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What’s the difference between a financial planner and an accountant?

Posted May 14, 2018 by MoneyLink

Accountants and financial planners are not the same. The question most people ask, is do I need both?

There are plenty of common misconceptions about the difference between a financial planner and an accountant, mostly because they tend to have complementary skill sets.

But the key difference is this: An accountant looks backwards, while a Financial Planner looks forwards.

The past versus the future

An accountant helps you with your tax returns based on what you’ve already spent, invested and saved. An accountant’s primary responsibility is to help you ‘account’ for your money, (and) to also hold you ‘accountable’ for your funds, and to ensure that you are meeting your obligations under Australian tax law.

Most people who have straight forward finances don’t necessarily need an accountant, but unless you are aware of every legitimate tax deduction you are eligible for, an accountant can assist you in reducing the amount of tax you need to pay on any income you earn.
If you have a complex investment portfolio, more than one income stream, are self-employed or perhaps own a small business, then it’s almost essential to get advice from an accountant at tax time.

Tax returns and tax planning are only one aspect of your overall finances. It is important to know that accountants can only provide limited financial advice, and only if they are licensed to do so.

The role of the financial planner

A financial planner, on the other hand, has a much broader scope, and helps you plan for your financial future. A financial planner looks at your current personal circumstances and helps you to work out your life goals. A financial planner will help you with debt management and budgeting and also help you to draw up a long-term strategic plan for meeting your life goals, whatever they are. Financial planners also advise on things like asset protection, insurance, superannuation, investments, retirement and estate planning.

When you engage a financial planner or an accountant, understand clearly what each can do for you. Reputable firms will provide a guide to their services on their website or in brochure form at their premises and this will set out their remit.

Financial Planners and accountants do sometimes work closely together, and many experienced financial planners and accountants will take an interest across both areas of your finances – what you’ve spent as well as your future potential earnings, so that they can better understand your personal situation and therefore help you to the best of their ability. But at the end of the day, they both provide distinct services.

Do you need both an accountant and a financial planner?

It is wise, once you begin investing, to ensure you’re getting advice across the board. An accountant and a financial planner will both bring different knowledge to your financial position.

When choosing a financial planner, you should look carefully at qualifications and experience and find someone you can ‘talk to’ – someone you feel you can trust – who doesn’t bamboozle you with jargon and who takes the appropriate time to ensure that you understand your investments and the associated documentation. Often an independent financial planner – one who is not associated with a bank or a large investment firm – will have access to a wider range of investment options for you to choose from too.

The big difference between a mediocre planner and a good financial planner, is that a good financial planner will empower you, and in doing so will impart valuable information that helps you to become more informed and more confident about your financial position and the financial decisions you need to make over the course of your lifetime.

MoneyLink Financial Planning Pty Ltd is an Australian Financial Services Licence Holder. No:.247360

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