With the large multitude of different occupations and individuals directly acting beneath the financial sector, it is by no stretch of imagination that corporation executives and individuals in need of assistance with their finances may become confused when presented with the different options available to them.

Fortunately, for most ordinary individual financial needs, highly specialized and certified professionals such as experienced CPAs or similar are not quite needed, so long as the particular financial problems do not require specific expertise.

An accountant and a financial advisor may be differentiated by the particular services they offer and their specific function within an organization in the event that they are part of a firm or agency. Depending on the entity or individual’s needs, either an accountant or financial advisor is a suitable candidate for assistive financial work.

What Does an Accountant Do?

An accountant is an individual working in the financial sector wherein they may or may not act as a certified professional, capable of dispensing advice pertaining to taxation, auditing, finance, corporate and asset insolvency and many other duties related to the world of business and finance.

The term accountant, however, may be used by any sort of person that wishes to refer to themselves as such, and it is only by taking a certification exam that an accountant may be considered professionally competent in the field of accountancy, oftentimes taking on the job title of CPA, chartered accountant, chartered professional accountant or similar honorifics titles.

Oftentimes, accountants are employed either by an accounting firm wherein they are placed within a specialized department or one meant for general accounting purposes or they may also work as independent contractors, usually available to the public.

While accountants, especially of the certified kind, are skilled in a variety of financial tasks and objectives, certain types of accountants specialize in specific fields therein related to the subject of account, and as such the particular job of any one accountant may vary depending on their position in their firm or company.

What Does a Financial Advisor Do?

A financial advisor, on the other hand, is another form of finance related professional who focuses on the provision of financial advice as a personalized service. This financial advice is often custom tailored for the particular entity or individual and their specific financial situation or position. 

Unlike the job occupation of an accountant, financial advisors are not legally allowed to call themselves as such without first undergoing specific training and becoming a registered member of certain financial advisor related organizations, usually governed and regulated by a federal body.

However, other types of professionals working within the financial sector are also legally allowed to refer to themselves as a financial advisor without first taking the prerequisite certifications and qualifications normally required of individuals desiring to become a financial advisor.

These types of individuals may be working as registered financial brokers, certified investment advisors, private bankers, certified accountants, financially-related attorneys, agents of insurance firms and financial planners.

Financial advisors most often fulfill their duties by performing a cursory analysis of their client’s financial portfolio, taking into account such things as stock positions, low-liquidity properties, real estate, cash and projected futures so as to formulate an adequate strategy either as a way to combat the client’s debt or to develop their wealth in a stable manner.

Can Accountants do Financial Planning or Financial Advising?

While accountants can possibly be knowledgeable or experienced enough to provide sound financial advice and financial planning, their professional scope in particular makes the advice they are normally certified to provide somewhat more technical than that of a financial advisor or financial planner. 

This is due to the fact that accountants, especially if certified, primarily focus on the analysis and summarization of financial transactions, otherwise known as the present cash flows of a corporate entity or individual with highly liquid assets.

Normally, most individuals within a certain wealth level do not often require an accountant owing to the relative simplicity of their financial situation. While it is entirely possible to hire an accountant for personal expense and finance accounts, the premiums or price related to these services may be higher than is necessary.

Financial advisors or planners, on the other hand, are better suited to individuals or estate entities that desire to create a concrete strategy for the growth and protection of their current assets. Financial planners or advisors specialize in this by being intimately familiar with concepts such as personal budget management, non-aggressive investment strategies and retirement accounts provided both at a corporate and federal level.

These particular specialties pertaining to the focus of financial advisors create a perfect assistant for planning a strategy to overcome debt or to enact a long-term plan for future finances, of which are not a particular specialty of most generalized accountants.

Do Financial Advisors Offer Accounting Services?

While financial advisors are generally certified in matters of finance and as such are usually qualified enough to perform certain tasks under the purview of account services, it is not their specialty and as such they do not normally offer such benefits to their clients.

Financial advisors specifically function in an advisory capacity- hence their name-, with a particular focus on the present and future state of their clients’ financial situation, oftentimes connecting the client with other members of the financial profession in order to shed further light on their possible financial avenues.

Considering the fact that accountants normally perform their duties as auditors, financial assessment and analyst specialists or otherwise as financial statement disclosure agents, it is unlikely that a financial advisor will be experienced enough in these fields to provide an adequate enough job, warranting instead the hiring of a certified accountant to work alongside said financial advisor.

