VioletaStoimenova/ Getty Photographs; Illustration by Austin Courregé/Bankrate
Monetary advisors and accountants are each monetary professionals who help shoppers with completely different facets of their monetary lives. Whereas each jobs contain monetary evaluation, there are vital variations between the 2 roles. Right here’s what you need to find out about monetary advisors and accountants, together with when it is smart to rent one versus the opposite.
- Accountants vs. monetary advisors by the numbers: In 2022, there have been practically 5 occasions as many accountants and auditors (1.5 million) than there have been private monetary advisors (327,600), in keeping with information from the U.S. Bureau of Labor Statistics.
- Monetary advisors are a preferred supply of data: Of the 57 p.c of Individuals who sought monetary recommendation in 2023, about 35 p.c spoke with a monetary advisor — the second hottest supply of monetary info behind family and friends, in keeping with a December 2023 Bankrate survey.
- Monetary advisors are a trusted supply of data: 35 p.c of Individuals say that monetary advisors are probably the most trusted supply of monetary recommendation, outpacing spouses, members of the family, enterprise information, pals and social media, in keeping with a 2023 survey by Northwestern Mutual.
- Projected will increase for each professions: Employment of accountants and auditors is projected to develop 4 p.c from 2022 to 2032, whereas the variety of private monetary advisors is projected to develop 13 p.c throughout the identical time, a lot sooner than the typical for all occupations, in keeping with the Bureau of Labor Statistics.
- Accountants maintain busy at tax time: Common workers billable hours for accounting companies throughout the 2022 tax season was 1,467 hours, in keeping with the CPA Journal.
What does a monetary advisor do?
A monetary advisor helps shoppers with numerous facets of their monetary lives, however they’re most frequently related to retirement planning. Monetary advisors assist to construct funding portfolios for various objectives and may additionally help with issues like budgeting, insurance coverage, tax technique, property planning and extra.
One of many first issues a monetary advisor does once they begin working with a consumer is to find out the consumer’s objectives. From there, they assist develop a financial savings and funding technique that aligns with these objectives. Shoppers sometimes meet with their monetary advisors a handful of occasions annually to observe their progress towards objectives and see if any modifications are vital.
The perfect monetary advisors are fiduciaries, which implies they’re ethically sure to all the time act in the very best pursuits of their shoppers and proactively disclose any potential conflicts of curiosity. If a monetary advisor isn’t a fiduciary, there’s probability they work for an insurance coverage firm or monetary establishment, and the recommendation they provide could also be biased.
What does an accountant do?
An accountant’s function is often extra slim than that of a monetary advisor. Accountants assist observe and manage monetary transactions and sometimes assist put together annual tax filings. Oftentimes, shoppers may solely interact with their accountant round tax season, whereas they could work together with a monetary advisor at numerous factors throughout the yr.
Accountants could also be extra concerned in situations the place the consumer owns a enterprise. The accountant might assist put together monetary statements for the enterprise along with its tax returns. Accountants sometimes don’t give funding recommendation.
Key variations between monetary advisors and accountants
Whereas monetary advisors and accountants might sound related, there are some massive variations within the providers they supply. Listed below are a few of the key variations between the 2.
Certifications
A monetary advisor might maintain plenty of completely different skilled designations, akin to licensed monetary planner (CFP) or chartered monetary analyst (CFA), whereas accountants sometimes maintain the licensed public accountant (CPA) designation.
Companies supplied
Accountants sometimes provide providers associated to tax preparation and may additionally be concerned with monetary statements or monitoring and organizing transactions. Monetary advisors assist with retirement planning, funding administration, property planning, tax technique and extra.
Assembly frequency
You could meet with a monetary advisor a handful of occasions annually, discussing your funding outcomes and whether or not your objectives have modified, whereas shoppers sometimes meet with their accountants throughout tax season.
Must you work with a monetary advisor or an accountant?
There are numerous eventualities in life when it could make sense to rent a monetary advisor, accountant or each. Listed below are a few of the conditions the place working with one is smart.
When to rent a monetary advisor
- You’re in search of assist with retirement planning or funding administration.
- Your general monetary state of affairs is complicated and also you’d like help with a wide range of subjects akin to property planning, tax technique or insurance coverage.
- You’re in search of a debt paydown technique.
When to rent an accountant
- You’re in search of somebody to do your taxes.
- You need somebody to assist manage your monetary life.
When to rent a monetary advisor and an accountant
Backside line
Whether or not or to not rent an accountant or monetary advisor will rely in your particular person circumstances and what is smart for you might not make sense for another person. Usually, accountants are used for tax preparation, whereas monetary advisors are used for funding recommendation and retirement planning in addition to plenty of different monetary points. Think about using Bankrate’s monetary advisor matching software to discover a monetary advisor in your space.
