by Alverta “Sandy” Steinwedel
Yes, an accountant can be a financial advisor, and many are both. What is a financial advisor and how does it differ from a Certified Financial Planner?
Certified Financial Planner (CFP) is an individual who has:
- Earn a bachelor’s degree, preferably in finance or business management
- Pass the CFP Examination
- Gain relevant experience in the field, which usually requires a minimum of three years
Certified Public Accountant (CPA)
- Earning a bachelor’s degree in accounting
- Pass the CPA Exam
- Gain relevant experience in accounting
As you can see the educational foundation is the same for both; however, the test to earn the designation and their experience are earned through a different path.
In addition, a CFP must adhere to the “Financial Standard” which is:
“A CFP professional takes a holistic, personalized approach to bring all the pieces of your financial life together. CFP’s make a commitment to act as a fiduciary when providing financial advice to clients. This means they have agreed to put the clients’ best interests first, so they have a secure financial tomorrow.”
Therefore, it is important that your accountant, who is acting as your financial advisor, follows the same “Financial Standard” governed by a CFP.
People ask, “When should I hire a financial advisor?’ Is there a certain amount in my portfolio or age? Answer: When you feel you need financial advice. Not only with investments but credit card debt, retirement savings, home purchase, etc.
In your initial meeting be ready to discuss fees, reporting, and your expectations.
Financial advisor fees can be based on commission/sales, a set management fee, percentage fee based on your total asset value or hourly fee. Each fee structure is determined by your needs. If you are working with an accountant, discuss a discount on tax preparation. Some may offer a discount on multiple services.
Proper reporting may be an issue that is important to you. Many companies provide quarterly reports as well as a monthly newsletter. In addition to reports, one-to-one meetings are a must. Advisors have different philosophies on meetings. Some only meet as needed, annually and/or quarterly. It is important you schedule a meeting with your financial advisor at least annually whether it is via phone call, video conference or face-to-face.
As with any service business, the client may decide to change advisors. Changing advisors is an easy process with today’s technology. If you are moving assets, documents are provided via DocuSign. Once the signatures are received, the assets are moved via a wire transfer. BEWARE: Remember if you are using an accountant as your financial advisor, accountant and tax preparer, it may be advisable to hire two different individuals.
In conclusion, before you hire your financial advisor, consider using a broker checker website to confirm the person you are considering: 1) can sell investments; 2) can offer investment advice; 3) detail their employment history and 4) does not have any regulatory actions or complaints. The Financial Industry Regulatory Authority (FINRA) is an independent, non-governmental organization that regulates brokers and broker-dealer firms to protect investors. Here is a direct link: brokercheck.finra.org