This particular arrangement is in fact quite common, especially for corporate entities or individuals with significant sums of money and highly valuable assets, as a financial advisor and an accountant working in tandem may provide a full-scale analysis and planning strategy of a client’s entire financial portfolio.

Are Financial Planners Different from Financial Advisors?

Generally, the duties of a financial planner and that of a financial advisor are practically the same at first glance, with both finance professionals acting in an advisory capacity concerning the individual’s or entity’s long term financial goals.

However, where these two particular careers differ is in the specificity of their meaning, wherein a financial planner is a certified and qualified professional that not only advises but also strategizes a plan or program so as to allow the client to meet their long-term financial goals in an efficient and fool proof manner.

The career title of financial advisor, on the other hand, simply refers to any certified or otherwise qualified financial professional acting in an advisory capacity in terms of individual financial management, including that of investment advice and other financial capacities involving the future of said client.

Are Financial Advisors Salaried or Commissioned?

Certain financial planning firms or banks may elect to provide their customers the services of in-house financial advisors of which are compensated through a salaried position within the organization. However, this is relatively uncommon, and salaried financial advisors are not as common as financial advisors being paid on a commission by commission basis.

Apart from providing financial planning for prospective clients, financial advisors may also earn commissions from acting as middlemen or salesmen for financial assets like real estate property, stocks, insurance plans or loans. 

This is not to say, however, that financial advisors are not compensated on a commission basis, whether as individual contractors or employees of an organization. This is due to the nature of a financial advisor’s job wherein they primarily work with separate clients, and as such their duties are only brought into play in the event that an interested party chooses to hire them or the firm at which they are employed.

Unlike accountants, financial advisors may charge on an hourly basis or a retainer fee if kept on retainer, particularly in cases of continued financial development concerning a corporate entity or particularly wealthy individual. 

This equates to financial advisors possibly being less expensive to employ, depending on the particular difficulty of the client’s financial state and the sort of assets they possess in their financial portfolio.

When Should You Hire an Accountant?

Making the decision to hire an accountant, whether as a corporate entity or as an individual, depends on several factors or the presence of certain situations that warrant the presence of a financial professional and their subsequent expertise.

Certain periods in a company’s life cycle such as during the formulation of their initial business plan, during taxation season in the United States or even during the process of a dreaded Internal Revenue Service audit. 

In situations such as these, the presence and advice of a certified accountant may in fact save the corporate entity large sums of money in penalties by certifying financial statements and otherwise providing strategies that allow the corporate entity to financially function as efficiently as possible.

Even as an individual, freelance accountants or agent accountants of an accounting firm are an excellent avenue in managing one’s finances and financial options in situations such as filing of tax claims and returns, the planning of a small business formation or even simply financial advice concerning the individual’s own personal monetary situation.

In particular, it is a wise choice for small business owners to hire the services of a commission compensated accountant with the proper certification, especially in matters concerning the federal or municipal government. 

Because of the intense bureaucratic documentation involved when dealing with governing bodies concerning finances, the experience and connections of an accountant are invaluable and will help protect the business owner’s interests from costly errors and oversights that they may not even be aware of.

When Should You Hire a Financial Advisor?

Making the decision to contract the services of a financial advisor, on the other hand, is a more situational choice and as such is not usually undertaken on a regular basis for most ordinary individuals. Financial advisors aid individuals or smaller businesses in becoming knowledgeable about the particular strategies involved in achieving or maintaining long-term financial success.

In the event that the client is already knowledgeable about said financial strategies and similar subjects, it may still be beneficial to hire a financial advisor in the capacity of a financial assistant, wherein they may act as an agent of the individual or corporate entity pertaining to matters of their financial future and strategic financial goals.

However, care must be taken so as to prevent significant damage to the client’s prospects or current financial decision by improper or low-quality financial management. Unqualified or otherwise uncertified financial advisors, for example, may provide disastrous advice that can end in large amounts of money being lost in unstable markets or through federally implemented penalties.

References

1. Taylor, Don (2005). C. Bruce Worsham (ed.). Financial Planning: Process and Environment. Bryn Mawr, PA: The American College Press. p. 9.3. ISBN 1-932819-08-8.

2. Friedman, A. L., & Lyne, S. R. (2001). The beancounter stereotype: towards a general model of stereotype generation. Critical perspectives on accounting, 12(4), 423-451.

3. Unknown Author. “Choosing investment professional investment advisors”  Financial Industry Regulatory Authority. “Investment Advisers.” Accessed July 22,, 2021.

4. Troy Segal, Michael Logan. (July 2021) “Finding a financial advisor or planner” Investopedia Investopedia.com