Financial Professional or Accountant? Four Key Ways They Differ

Financial Professional or Accountant? Four Key Ways They Differ

November 10, 2021

Whether you're launching a new business, looking for a second opinion on your retirement plan, or just need some extra help with your taxes, you may be wondering whether it's time to contact an accountant or financial professional. While both types of professionals can provide you with targeted financial advice, the right choice for you will depend on your individual financial needs. It's important to understand the distinct roles each position holds. Below, we'll discuss four of the biggest differences between financial professionals and accountants.

Accountants Recommend, Financial Professionals Implement

Both accountants and financial professionals can provide advice on a wide range of financial matters, including tax strategies and budget forecasting. But an accountant may not be able to actually execute the plan on your behalf, like setting up an IRA or purchasing mutual funds. The right choice here will depend on how hands-on you'd like your financial professional to be.

Financial Professionals Deal in the General, Accountants Deal in the Specific

Financial professionals are often asked to provide general financial and wealth management advice to their clients. This can include everything from setting retirement contributions to selecting an asset allocation to weighing, evaluating, and recommending investments. But accountants tend to have a more specific focus, whether it's completing your income taxes or assessing the upside of a prospective business purchase.

Accountants are Transactional, Financial Professionals are Holistic

Because accountants tend to deal in the specific more than the general, it's not uncommon for their services to lean toward the transactional side. This can mean paying per service provided, like tax preparation or bookkeeping. This often stands in contrast with the more common method of paying a financial professional, which usually involves a retainer or a percentage of the assets being managed.

Accountants Look at Today, Financial Professionals Look at Tomorrow

Building on the theme of discrete, transactional tasks, accountants tend to focus their advice more on the here and now. They concentrate on reviewing the most recent IRS rules and regulations to advise their clients on tax changes and can provide detailed information on complex tax situations. Financial professionals tend to be more future-looking, with their skills largely focused on long-term planning decisions.

While these professions target different niches, both financial professionals and accountants can be invaluable for anyone looking for a second opinion on their finances.

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Important Disclosures:

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.