A CPA handles taxes and accounting, while a financial advisor focuses on investments, retirement, and long-term financial planning. You may need both when financial decisions involve tax implications and long-term goals. By working together, they can help you avoid conflicting recommendations and make informed financial decisions.
These two areas of expertise often overlap in tax and financial planning. For example, selling investments may support your financial goals but also create unexpected tax liabilities. Similarly, reducing your current tax bill may not always align with your retirement plans. This collaboration can help align your tax strategies with your overall financial goals.
If you're unsure whether you need a financial advisor alongside your CPA, choosing the right professional can feel challenging. To make that decision easier, take our free Advisor Quiz to get matched with up to three fiduciary advisors who may help you coordinate your financial planning with your tax strategies.
What a CPA Actually Does
A CPA helps individuals and businesses prepare tax returns, plan for future tax obligations, maintain accurate financial records, and comply with tax regulations. They also provide guidance on tax-saving opportunities, financial reporting, and complex accounting matters to support effective financial management.
To earn this designation, candidates must meet state-specific education and experience requirements, pass the CPA Exam, and complete ongoing professional education. These licensing standards help establish professional competence and accountability in accounting services.
In practice, a CPA's role extends beyond filing annual tax returns. CPAs may also provide proactive tax guidance, including timing income and deductions, reviewing business structures, and assessing the tax consequences of major financial transactions.
Additionally, CPAs may assist with bookkeeping, business entity selection, and representation during IRS audits. Their knowledge of tax rules and compliance can be particularly valuable when financial decisions involve complex reporting requirements or potential tax consequences.
What a Financial Advisor Does
A financial advisor helps individuals manage investments, plan for retirement, and develop strategies to achieve their financial goals. Their services may include investment management, insurance planning, education funding, and guidance on major financial decisions. The goal is to create a financial plan that reflects your needs and priorities.
Beyond these services, review the professional standards that govern financial advisors. Titles such as financial advisor, wealth manager, and financial consultant do not automatically indicate specific qualifications or legal responsibilities. Understanding the regulatory standards that apply to an advisor can help you assess the level of responsibility they have to clients.
These obligations depend on the capacity in which a financial professional operates. Investment advisers registered with the SEC or state regulators generally have a fiduciary duty to act in their clients' best interests when providing investment advice. In contrast, broker-dealer representatives must follow Regulation Best Interest (Reg BI) when making recommendations to retail customers. Under this standard, they must put customers' interests ahead of their own when recommending financial products or services.
Because these standards differ, confirm an advisor's responsibilities before hiring them. Ask whether they act as a fiduciary at all times and request written confirmation. This can help you identify potential conflicts of interest and choose a professional whose responsibilities align with your financial needs.
Tax Preparation Versus Tax Planning
Tax preparation involves preparing and filing tax returns based on past financial activity, while tax planning takes a forward-looking approach to managing future tax obligations. Both serve important purposes, but tax planning provides opportunities to make adjustments before taking important financial steps.
Once the tax year ends, you have fewer opportunities to make changes that could reduce your tax bill. At this stage, a CPA can help ensure your tax return is accurate and that you claim all eligible deductions and credits. Given these limitations, early tax planning is particularly important for individuals with complex financial situations.
For instance, early tax planning can help you decide when to withdraw retirement funds or realize investment gains. It can also help you structure charitable contributions to reduce your tax liability. These choices can affect both your tax obligations and long-term financial goals. To balance these priorities, a CPA can review the tax consequences, while a financial advisor assesses how these decisions fit into your investment and retirement plans. This combined approach can help you manage taxes without compromising your overall financial strategy.
The CPA Who Also Plans: The PFS Combination
A CPA with the Personal Financial Specialist (PFS) credential combines accounting expertise with specialized training in personal financial planning. This credential allows CPAs to offer services beyond traditional accounting, including retirement, investment, estate, and tax planning.
Access to both areas of expertise can be particularly valuable for individuals with complex tax situations who also need broader financial guidance. Instead of consulting separate professionals for every financial concern, you may be able to get multiple planning services from one qualified CPA/PFS. However, the range of services depends on the professional's experience, qualifications, and practice.
Although a PFS credential demonstrates specialized financial planning knowledge, it does not automatically mean a CPA provides investment management services or acts as a fiduciary in every professional capacity.
Before choosing a CPA/PFS, ask about their financial planning experience, compensation structure, and any additional registrations or licenses. Reviewing these details can help you assess whether their expertise matches your financial needs or whether working with a separate financial advisor would be more appropriate.
Situations That Really Call for Both
Working with both a CPA and a financial advisor can be beneficial when your financial situation involves complex tax obligations and long-term planning needs. For example, business ownership, equity compensation, inheritance, and retirement income planning are common situations where both professionals may provide valuable guidance.
