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Financial advisors and accountants are both financial professionals who assist clients with different aspects of their financial lives. While both jobs involve financial analysis, there are significant differences between the two roles. Here’s what you should know about financial advisors and accountants, including when it makes sense to hire one versus the other.
What does a financial advisor do?
A financial advisor helps clients with various aspects of their financial lives, but they’re most often associated with retirement planning. Financial advisors help to build investment portfolios for different goals and may also assist with things like budgeting, insurance, tax strategy, estate planning and more.
One of the first things a financial advisor does when they start working with a client is to determine the client’s goals. From there, they help develop a savings and investment strategy that aligns with those goals. Clients typically meet with their financial advisors a handful of times each year to monitor their progress toward goals and see if any changes are necessary.
What does an accountant do?
An accountant’s role is typically more narrow than that of a financial advisor. Accountants help track and organize financial transactions and often help prepare annual tax filings. Oftentimes, clients might only engage with their accountant around tax season, whereas they may interact with a financial advisor at various points during the year.
Accountants may be more involved in instances where the client owns a business. The accountant may help prepare financial statements for the business in addition to its tax returns. Accountants typically do not give investment advice.
Key differences between financial advisors and accountants
While financial advisors and accountants might seem similar, there are some big differences in the services they provide. Here are some of the key differences between the two.
- Certifications
- A financial advisor may hold a number of different professional designations, such as certified financial planner (CFP) or chartered financial analyst (CFA), while accountants typically hold the certified public accountant (CPA) designation.
- Services offered
- Accountants typically offer services related to tax preparation and may also be involved with financial statements or tracking and organizing transactions. Financial advisors help with retirement planning, investment management, estate planning, tax strategy and more.
- Meeting frequency
- You may meet with a financial advisor a handful of times each year, discussing your investment results and whether your goals have changed, whereas clients typically meet with their accountants during tax season.
Should you work with a financial advisor or an accountant?
There are various scenarios in life when it may make sense to hire a financial advisor, accountant or both. Here are some of the situations where working with one makes sense.
When to hire a financial advisor
- You’re looking for help with retirement planning or investment management.
- Your overall financial situation is complex and you’d like assistance with a variety of topics such as estate planning, tax strategy or insurance.
- You’re looking for a debt paydown strategy.
When to hire an accountant
- You’re looking for someone to do your taxes.
- You want someone to help organize your financial life.
When to hire a financial advisor and an accountant
- You’re starting or selling a business.
- You’re making a major purchase such as a home.
- You have significant wealth and your financial situation is complicated.
Bottom line
Whether or not to hire an accountant or financial advisor will depend on your individual circumstances and what makes sense for you may not make sense for someone else. In general, accountants are used for tax preparation, while financial advisors are used for investment advice and retirement planning as well as a number of other financial issues. Consider using Bankrate’s financial advisor matching tool to find a financial advisor in your area.
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