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.
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Both financial advisors and accountants can help clients meet financial goals and maximize tax savings.
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Financial advisors tend to focus more on long-term financial planning for individuals.
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Accountants most commonly focus on tax planning and returns.
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.
The best financial advisors are fiduciaries, which means they’re ethically bound to always act in the best interests of their clients and proactively disclose any potential conflicts of interest. If a financial advisor isn’t a fiduciary, there’s a good chance they work for an insurance company or financial institution, and the advice they give may be biased.
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.
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.
