What You Need to Know
- Taxes play an important part in investment planning, so an advisor partnering with an accountant can be extremely valuable.
- Adding tax services can help advisors stabilize income, increase cash flow and give their practice more flexibility.
- Becoming more digital makes it easier to share critical financial data between the advisor and CPA.
As every advisor knows, sound investment advice should incorporate some semblance of tax planning, or at least a rough calculation of the tax impact of a given transaction.
But more often than not, when a client asks an advisor about their tax liability, they’ll often hear, “I can’t give you advice on that. You’ll have to talk to your tax expert.” This is where advisors partnering with a tax expert can provide a more seamless client experience.
Advisors and accountants may have expertise in various financial matters and situations, but the licensing, credentials and focus of each professional are specialized. Accountants are licensed to provide tax advice and counsel and help prepare annual tax returns and/or estate tax returns.
Within corporations and businesses, accountants also may help administer payroll, audit financial information and help prepare budgets, business plans and financial statements.
Advisors are licensed to give investment advice and develop comprehensive financial and wealth management plans. An advisor’s services can include portfolio construction as well as risk management, retirement income strategies, estate planning, philanthropy strategies and more.
Because taxes play an important part in each of these elements, an advisor partnering with an accountant can be extremely valuable.
Although some people don’t necessarily seek out financial advisors when it comes to investing advice, everyone has to pay taxes. Therefore, most people will opt for a CPA before seeking out an investment advisor, which means the CPA can provide a great new business channel for advisors.