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Why Does it Make a Difference if Your Financial Advisor is a CPA?

Trust is everything when it comes to choosing a financial advisor. You have to entrust this person with your money, personal information and private financial goals. There may be a number of reputable financial advisors in your area. How do you know which one to choose?

Some clients will narrow down their choices by focusing on financial advisors who are also CPAs. Financial advisors don’t have to have accounting experience, but it’s one criterion that might prove important to you, too.

It Means Your Financial Advisor Is Credentialed

“Financial advisor” is a phrase that tends to be used broadly, and anyone can claim to be one. Of course, generally financial advisors working with reputable firms are highly educated and experienced and may hold Certified Financial Planner (CFP) credentials. But one way to be sure that your financial advisor has passed rigorous financial testing is to work with one who is a CPA.

Licensing requirements vary by state, but it’s generally safe to assume that an advisor who is a CPA has met strict educational and experiential requirements and has passed the comprehensive CPA Exam. (This 16-hour exam is so challenging that only about 50 percent of candidates pass!) Additionally, CPAs may be required to complete a certain number of continuing professional education hours to maintain licensure. CPE courses cover a range of topics including ethics, technology, recent tax legislation and compliance, allowing CPAs to stay current on issues affecting their clients. Licensed CPAs are also required to adhere to the American Institute of CPAs’ Code of Professional Conduct.

It Could Simplify Your Life

You’re busy enough. Choosing a financial advisor who is also a CPA could streamline your entire financial planning process. Instead of keeping separate lists of questions to ask your financial advisor and your CPA, your advisor can answer them all. This can be a helpful convenience even if you don’t hire your financial advisor or their firm to service your accounting needs. If you do use the same advisors for your accounting needs, you may appreciate having a single point person to contact with any questions around these issues, instead of having to meet with and pay a separate accounting firm. This could be especially true around tax season, when the same firm that helps you with financial planning is able to provide tax preparation and filing services. It’s like having a one-stop shop for all your financial needs.

It’s Useful for Tax Planning

Certainly, a reputable financial advisor – even one who isn’t a CPA – should have a solid understanding of general tax law. Not all financial planners are tax specialists, however. Tax strategy and preparation is generally an area of expertise for CPAs. When you work with an advisor who’s always mindful of the tax implications around your plans, you’re unlikely to run into expensive surprises later on.

Working with an advisor who’s also a CPA could help you craft the tax strategy that best serves your current and future needs. Especially if you have a complex tax situation, or if you’ve made financial planning mistakes in the past that have hurt you at tax time, a CPA’s insights can be invaluable. CPAs should also be knowledgeable about reporting and compliance requirements. Adhering to those requirements, with your advisor’s help, could be important if you’re ever audited.

It Means Your Financial Advisor Will See Your Full Financial Picture

You want your financial advisor to help you optimize every dollar. Crafting the strategy that allows you to grow your money and build security requires your advisor to understand not just your future goals, but your financial past too. CPAs are able to look at your past tax statements and account documents to identify weaknesses and patterns. A financial advisor who is also a CPA can use that information to find opportunities that suit your saving and investment style. This added layer of experience gives these professionals the ability to take a 360-degree view of a client’s financial picture.

Sachetta Callahan offers a full spectrum of financial services, including financial advising and tax planning. How can we help you prepare for everything that comes next? To learn more, contact Sachetta Callahan today.

We’re pleased to announce a growth merger with Wealth Management Advisors, effective January 1, 2022.

Learn more about what to expect.