Can a CPA be a Financial Advisor?
A CPA (Certified Public Accountant) and a financial advisor, while highly related career options, require different licenses and certifications to practice. Can a CPA also practice and perform the duties of a financial planner and be fit for an appointment to that position? Let’s explore this in more detail.
What is a CPA?
A CPA has taken and passed the Uniform CPA Examination, has met educational requirements set by the state accountancy board, has the necessary experience, and has completed continuing education courses.
CPAs are licensed to perform duties including:
-Auditing of financial statements
-Preparing and filing of tax returns including business tax returns
-Serving in the accounting, tax, finance, and consulting sectors
Since they understand accounting rules, tax laws, policies, and financial systems and procedures, most CPAs are employed in public accounting companies, government, and non-governmental organizations or as accountants and controllers in corporations.
CPA Requirements
The requirements to earn a CPA license include:
-Completion of a Bachelor’s degree, which is usually worth 150 credit hours, with some specifically in accounting and business
-The passing of the Uniform CPA Exam
-Obtaining professional work experience—in some cases– under the supervision of a licensed CPA, which may take 1 to 2 years
-Meeting ethical and/or continuing education requirements for license renewal
Financial Advisor Job Description
This involves professionals advising consumers and businesses on personal finance, investment and wealth building, budgeting, who should invest, when and how, and saving for a special purpose like retirement or children’s college education. They are expected to evaluate and analyze the client’s financial well-being and goals and give recommendations about the best ways the client can improve his or her finances.
Financial advisors fall into several categories: investment advisors, wealth managers, retirement specialty advisors, and insurance agents.
The services they commonly provide include:
-Investment and portfolio management
-Retirement planning
-Tax planning
-Estate planning
-Insurance advisory information– such as life insurance
-Education savings guidance
Should Certified Public Accountants Be Regarded as Financial Planners?
Chartered Public Accountant with Extra Certificates
Although substantial information about finance and quantitative data is part of the structured education of a CPA, further training and credentials will be necessary to perform as a financial advisor.
Some of these include:
Securities Licenses
Any financial advisor who is going to give guidance on any security investment or product must have these licenses: Series 6,7, 63, or 65. To legally address securities issues as presented, a CPA has to get the licenses independently from the CPA qualification.
CFP Certification
CFP (Certified Financial Planner) is known to be at the pinnacle of professional financial planning. To become licensed, the individual has to undergo an examination, have the necessary experience, accept specific codes of ethics, and undergo continuing education. A CPA could decide to specialize in financial planning and get a CFP.
Some other certifications include the CFA, which is Chartered Financial Analyst; ChFC, which is the Chartered Financial Consultant; CFS, which is the Certified Financial Specialist, and so on, which go into detail about an advisor’s specific area of expertise within the financial services industry.
RIA stands for Registered Investment Advisor Firm.
Investment advice that would allow one to charge investment advisory management fees requires one to be registered with the SEC or state securities laws as an investment advisor. RIAs are available to be registered by the CPA firms.
The Pathways Available
CPA with No Licenses
Any CPA can give advice concerning taxes, accounting, and simple budgeting without receiving extra credentials. However, they would be restricted to providing recommendations on specific investment products.
CPA Holding Extra Qualifications
With determination, and some extra time and endorsement, the CPA can build on his/her skills and approvals, being a financial planner in such specialized fields as planning for retirement; needs for life insurance; or planning on how to properly invest for tax efficiency.
The next step in preparing for the financial advisory profession is to open up a Registered Investment Advisor Firm.
A licensed CPA could start an SEC or state registered independent investment advisory company that specializes in individualized investment portfolio management and be reimbursed by asset-based fees.
Renowned Accounting Firm CPA Partners with Financial Advisor
A small number of CPA firms incorporate or affiliate with a CFP or registered financial advisor, and therefore, provide financial planning and/or investment advisory services. The CPA is responsible for all financial matters in accounting and taxes; the advisor is the expert on investment and more strategic planning.
The Blended Approach
Many people looking for the help of a financial advisor also have similar requirements with regard to taxes and reporting, which are still best done by an experienced CPA. The best of both worlds is quite frequently a joint plan based on the combination of a CPA and a financial advisor.
Conclusion
The demonstrated intent of a CPA to obtain more certifications and given the fact that this professional often possesses expressively complementary sets of competencies, this individual may be deemed to have robust potential in order to also work as, or in conjunction with, a professional financial planner. The idea of integrating accounting and taxation services while incorporating financial analysis and investment advice is of great value to clients, especially those requiring more specific solutions by integrating company’s financial decisions with their overall goals and circumstances.
