CFP vs. CPA: What’s the Difference?

certified-financial-planner

Q. Are there real benefits to going to a financial planner who is also an accountant? What should I look for?

— Learning

A. We’re glad to hear you’re paying close attention to what credentials different advisors have to offer.

Financial planners who are certified financial planners, or CFPs, have extensive experience and education in comprehensive financial planning, including the areas of insurance, investment, income tax, retirement and estate planning, said Jodi Cirignano, a certified financial planner with Lassus Wherley in New Providence.

When you choose to work with a CFP who is a licensed certified public accountant, or CPA, you may obtain access to an even broader range of services and subject matter expertise, particularly in the areas of business planning, tax planning and tax preparation, Cirignano said.

“CPAs are trained to integrate the income and estate tax implications of financial decisions into a client’s overall planning, helping client’s optimize their after-tax income and returns,” she said. “Many CPAs also have experience in advising business owners on issues such as personal and business financing, business succession issues and cash-flow management.”

She said earning the CPA credential requires a significant amount of education and experience and a commitment to 120 hours of continuing professional education every three years.

Cirignano said a CFP and CPA practitioner can provide a powerful combination of skills, experience and expertise for clients, but ultimately, you will want to select an advisor based on who is best suited to help you with your unique issues.

“In addition to inquiring about the advisor’s credentials during the interview process, you will want to determine if the advisor’s strengths complement your needs, if they are experienced in working with clients that have similar financial profiles and planning issues, the scope and the cost of their services,” she said.

Be sure to understand how the advisor is paid before you enter into any relationship.

Financial well-being requires ongoing management and planning to build, protect and transfer wealth, Cirignano said.

“Working with the right CFP or CFP/CPA professional who understands your concerns and is well-positioned to address these can provide peace of mind for you and your family,” she said.

[Editor’s Note: You can monitor your financial goals, like building a good credit score, each month on Credit.com.]

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You’re Fired! How to Know It’s Time to Cut Ties With Certain Financial People In Your Life

Young couple calculating their domestic bills

It’s never fun to have to fire someone, and if it’s not something you’ve ever had to do before, it can be hard to tell when it’s time to make the break. When it comes to your financial life, though, it’s important to make sure that the people helping you along the way are people you can trust and who genuinely have your best interest at heart.

It also goes without saying that they should be knowledgeable and really good at their job.

Below are some common times when it might be better for you to fire certain people in your life. Take heart that while it might be uncomfortable in the moment, overall it’s the right thing to do, and your finances will thank you.

The Person: Your CFP

Why it’s important: Certified Financial Planners are there to help you set overall financial goals, aid you in determining how best to manage your assets, investments, income and estate planning, and even help you set up insurance plans or help with taxes. If there’s one person in your life you need to be able to trust, this is the one.
When it’s time to cut ties: Sometimes the need to breakup with your CFP can be as simple as the fact that they’ve raised their rates and you simply can’t afford them anymore (although if you’ve worked with them long enough, it’s worth asking if there’s any way they could cut you some slack so you don’t have to find someone new altogether). Other signs can be a bit murky. Overall your CFP should be available to you when you have important questions, or at least get back to you within a reasonable timeframe. She should offer advice that makes sense to you and take time to explain why she’s making the suggestions that she is, and your portfolio should, overall, reflect positively with what she’s suggesting you do. (In other words has she made you money with her suggestions? If it’s been a while — markets do fluctuate, after all — and the answer is no, it’s time to move on.) Personality is a big thing to consider here, too. If you feel any pressure or negativity when it comes to interacting with your CFP, it’s time to walk away.

If you’ve recently broken up with your CFP or you’ve never had one before and you think it’s time, check out this piece for advice on how to choose a financial planner.

The Person: Your Realtor

Why it’s important: Arguably the largest purchase you’ll ever make in your life is a house, and while there’s a lot of research that can be done on your own these days, having a professional, knowledgeable realtor makes the whole stressful process a lot easier.

When it’s time to cut ties: A good realtor will be an expert in the market where you’re looking to buy. If he can’t answer questions relating to schools, crime, community, etc., that should be your first red flag. Like a CFP, your realtor should also be readily available to you, or at least return your calls within a reasonable amount of time. If someone works part-time as an agent, consider the fact that if a house you want becomes available and he isn’t working the day it goes on the market, you could be out of luck. You also shouldn’t feel any pressure from your realtor to purchase homes that are out of your price range or in areas where you don’t feel comfortable or aren’t interested in looking. On the other hand, a good agent will balance your interests while encouraging you to branch out and consider other similar options, as well, since sometimes buyers don’t really know what they want until they see a place. This is especially true for first-time homebuyers. If you’re a first-time homebuyer, check out this piece for nine expert tips to make the process easier.

The Person: Your Accountant

Why it’s important: A good accountant will help you understand a complicated tax system and will help you save as much money as possible by knowing the ins and outs of the laws as they pertain to your business or work.

When it’s time to cut ties: Some obvious reasons that your accountant no longer works for you would be if they or you move and a face-to-face, which is often helpful if not necessary, is no longer an option, or if their fees go up drastically without just cause. Outside of those reasons, things to look for in a good accountant include someone who takes the time to explain your financial statements (because let’s be honest, those babies can be super confusing), they aren’t well-versed in your area of work (for example if you’re freelance worker, you’ll need someone who’s familiar with the ins and outs of 1099s and write-offs), they don’t dig deep to help you maximize areas where you can take deductions, there’s poor communication overall or you sense any kind of dishonesty or poor taste. When it comes to the IRS, you certainly don’t want to be on the end of any shady business, so cut your accountant lose if you feel like he’s not totally above board with his business.

The Person: Your Bank 

Why it’s important: A bank isn’t a single person, per say, but as an institution, your bank certainly holds a lot of power in your financial world.

When it’s time to cut ties: If you haven’t done any research lately about the options that are out there for banks these days, it’s probably time to start before making any changes. The truth is some banks still charge fees for things that others will give away for free, but there could be additional incentives to pay those fees — you just won’t know until you look around.

Some things to consider that might mean it’s time to take your business elsewhere includes: poor customer service, exorbitant checking account fees or minimums requirements, a lack of ATMs or bank branches near you, or a lack of other important additional features (like online check depositing, free account transfers, a user-friendly mobile app, etc.) that you’re looking for.

Before you actually do cut ties with your bank, it’s always worth calling them up to let them know that you’re planning to leave and why, because you never know what they might offer you to get you to stay. If you’re considering leaving your bank, click here to help compare different checking account offers, read this for the best banks for linked checking and savings accounts, this one for the best accounts for foreign travel and expats, and this one for the best accounts for college students.

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