The following situations explain when combining their expertise may be particularly useful:
You Own a Business
Business owners often face decisions involving business structure, estimated taxes, and personal finances. While a CPA handles tax compliance and business-related obligations, a financial advisor can help plan for personal wealth, retirement savings, and a potential business sale.
You Receive Equity Compensation
Stock options and restricted stock units (RSUs) can create complex tax obligations and investment risks, especially when much of your wealth is concentrated in one company. To manage these challenges, a CPA can provide tax guidance, while a financial advisor can help you develop investment diversification strategies.
You Receive an Inheritance
Inheriting assets may introduce new tax considerations and investment decisions. Depending on the type of inheritance, you may need a CPA to clarify potential tax obligations. Meanwhile, a financial advisor can help you incorporate inherited assets into your long-term financial plan.
You Are Planning Retirement Income
Deciding how much to withdraw from retirement accounts and when to take distributions can affect your taxes and future income. To manage these decisions, a financial advisor can develop a retirement income strategy while a CPA reviews the potential tax consequences.
In these situations, the need for both professionals ultimately depends on the complexity of your finances and the decisions involved. Before hiring them, review whether your tax and financial planning needs require separate expertise or can be addressed by one qualified professional.
How to Get Them Working Together
To help your CPA and financial advisor work effectively together, establish clear communication and share relevant financial information. You should also define each professional's responsibilities and keep both informed about major financial decisions. This can help prevent conflicting recommendations and support a more consistent financial strategy.
Here are some practical steps to make this working relationship more effective:
- Encourage Direct Communication: Give your CPA and financial advisor permission to communicate and exchange relevant financial information. With your authorization, they can discuss important matters directly without relying on you for updates.
- Involve Both Before Major Decisions: Inform both professionals before making significant financial moves, such as selling investments, changing your business structure, making large gifts, or completing Roth conversions. Early discussions can help identify potential tax implications and planning concerns before taking action.
- Share Important Financial Documents: Provide both professionals with relevant tax returns, investment statements, and information about your financial goals. Access to the same information helps both professionals provide more consistent financial guidance.
- Clarify Each Professional's Responsibilities: Establish who will handle specific aspects of your financial decisions. For example, your CPA may address tax calculations and reporting requirements, while your financial advisor manages investment and retirement planning. Clear responsibilities can help prevent important tasks from being overlooked.
- Verify Professional Credentials: Before relying on an advisor's recommendations, review their registration status and disciplinary history through official regulatory resources. You can use Investor.gov to access tools for researching investment professionals and checking their backgrounds.
Ultimately, you can manage the relationship between the two professionals yourself or choose a financial advisor willing to work directly with your CPA.
Need a Financial Advisor Who Can Work With Your CPA? Take Our Free Financial Advisor Quiz
Managing your taxes, investments, and retirement plans can become challenging when financial decisions affect multiple areas of your finances. Even if you already work with a CPA, finding a financial advisor who understands your tax situation and can coordinate with your accountant may not be easy. Without this collaboration, you could face conflicting recommendations, overlooked tax implications, or decisions that do not support your long-term goals.
Addressing these challenges may be easier with a fiduciary financial advisor who is willing to collaborate with your CPA. This collaboration may help you make more informed financial decisions while keeping your tax and long-term planning priorities aligned. To find an advisor who understands your needs, take our free Advisor Quiz to get matched with up to three fiduciary advisors. Then compare your options and choose a professional willing to work alongside your CPA.
FAQs
How Much Does It Cost to Work With Both a CPA and a Financial Advisor?
Costs depend on the services you need and each professional's fee structure. CPAs may charge hourly or fixed fees, while financial advisors may charge asset-based, hourly, or flat fees. Request written estimates from both professionals before hiring them.
Can I Hire a Financial Advisor Without Changing My CPA?
Yes. You can keep your existing CPA and hire a separate financial advisor. Before choosing an advisor, ask whether they are comfortable working with your accountant. This allows you to maintain your current accounting relationship while receiving additional financial guidance.
Who Should I Contact First for a Major Financial Decision?
Start with the professional whose expertise is most relevant to your decision. For tax-related concerns, contact your CPA first. For investment or retirement decisions, consult your financial advisor. In complex situations, involving both early may help you consider different financial implications.
Does My CPA Need Access to My Investment Accounts?
Not necessarily. Your CPA may only need relevant investment statements, transaction records, and tax documents to address reporting requirements. Direct account access is not always necessary. Ask which documents are required and use secure methods to share sensitive financial information.
How Often Should My CPA and Financial Advisor Review My Financial Situation?
An annual review may be sufficient for relatively simple finances. However, major changes in income, investments, or family circumstances may require additional discussions. Ask both professionals how frequently they recommend reviewing your financial situation based on your specific needs.
