CPA vs. Financial Advisor: Which One Is Right for You?

Although the roles of a Certified Public Accountant (CPA) and a financial advisor seem similar, these professionals offer different financial advice. For example, as a financial writer and business owner, I work closely with my CPA. He advised me on the best business formation, filed my taxes, and even helped me set up a payroll (even though it’s just me on it)! 

However, when I became a parent, I didn’t go to my accountant. Instead, I worked with a financial advisor who helped me complete important steps, like getting term life insurance. He also helped me plan for long-term goals, like retirement and college funds. Both of these types of professionals can help you with financial decisions, but they have different areas of expertise.

Table of Contents

1. What’s the difference between a CPA and a financial advisor?
2. Credentials, qualifications, and licenses
3. What each profession actually does (and doesn’t do)
4. When should you work with a CPA?
5. When should you work with a financial advisor?
6. Can you work with both an accountant and a financial advisor?
7. Try your first 45-minute session with a financial advisor—free
8. FAQ

What’s the difference between a CPA and a financial advisor?

According to the Bureau of Labor Statistics (BLS), the accounting and financial advising fields are growing:

• The BLS predicts employment for accountants will grow 6% by 2033 (faster than average). 
• Its growth projections for financial advisors are even bigger: 17% by 2033. 

Though both of these career tracks are for financial professionals, they perform different tasks and can help with your finances in different ways. Generally, CPAs give tax advice, and financial advisors give investment advice.

Is a CPA a financial advisor?

No, a CPA is not a financial advisor. Although CPAs offer financial advice, such as tax preparation, they do not have licenses to manage investments or make investment recommendations like financial advisors.

Can a CPA give financial advice?

Yes, CPAs can give financial advice related to financial reporting, tax preparation, and tax planning. However, they are not licensed to give or implement investment advice.

Can accountants give financial advice?

A general accountant is trained to give financial advice when preparing financial statements and budgeting. However, not all general accountants are CPAs. CPAs are accountants who have passed rigorous exams and licensing requirements. They can advise on taxes but are not licensed to invest on their clients’ behalf.

Credentials, qualifications, and licenses

Here are the differences between accountants and financial advisors, and the educational and licensing requirements needed for each profession.

CPA vs. CFP®: What’s the difference?

A CPA is a Certified Public Accountant, and a CFP is a Certified Financial Planner. Both are financial professions that require passing exams and meeting other licensing criteria. The main differences are that accountants typically work with tax preparation and tax advice, while financial planners help individuals make financial and investment decisions for their futures.

What it takes to become a CPA

To become a CPA, you must pass the CPA exam and follow the CPA licensing requirements in your state. Each state sets its own licensing requirements. Typically, you will need a bachelor’s degree with a specific number of college credit hours completed. A certain number of those credit hours must be in accounting courses.

Once you’ve met your qualifications, you apply to take the CPA in your licensing state. When approved, pay your exam fees and take the test. You might need to complete other requirements in addition to passing your CPA exam, such as specific work experience. Again, each state has slightly different requirements. 

What it takes to become a financial advisor

There are different types of financial advisors, and requirements vary depending on which professional certifications an advisor wants to pursue. Though many financial advisors have finance or business backgrounds, it’s possible to become a financial advisor without a college degree.

To become a licensed financial advisor, you must pass specific exams issued by FINRA, the organization that regulates and provides oversight for the financial advisor industry. The initial exams that financial advisors must pass include the Securities Industry Essentials SIE, Series 7, and Series 66 exams.

If you want to become a Certified Financial Planner (CFP®), which is a well-respected certification in financial advising, you will need a college degree. You also must pass the CFP exam and meet experience and ethics requirements.

What each profession actually does (and doesn’t do)

Both CPAs and financial advisors help individuals and businesses with their financial needs. Accountants help organize past and present finances and help people and businesses remain compliant with their taxes. 

Financial advisors focus on the present and the future. They help individuals ensure they make choices today that will benefit them in the long term.

Typical CPA responsibilities

An accountant can choose different areas of focus, from public accounting to nonprofit work to education. Here are some typical CPA responsibilities:

• Tax advisory services
• Compliance audits
• Auditing a company or an individual’s financial statements
• Assurance services
• Forensic accounting
• Financial reporting and analysis
• Tax planning
• Management accounting and bookkeeping
• Preparing and filing tax returns

Typical financial advisor responsibilities

Financial advisors can specialize in serving different types of clients, such as young professionals, high-net-worth families, or underserved populations. While there are many ways financial advisors earn an income, most financial advisors have similar responsibilities:

• Provide general financial advice
• Create investment plans for clients based on their goals and risk tolerance
• Assist clients with tax and estate planning
• Monitor clients’ investments and provide recommendations
• Develop a retirement plan
• Help with major life transitions
• Offer advice on insurance and risk management
• Coordinate with other professionals (e.g., CPA, attorney, insurance agent)

The biggest difference between these two professions is that financial advisors manage and invest money on their clients’ behalf, and accountants prepare and file taxes for clients in addition to other tasks like management and bookkeeping.

