Both accountants and financial advisers play an important role in helping individuals manage their finances. Knowing whether you need a financial adviser or an accountant can often be a tricky distinction for many people. An accountant performs audits, creates financial forecasts and compiles financial statements. On the other hand, a financial adviser can help you achieve specific financial life goals, like buying a car, funding your children’s education, launching a business or retiring early. Understanding the difference between the two financial experts can help you choose which one you need.
Why everyone needs a financial professional
We understand that navigating the financial services industry can be confusing. This is why we recommend finding a finance partner that has tailored services designed to help you reach your financial goals. Pinpointing your specific financial needs determines which kind of financial consultant can best serve you. Some of the most common reasons clients seek out bespoke financial solutions can include:
Budgeting
Breaking bad fiscal habits is a priority for most Australians. A recent survey of more than 2,000 Australians revealed that Gen Z holds the highest personal debt among the generations in Australia — with an average of $38,000. Gen X is close behind, with an average personal debt of $35,000. Future-proofing your finances requires firm budgeting practices.
Debt management
Coming in at a close second to budgeting is debt management. Financial professionals can identify solutions to pull you out of credit card, education, loan repayment, mortgage and recreational debt.
Inheritance
Inheriting money can elicit questions about how best to manage your newfound funds. Choosing to invest it or add it to your retirement plan requires guidance from financial experts.
Investing
Consulting with a financial adviser can help direct how, where, and when to invest your money for the best return on your investment.
Retirement planning
Superannuation and retirement planning can benefit from the guidance of a financial professional who can holistically assess your individual net worth and propose plans to match your retirement goals.
Starting a business
If you plan to start a business, you will need the help of a financial expert to set up a business plan and outline a strategy for managing your professional and personal finances.
Tax preparation
Individuals and businesses can significantly benefit from consulting with qualified tax accountants who offer practical advice, tax preparation services and tax minimisation strategies.
Once you have narrowed down your focus, you should match your needs against the primary skill set to decide which financial professional is right for you.
What is the difference between a financial advisor and an accountant?
Accountants and financial advisors are both essential for financial growth. Whether you are an individual wanting to make the most of your hard-earned money, or a business interested in achieving sustainable growth, you will require the help of one — or both — of these financial professionals. Some of the services offered by accountants and financial advisors offer overlap, but that does not mean you can swap out one for the other. Exploring what each of these financial experts does and who they serve can help you decide which is right for your needs.
Businesses and individuals can minimise tax liability now and in the future through strategic tax planning. Skilled tax accountants can help you receive larger tax refunds whilst reducing the amount of future tax you are required to pay. Accountants can put strategies in place to help you make the most of your earnings. Their advice can range from putting more into your super to reorganising your business structure. It’s important to choose an accountant who invests time getting to know you and your future goals.
Historically, financial advisers helped with retirement planning. Today, good financial advisors help you make smart decisions with your money so that you can get all you want out of life. This could include buying a home, funding your children’s education, or retiring by 40. A thorough financial planner considers your age, relationship with money, assets, liabilities, savings capacity, family situation, career plans and lifestyle goals. You’ll know you’ve found a good financial advisor if they cater their financial advice to your specific circumstances. They should craft unique financial approaches that match your long-term financial goals and never use cookie-cutter approaches.
Do accountants give financial advice?
Prior to 30 June 2016, accountants could offer financial advice. However, since the financial advice reforms were approved, the rules have changed. Now, accountants can only give you financial advice on investments — if they hold an Australian Financial Services (AFS) licence or if they are an authorised representative of an AFS licence holder.
Accountants without an AFS license can still assist with basic self-managed super fund administrative tasks like paperwork for fund establishment and rollovers, as well as provide information about investments and investing strategies. Disclaimers and waivers do not override this licensing requirement.
Do I need a financial advisor and an accountant?
Deciding on which kind of financial expert you need depends on your situation. If you are looking for specific tax advice, like filing a tax return, an accountant is an obvious choice. However, if figuring out how to position your assets for meeting future goals is your immediate concern, then a financial planner is the right fit.
In some instances, you may benefit from working with both an accountant and a financial adviser. Business owners are among those who should consider consulting with both. Working with an accountant and a financial planner is a best-of-both-worlds scenario for business owners who want to grow their business, reduce tax and set aside a tidy nest egg for their retirement. Coordinating the advice that you receive from each of these financial experts can maximise your wealth.
Ideally, you want to choose a financial services firm that offers both accounting and financial planning services — like Financial Spectrum. Working with an accountant and a financial planner who you can trust is important for reaching your personal and business financial goals. Both finance professionals should be able to explain financial issues in an easily digestible manner so you can be an active participant in your financial planning.
Financial advisor vs accountant: which is better?
There is no need to choose between a financial adviser and an accountant when you work with Financial Spectrum. We have a team of in-house accountants who work in tandem with our financial advisers. Having full visibility of your financial affairs enables our financial experts to provide relevant advice that delivers better client outcomes. Integrating all aspects of your finances also provides huge efficiencies in terms of cost, paperwork and time. Business owners who need to integrate their personal and business finances find this especially advantageous.
Book your free strategy session with one of our team members to get started on reaching your financial goals for today and the future.
Consistently ranked one of Sydney’s top financial planners (Adviser Ratings), Brenton helps his clients life a great life by making the most of their money. Read his full bio here.
