In a perfect world, it’d be nice to think there’s a one-stop shop for all your financial needs, right? You walk into the office and they sort out your taxes, your savings, your loans and your property portfolio in one nice neat little appointment.
Don’t get us wrong, that’s a beautiful ideal, but dealing with each individual component of your financial needs is a highly specialised task.
Just like you wouldn’t see a cardiologist for your teeth, accountants and financial planners are two very different, yet equally necessary components of your financial health and wellbeing.
Before we get down to business, let’s do a quick refresher.
As this great article in Money Magazine tells us, financial planners exist to help you with your financial goals, both setting them and achieving them.
Accountants on the other hand have the job not only of helping you at tax time, but also of providing advice around trusts, financial compliance, and growing and running a business if you own one.
This is why we want to talk about the importance of both professions and why it’s vital for you to have a great tax accountant and a financial adviser by your side as your financial needs become more complex on your path to building wealth.
Tax accountants and financial advisers: Different roles, different goals
So we know accountants do tax, but they can help with a whole lot more than your end-of-financial-year needs.
Here are the main three things that your accountant can help you out with:
- Tax: Your accountant ensures that relevant tax forms and requirements are prepared, organised and submitted on time while focusing on increasing efficiency by minimising taxes. They can also provide advice on business structure as well as advice on other taxes like fringe benefits and capital gains.
- Bookkeeping: If you have a business you’ll know how much work goes into this one. Think payroll, accounts payable and receivable, balance sheets and any other company financial record-keeping
- Auditing: Auditing by the ATO can be scary. But your accountant can also perform audits as a preventative security measure ensuring that there’s nothing untoward happening in your business with regard to money handling or overspending
A good accountant is worth their weight in gold but just be cautious if they start offering any financial services outside their scope.
To legally offer advice on certain financial products, such as investments or superannuation, the advice provider must be authorised under an Australian Financial Services License (AFSL).
Whilst they have a good understanding of tax efficiency, financial advisers focus on your finances in a holistic manner. A financial adviser will sit down and help determine your needs, both short and long term and then help create a financial plan to achieve your goals. Their expertise allows them to provide relevant advice that can help you build the lifestyle and future you’ve envisioned for yourself.
Remove the FOMO and partner with a financial adviser
We will never ever detract from the incredibly complex work that a talented and knowledgeable accountant does. If nothing else, taxes are a drag and bookkeeping is horrible so to find someone who loves doing that work for you and is actually good at it – amazing!
But just partnering with an accountant alone is the financial equivalent of limiting yourself to one best friend. Just think of all the missed opportunities and experiences — big-time FOMO!
The focus on tax efficiency is just one piece of a very big, and very complicated puzzle and most certainly shouldn’t be the single driving factor behind your financial decisions.
Just like you pay taxes for most of your adult life, partnering with a good financial adviser is crucial at any age. Getting good solid financial goals, and an action plan to achieve them in place as early as possible sets you up for success.
The goalposts will most likely shift over time, but that’s why we always recommend annual reviews. So whether you’re planning a second investment property, your first home purchase, paying for your kid’s education, getting your super sorted, or any and all of the above you’ll always have genuine peace of mind regarding your finances.
Yes, you need a tax accountant and a financial adviser
If you haven’t picked up the vibe already, yes, you really do need an accountant and a financial adviser.
In answer to the question: why a financial adviser? Because you’re probably not an expert, and Google definitely isn’t an expert.
Of course, there are some fantastic resources to help you understand the decision-making process behind achieving your financial goals. We will always be advocates for our clients educating themselves, but a financial adviser offers the necessary industry knowledge to help you keep up with all the data and regulatory requirements out there.
Financial advisers have the expertise and tools at their disposal to help you by:
- Defining financial short-term and long-term goals
- Developing a financial plan to achieve those goals
- Forming strategies to achieve those goals and effectively manage their finances
- Developing a financial plan for retirement
- Establishing a well-structured estate plan
They can also look at the potential impacts of your financial decisions and guide you to implement the right strategies so that you’re consistently building towards your goals.
In case you’re thinking, “So why bother with an accountant?” the answer to that question is: Because tax and bookkeeping are also complicated.
As this great ABC article mentions, those with incredibly simple tax returns may find that the expense of an accountant isn’t worth their while.
But if you answer yes to having investments, working as a sole trader or business, or being a freelancer or contractor, it’s likely that your accounting needs are going to be more complex and you’ll need some expert advice to make sure your tax is being filed correctly.
If you’re not sure, give it a go and see if you feel like it was worth the time and money. Many people are actually quite surprised at how much they just don’t know about their tax requirements.
As your wealth continues to grow and your sources of income become more complex, it’s important to have a tax accountant who can look over the proper tax requirements and documents needed to ensure compliance (and avoid hefty fines).
So to circle back to the very important question in this blog’s title: go ahead and buy them both a drink!
Your accountant and financial planner both cover very important and unique aspects of your financial journey. Your accountant records and organises transactions for what has already occurred, while your financial adviser focuses on advice and forward guidance.
If you’re considering partnering with a financial adviser, book a meeting with one of our Wealth Partners and we’ll discuss the best strategies for achieving your goals.