When should you work with a CPA?

An accountant can help you with your personal or business taxes. Accountants are compliance experts, organize financial records, file taxes, and can assist you during audits. Here are some more situations where it’s helpful to hire an accountant:

• You want to start a business and need help deciding on the best business structure to minimize your tax liability.
• You’re unsure how to file your personal taxes.
• You own a business and need someone to help you maintain proper bookkeeping and payroll.
• If the IRS audits you, an accountant can help you navigate the process. 
• Accountants can help you prepare formal documents about your business finances if you want to take out a business loan or seek venture capital.
• When you inherit money, an accountant can give you advice about estate and income taxes related to your inheritance.
• Accountants give advice on how to minimize your personal and business taxes.

When should you work with a financial advisor?

A financial advisor is a trusted expert when it comes to investments and retirement planning. Their job is to advise you on the best steps to take to reach your financial goals. Here are some situations where hiring a financial advisor is helpful:

• You’re not comfortable investing on your own, and you want to get advice from a professional.
• You recently received a large bonus or inheritance and want advice on how to manage it.
• When your children go to college, you want to find a way to pay for their education without loans.
• Your financial goals include buying a house, starting a business, or purchasing investment properties, and you want an advisor to help you make the best decisions.
• You thrive on accountability and want someone in your corner to help you stay on track with your financial progress.

I recommend hiring a CPA if you have equity compensation, a business, or any other level of complexity where tax planning could be beneficial. A financial advisor could also provide value in these situations because they can understand your entire financial situation beyond taxes and coordinate with a CPA.

If you have a complex tax situation and a limited budget, start with a CPA and then add a financial advisor. Make sure your CPA has experience working with clients who have a similar situation and that they offer proactive tax planning services.

Can you work with both an accountant and a financial advisor?

Yes, you can work with an accountant and a financial advisor. An accountant can help you optimize and file your taxes. A financial advisor can help you plan a tax strategy and an investment strategy. 

Hiring both can give you the advice you need to optimize your finances today and in the future.

Try your first 45-minute session with a financial advisor—free

If you’re unsure whether hiring a financial advisor is right for you, you can use a service like Money Pickle to talk to a financial advisor for free on a video chat. With Money Pickle, you fill out a quiz to get matched with an advisor. Schedule a free video call to see whether it’s a good fit, no strings attached. 

If you decide to hire a financial advisor after your free call, each advisor sets their own fees. Think of it like a matchmaking service, where you get a free first date to decide whether an advisor can help you reach your money goals.

When hiring a financial advisor, you should ask about their licenses and credentials, fee structure, areas of expertise, and relevant experience. If you already have a CPA, you can ask them for a referral to an advisor in their network or make sure the financial advisor you’re considering will coordinate with your CPA for tax planning.

FAQ

Can CPAs manage investments?

Generally, CPAs cannot manage investments unless they are also licensed as financial advisors. A CPA may offer guidance on tax-efficient investing strategies, but only a licensed financial advisor—such as someone with a Series 65 or CFP® designation—can create investment portfolios or buy and sell securities on your behalf.

If you’re looking for someone to actively manage your money, you’ll need a financial advisor or a dual-licensed professional.

Can a CPA replace a financial advisor?

Not usually. A CPA can provide valuable financial advice, especially when it comes to tax planning, deductions, and business finances. But they typically don’t offer retirement planning, investment management, or insurance analysis.

If your financial needs go beyond tax help, such as planning for long-term goals or building wealth, you’ll want to work with a financial advisor, not just a CPA.

How much do CPAs vs. financial advisors cost?

CPAs often charge by the hour, by the service (such as tax preparation), or on a flat-fee basis. Financial advisors may charge a flat fee, an hourly rate, or a percentage of the assets they manage (commonly around 1% annually).

Fee-only advisors are generally more transparent, while commission-based advisors may earn money by selling financial products. Always ask about fees upfront so you understand how your advisor or CPA is compensated.

Should I hire a CPA or a financial advisor for retirement planning?

For retirement planning, a financial advisor is typically the better fit. Advisors can help you create a personalized retirement savings strategy, recommend tax-advantaged accounts like IRAs and 401(k)s, and guide your investment choices based on your timeline and risk tolerance.

A CPA may play a supporting role by helping you understand the tax implications of retirement withdrawals or converting retirement accounts, but they aren’t equipped to manage your overall retirement plan.