Do I Need a CPA or CFP for Financial Advice?

Posted by Rushell Kayna on December 15th, 2020

Handling finances accurately isn't everyone's cup of tea. This is because taxes and investments can get complicated in the blink of any eye. And that is why working with a human advisor is the best choice.

But, when it comes to choosing the right advisor, one has to find the best from many others' oceans. Also, not all financial advisors have a similar qualification. For instance, let's talk about Certified Financial Planner (CFP) and Certified Public Accountant (CPA).

Just because both the designation says "certified" initially, it doesn't mean that the person holding the certificate is an expert in everything.

It just means that the person has met specific criteria to get the certification.

That is why it becomes extremely crucial to understand how the designations are earned. This way, you will know if the hired professional can stand up to your needs or not.

So, let's see what you need to know about both CFPs and CPAs.

Who Is A Certified Financial Planner (CFP)?

Certified Financial Planners (CFP) work along with individual clients to help build financial plans so the client can reach the financial goals; a CFP can easily take a look at your overall financial picture.

CFPs can let you know how you are doing and where you must proceed based on the set life goals.

Even though CFPs manage the clients' investments, not every CFP needs to do that for their clients. Instead, they might focus on financial planning services.

How Can One Become A CFP?

An individual must earn or hold a bachelor's degree with five years of clearing the CFP exam.

And before giving the CFP, the individual needs to complete CFP-board registered education program. Once done with it, the individual can provide the CFP exam.

One does not become a CFP after passing the exam. He/she must gain a two-year apprenticeship or have a minimum of three years of experience in proper personal financial planning.

Lastly, the individual must pass CFP Board's candidate fitness based on ethical standards.

Who Is A Certified Public Accountant (CPA)?

Certified Public Accountants (CPA) are licensed experts who assist individuals or even businesses on aspects like:

• Taxes
• Preparing Audits
• Bookkeeping
• Consulting
• Financial statements

For people, both tax planning and preparation services are beneficial.

But, business owners may also prefer to use CPAs. And some businesses may only utilize other services in addition to the tax service.

How Can One Become A CPA?

CPAs gain their license in the state they practice. This is because each state has its requirement when it comes to licensure.

But, the CPA exam is similar across the U.S., and the exams of all the potential CPAs include:

• Business environment and concepts
• Financial accounting and reporting
• Regulation
• Auditing and attestation

Once the individual passes the exam, he/she needs to meet specific experience requirements. Like CFPs, even CPAs require taking an ethics course to obtain the CPA license to practice legally.

With a CPA license in hand, the individuals do not require to keep up with the new requirement. Just taking a continuing education course each year is enough to keep the license intact.

The Major Difference between CPA and CFP

The only difference between CPA and CFP is that they have different ways of helping their clients with financial advice.

For instance:

CFPs offer financial planning and investments.

CPAs are generally focused on taxation and assisting SMEs.

How Can I Choose The Right Professional For Financial Advice?

The best way to understand which professional is right for financial advice is by understanding your needs.

For instance, if you want help with tax planning advice, then consult the CPAs. Similarly, if you need proper assistance in financial planning, then you should call the CFPs.

But, know that some professionals offer both the services. So, here are few things to choose a particular CFP or CPA.

1. Look at the license or certification of the professional. See to it that these documents are recent.
2. Now, assess the CPA or CFP. It would help if you made sure that there are no outstanding complaints against him/her.
3. Proceed with interviewing the professional you are considering. The notion here is to understand if the professionals can comprehend your needs and offer services as expected.

Over to You

Finances are one of the most complex things in our lives. One wrong move and things can go downhill. That is why choosing the right financial advisor based on the designation and your needs are crucial. But, since you have read this blog, we are sure that your confusion must have vanished.

However, if you are still concerned, then Just Call Jack to hire top-tier professionals for your financial needs.