Financial Advisor vs Accountant: Which Is the Best for Your Business?

August 9, 2022

Financial Advisor vs Accountant: Which Is the Best for Your Business?

There's no doubt that if you are not directly involved in the finance and accounting world, some of the different roles and designations can seem very similar. One common area of confusion for business owners is whether they need a financial advisor vs accountant.

While there is definitely some overlap in any finance and accounting role, these are very different, and they're not interchangeable. So, let's take a closer look at the difference between an accountant and a financial advisor, so you can make an informed choice.

What Does an Accountant Do?

Accountants track, record, calculate and report on financial transactions that occur in a business. They may be involved in internal auditing, financial forecasting and managing corporate tax accounts.

Public accountants usually work for third-party auditing firms that public companies must use to audit their financial statements.

The role of an accountant is very precise, and while they might be involved in financial decision-making as part of a management team, their primary function is not to provide financial planning advice.

What Does a Financial Advisor Do?

A financial advisor or financial planner, as they are sometimes known, usually works with individuals, helping them to plan for their financial future. They might offer advice on investments, retirement planning and maximizing personal tax benefits.

Financial planners usually work for themselves or for financial planning companies, and they are paid commissions based on their client's investments and earnings.

Most financial planners have established relationships with a variety of investment funds and wealth generation and management companies. This means they can match their clients with the right kind of financial tools for their specific needs.

What Kind of Training Do Accountants and Financial Advisors Need?

The type of training a financial advisor vs accountant needs depends a lot on where they work and what the specific requirements for their job are.

Technically, neither an accountant nor a financial advisor needs to have a degree – although both usually do require at least a bachelor's degree in finance, accounting and or business.

If accountants want to become a CPA (Certified Public Accountant), they need to complete a bachelor's degree as well as further studies and pass a certification exam.

While there are no universal education requirements for these professions, most employers will require formal training, and of course, both accountants and financial advisors need to be great with numbers and maths!

Licensing and Other Requirements

While it's true that neither an accountant nor a financial advisor needs to have any specific degree or certification, there are several types of licensing that may be required.

Financial planners, for instance, need to pass the securities exam in order to work in the field. If they want to get the CFP or Certified Financial Planner designation, they also need to complete both a bachelor's degree and additional studies.

Licensing and certification requirements can vary based on the geographical area, and the specific role an accountant or financial planner will fill. So, it's always a good idea to find out what the specific requirements are for your location and your business's specific requirements.

Could They Be Both?

There's no rule that says someone cannot be both an accountant and a financial advisor. However, it's not very common. Usually, when someone chooses to become a financial advisor after training as an accountant, they move out of their accounting role and into the financial advisory space.

Because accountants usually work with business finances and financial advisors usually work with individuals, there might also be a conflict of interest if one person were to provide both services.

So, to answer the question "can accountants give financial advice" the answer is a qualified yes. They can probably give you their personal opinion and advice, but they probably won't have access to all the information and industry relationships that are necessary to give you the best possible investing results.

Accountants deal very much with what has already happened. Financial advisors look into the future to develop a plan that helps you reach your goals.

Build a Financial Team

The best advice for anyone who wants to get the best out of their business and personal finances is to build a team of financial professionals based on their needs.

Hire a great accountant to work in your business, keep track of income and expenses, and help you to make good financial choices for your business.

If they need a team to assist them, hire a bookkeeper or an accounts receivable and accounts payable clerk and provide administrative assistance if they need it.

Then find a great financial advisor who can help you to plan your personal finances and manage the wealth your company's success brings to you.

When it comes to good financial management, it really does take a village, and unless you have a very small business, there's no one person who can do it all. So rather than wondering whether you need a financial advisor vs accountant, start looking for the best people for both roles.

Make Informed Choices

Now that you know the difference between accountant and financial advisor, you’ll be better equipped to make informed decisions about your money.

In most cases, successful business owners need to have both an accountant and a financial advisor. Very often, they have several other financial professionals on their team too.

While financial management and accounting roles and designations may seem very similar, there is actually a big difference between accountant and financial advisor, as you can see, and the one can’t necessarily do the other’s job.

Keep Everyone Connected

One of the best tools we have at our disposal in the finance and accounting world today is technology. It used to be very complicated to share financial information because it literally meant having someone in your office looking at physical books.

Today, we have cloud-based accounting systems, wealth management tools and stock trading platforms. Even if you do have a team of financial professionals, it's easier than ever to give them all the information they need to get their job done right – without compromising on security and confidentiality.

LiveFlow is a great tool to use when you want to share specific information with specific people. It allows your accountant to create custom Google Sheets-based reports showing only the information you want to share. That gives everyone else who needs specific information access to the numbers you need, without providing unrestricted access to your accounting system. Using tools like LiveFlow not only allows your finance team to automate tasks but it also gives you endless collaboration options.

So, if you're ready to start adding to your finance team, consider adding LiveFlow to your fintech toolbox. It'll make keeping everyone in the loop a whole lot easier! Contact LiveFlow today to set up a demo and see how it can help you.

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