successful person understands the value of getting good advice, the difficult part is knowing where to find it. The synergy of trusted advisors is a necessity for any business. If you look at any successful individual or business, they have several trusted advisors. They become trusted because they really understand the nuances of their field and provide unbiased expertise and work at being the best at what they do full time. Each field has various levels of talent, but If you are a small business, I suggest you find a good Enrolled Agent (EA) or CPA for taxes and/or bookkeeping, an attorney for the legal issues, a property and casualty insurance agent for the business/ personal liability issues, and a Certified Financial Planner (CFP) for the overall holistic financial planning and management of investments issues. In addition, a good CFP should act to coordinate the communication and overall efforts of the other trusted advisors as part of the CFP's service to you. Another reason I suggest separating the professions is to minimize conflicts of interest that may arise and must be considered when blending the lines of professions and professionals.
I would separate the oversight/audit function from the investment one. The CPA can keep an eye on what the financial advisor is doing to make sure that everything works together and is above board. Having someone in charge of both functions, while likely simpler, requires that person to be good at everything and concentrates power in one individual's hands.
There are CPAs that can handle all these functions. You would want one that also holds a CFP® or PFS designation. There are also CFP® certificants who are EAs (Enrolled Agents) or CPAs.
Some CPA holders provide investment help as an accommodative service. Some CFP® holders provide tax support as an accommodation service. In other words, they may have a main area of practice and provide some guidance in another. This means you will need to interview the professionals who provide multiple services to determine if they will fit your needs.
Some CPAs or EAs will provide tax support, while working with local CFP® professionals in the area. The same is true in the other direction. Some CFP® professionals focus mainly in planning and investments, and work with local tax professionals to handle tax details.
Based on your needs, you may be able to work with one professional, or you may want to work with both. You will likely not save money in the long run through "bundling" the services in one professional engagement. If you do decide to use one professional, ask about their fee structure. It is OK if they charge separately for different services. You want to make sure they are transparent in their fees. This way you can make the best decision for you.
Ideally, you'd like to start with CFP® professionals because they’re the quarterback of the financial team to best serve you. By training, a CFP® is familiar with many aspect of your financial life, such as helping your cash flow/budget, education planning, estate planning, investment, risk management (life insurance, LTC, etc.), retirement planning, and tax planning. However, just because we know a vast breadth of all subjects, it doesn’t mean we are allowed to do tax or provide legal advice unless we also hold the CPA and law licenses. Thus, a CFP® is the center of your financial planning, but he/she will refer you to other professionals periodically for more specific tasks. Best!