CPA vs. Financial Advisor: Which Do You Need?

by | Jun 29, 2021 | Smart Financial Tips

While there is an overlap between the services of a Certified Public Accountant and a CFP® professional, there are also essential differences. Knowing what services each offers is key to helping you make the best financial decisions for your situation. For example, which professional can best answer your questions about gifting and inheritance? Which can help you with determining how much you need to retire? So read on, find out, and get an understanding of each expert’s role in your financial future.

A Taxing Dilemma

How do you know that you need a CPA? The first hint is that you find yourself searching the internet for answers to tax questions, or perhaps you’re asking friends and family for advice. If this sounds familiar, it’s time to turn to a professional.

When interacting with the Internal Revenue Service, a Certified Public Accountant is key because the CPA’s primary focus is on accounting and tax planning. In addition, a CPA is an expert on today’s tax code. The more complex your financial situation, the more you need a CPA in your corner. A CPA understands the tax implications of your investments, expenses, and other elements that factor into your tax return.

Your financial advisor is knowledgeable in taxes but will likely refer most tax questions to your CPA.

Invest Wisely

When you need an overview of your complete financial picture or help to figure out when you can retire, the best person for the task is a CFP® professional. A financial planner will incorporate all factors of your situation to make recommendations on all aspects of your finances, including cash flows, retirement, investments, your estate, insurance, and college savings. It’s a great way to keep on top of your overall financial picture and to ensure you achieve your financial goals.

Your accountant can recommend tax strategies, but your financial planner will help you implement those recommendations and advise you on the most efficient tax approach within your investment portfolio. Turn to your CFP® professional to make sure you’re staying on track.

April 15th and Beyond

The deadline to file your income tax return approaches every spring, and it’s the busy season for CPA’s. Your financial advisor can respond to general tax inquiries, but unless they are also an accountant, the best person for the job of preparing and filing tax returns is your CPA. In addition, tax laws change over time, and it’s the job of your CPA to keep up with the latest developments and how they affect your financial picture.

Buying and Selling Real Estate

You may need advice on selling a property. You can discuss the overall financial implications with your CFP® professional but turn to your accountant to determine what you’ll take home after paying taxes.  If the tax bite is too big, you might be considering a Section 1031 exchange.  This could be a good way for you to defer your tax liability on real estate you’re holding for investment purposes. Both a CPA and a CFA can explain how this works, but it’s your accountant who puts the 1031 into motion.

Best Financial Fit

A CFP® professional will help you look at your overall risks and potential rewards if you are starting a business. But your CPA can tell you if it is best to structure the business as an LLC, a partnership, an S corporation, or a sole proprietorship.

Do you know which accounting method is the best fit? Depending on your business, there might be reasons to choose the cash over the accrual method, or vice versa.  Rest assured that a qualified CPA can explain which is the best choice.

Other areas of CPA expertise include the potential taxation of your estate, sales, and personal property taxes, as well as the best way to structure gifts and the need for estimated quarterly payments to the IRS.

CPA and CFP® Professional Working Together for You

While we’ve been discussing the differences between financial professionals, financial success is a team effort. Each expert contributes a specific skill set. And when they work together, their power is multiplied.

Did your situation change over the year? Perhaps you received an inheritance or are going through a divorce. You may be planning to buy or sell a significant asset.  Whatever the situation, your team will make sure that you are covered from an overall financial and tax perspective.

An open line of communication allows your team to discuss what is best for you in your specific situation, rather than viewing it in a silo.  For example, your CFP® professional and CPA can discuss a wide range of financial topics to make sure you end up doing what is best for your overall financial situation.

The bottom line is that when your CFP® professional and Certified Public Accountant work together, great things can happen.


Team  Hewins,  LLC  (“Team  Hewins”)  is  an  SEC  registered  investment  adviser;  however,  such  registration  does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas.