In the past week, two people have asked me this in conversation:
“So if you help people pay less tax, what’s the difference between a financial planner and an accountant?”.
Twice in one week…does that classify as a FAQ? I’d so say.
So here’s my take on it….
Accountants assist you with your tax return. They help you save tax and can set up tax-effective company structures for small businesses . Their primary aim is minimising your tax liability.
They work mainly in hindsight, holding you ‘accountable’ for your financials for the previous financial year, or years.
Accountants can only provide limited financial advice, and only if they are licensed to do so, usually in relation to Self Managed Super Funds.
Financial Planners on the other hand are all about ‘planning’ your future finances. They consider your current personal circumstances and future financial goals, and establish a long term strategic plan to help you achieve and secure those goals. Tax effective strategies are an important, but small, part of this.
Tax planning is only one piece of the puzzle. Financial Planners also advise on things like asset protection, superannuation, investments, and estate planning. Once a strategic plan is in place, it is generally reviewed on a regular basis, and adjusted as required to ensure you remain on track towards your goals.
That seems relatively straight forward…right?
Maybe not….. There are plenty of accountants out there who are also financial planners, and financial planners who are also accountants. This is where it gets confusing. On top of that, financial planners often work closely with an accountant (and vice versa) and can refer you to each other.
However, whether you see an accountant or a financial planner, be sure to read their Financial Services Guide so you know exactly which areas they are licenced in, and what they can advise you on.
You may well find that engaging both an accountant and a financial planner is the only way to meet all your financial needs.
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