In the world of personal finance, it can be hard for beginners to feel confident in who they trust with their money, let alone fully understand what they’re going to do with it. Whilst taking control of your finances can be incredibly empowering and set you up for a more independent future, taking the steps to get there can feel overwhelming if you’re not on a confident footing to start with.
Let this guide provide you with easy-to-understand definitions of the role of financial planners and accountants, including the difference between them. We’ll dive into their jobs, their services, and who tends to benefit from them the most. Then we’ll round up the article with a brief discussion of whether it’s better to have one or both.
So if you want to know about financial planners vs. accountants, you’ll find the answers right below.
What’s A Financial Planner?
Financial planners primarily set out to help you develop long-term goals and better control of your finances. Once these goals have been set, they’ll maintain financial support by creating strategies to achieve them, providing advice in unexpected circumstances, and overseeing the elements involved in financial planning that may affect your situation.
A financial planner is great for someone who wants to look at retirement or insurance planning, risk management, and finances related to large costs – such as estate, tax, and insurance planning. They’ll take a broad overview of your income, expenses, assets, and objectives to give a more personalised approach than you might find with a bank.
Think of a financial planner as a dedicated ‘friend’, who’ll share their expertise in a niche field to help you protect and manage your financial wellbeing.
What’s An Accountant?
The job of an accountant is to record, analyse and report financial transactions, keeping everything ‘on the books’, and helping you stay on top of where your money is going. They play an important role for both businesses and individuals, ensuring accurate financial records to comply with tax laws, regulations, and to provide a sense of control and peace of mind.
An accountant is great for someone who finds it difficult to stay on track with their expenses, whether due to a long list that’s hard to keep up with or simply someone who is not the most confident with numbers. They traditionally offer bookkeeping, prepare financial statements and audits, and assist with tax planning and end-of-year reports.
Think of an accountant as a trusted confidante, who will ensure your financial records are accurate and up-to-date, so you can take the stress out of handling them yourself.
What’s The Difference?
The key difference between the two roles is that an accountant focuses on finances of the past, whilst a financial planner looks at the future. That also explains why financial planners tend to have a longer-term approach, whilst accountants are dealing with highly specific transactions that have already taken place.
Financial planners may provide more vague projections and goals to allow for flexibility and potential unknowns, whereas it is important for accountants to be 100% accurate since they are dealing with real figures that can have concrete outcomes if not handled carefully – for example with tax filing.
It’s also worth noting that financial planners have different regulations to comply with between their industries and hold different certifications. The exact regulations may change between countries or states so it’s worth checking what you should be looking out for before you entrust your financial information to an accountant or financial planner. Regardless, you should always be working with a certified professional with the appropriate licence, so don’t be afraid to ask to see proof of certification in your initial meetings.
Do I Need Both?
The answer to this question is entirely dependent on your individual needs and situation.
For example, if you’ve just started a business, an accountant may be incredibly helpful to help you keep track of your expenses and ensure you’re spending within budget. On the other hand, if you’re looking to expand your business, or to wind it down as a move towards retirement, a financial planner may be better suited to get a bigger picture overview.
Hopefully, you’ve now understood the key differences between financial planners and accountants; enough to see that their skill sets and aims serve highly different purposes. Having one will not cancel out the need for the other. In essence: whether you choose to engage with one should not be influenced by your decision to work with the other.
Conclusion
With a little bit more knowledge under your belt, you should now feel more confident in understanding the difference between financial planners vs. accountants, as well as whether you’d benefit from both or one more than the other.
Remember that enlisting people to help take care of your finances does not constitute a lack of ability to do it yourself. Sometimes delegating highly specialised jobs to the experts is the best way to feel reassured and ensure access to the most helpful insights, especially when it comes to something as important as your money.
If you are considering working with a financial planner, and/or an accountant, make sure you speak with a handful to find the one whose services and experience fit best with you. With that, financial security is well within your reach.
