Is An Accountant or A Financial Planner Better?

At any one given point, rich or not, you will need the service of either a financial planner or an accountant. There is never a right or wrong time in hiring the services of either or both of them.
The circumstances and type of need determine the service you will need and therefore, seek.

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Accountants can be described as professionals that deal with tax related issues whereas a Financial Planner as one dealing with investments. However, in some instances, both services may be needed depending on the nature of business or investment. Some intricate tax planning expressions and strategies will require a professional accountant but also seek the services of a Financial Planner to help in proper financial management and investment planning.

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What An Accountant Can Offer

As a business owner, you may wonder about the need to spend money on an accountant especially if the business is still small. You may also have business math knowledge. The definitive word for accountants is “taxes” and everything to do with taxes mainly focussing on strategizing, budgeting, tax preparation and filing with tax authorities. Simply, they help in reviewing tax situations in line with changes in tax laws that affect the business and financial structuring.

A professional certified public accountant CPA can offer various services, including;

  • Expenses breakdown; in-depth check, recording and reporting on all incurred expenses in your business or organization
  • Laying down tax-related strategies to help your business prosper including limited company formation.
  • Acts as a liaison link between internal auditors, external auditors, and management or business owner
  • Rental property ownership
  • Depreciation; accountants can valuate assets and advise on their depreciation
  • Bookkeeping; they prepare and maintain accounting records for your business or organization
  • Keep check on tax laws and recommend strategies to help lower tax liability.
  • Tax situation review and help in financial structuring
  • They can help in maximizing your tax returns from savings accounts
  • Carry out tax audits in your company and report on the findings

Accountants are quite task-oriented helping with specific issues that are inaccessible to individuals. One will usually need to be specific about the kind of help an accountant can offer, but their level of knowledge can be deep.

What A Financial Planner Can Offer

Thinking investments? Think of a financial planner!

A Financial Planner focusses majorly on investments but they can offer more than investing your money. Besides investing, they can advise on borrowing, getting out of bad debt before investing, and budgeting your money.

They, Financial Planners, focus on a broader picture. They are holistic and more goal-oriented than accountants eyeing wealth building in effective ways whilst taking into consideration long-term goals and client needs. Financial planners are experts in their field with the ability to locate opportunities. From both logistical and emotional perspectives, financial planners provide a comprehensive view of how a business matches one’s life overall.

Among others, a financial planner offers services such as;

  • Insurance planning (long term care, term life, disability, shareholder protection)
  • Guide on the types of accounts you need before retirement
  • Budgeting
  • They advise and guide on making investments (short, medium and long-term)
  • Asset allocation in cases of death, divorce, etc.
  • Guide on making savings for future expenses
  • Business structure and strategy ideas
  • Protection of wealth and accumulation
  • Portfolio Management

What Both Can Offer

To ensure businesses remain afloat financially, financial planners and accountants need to work together when hired. Accountants who broaden their expertise to include further designations have increased remarkably. Therefore, one may get an accountant who can provide the whole enchilada.
It is, however, advisable to create a financial team that provides clear financial solutions. A team made of a financial planner to guide on investments (risk assessment) and an accountant that guides on bookkeeping, laws governing tax returns.

Difference in modes of payment

There are different ways financial planners can be paid in contrast to accountants. Commission-based, fee-based, and asset-based are the three main forms of payment.
Commission-based planners earn a commission in percentage on money invested or insurance policies bought.

Fees-based planners charge a flat fee for a given service whereas asset-based planners charge a percentage of overall assets invested with them. It is, therefore, prudent to understand how one is paid before choosing the best planner for your needs. Besides the mode of payment, one can ask for referrals and be keen on the qualifications, experience, expertise, and relevant professional certification of the planner you intend to hire.

When seeking the services of a financial planner or accountant, it is advisable to seek referrals from friends, relatives, and colleagues, and schedule a prior free of charge meeting. Identify an expert with qualifications and certification such as Certified Public Accountant CPA or internationally recognized Certified Financial Planner designation.

Therefore, to know who is better between an accountant and a financial planner, identify the nature of your business and what your needs are.


Interesting related article: “What is an Accountant?”