CPA Partnership ebook

CPAs and financial planners are both pivotal to having a sound financial strategy. But though their goals are aligned, they each have a niche role in financial management and wealth building.

CPAs specialize in taxes, tax planning, audits, and financial consultation, while financial planners focus on investments. CPAs are qualified to act as financial planners, but most do not. On the other hand, financial planners cannot work as CPAs unless they have the proper credentials and licenses.

Partnerships between CPAs and financial planners make good business sense—not only for clients but also for the financial professionals at the heart of this discussion. When CPAs partner with financial planners, it extends their capabilities and allows them to focus on what they do best. By the same token, a partnership with a CPA adds value and builds trust, as clients can be confident of good advice and a sound fiduciary relationship.

This ebook looks deep into the value of partnerships between CPAs and financial planners. We’ll explore the two roles in detail and underscore the many benefits partnership can offer.

Understanding the Roles of CPA and Financial Planner
CPAs and financial planners provide services tailored to ensure their clients’ continued economic well-being. Let’s first explore the role and benefits a CPA offers.

Certified Public Accountants (CPAs) are professionals within the accounting industry. CPAs perform many of the duties of an accountant, but not all accountants are CPAs.

A CPAs services include everything from basic accounting to strategic financial planning, tax planning, and advising. But the role of a CPA is not limited to simply managing financial records or filing taxes. CPAs are trained to provide insights and guidance on various financial concerns, such as budgeting, auditing, and compliance.

CPAs play a pivotal role in many diverse sectors of our economy. They offer strong accounting and management acumen, are excellent analysts, and whether they are working with individuals, small businesses, or large corporations, they always act to protect their client’s interests.

Role and Services of Financial Planners
As financial markets become increasingly complex and unpredictable, the role of a financial planner has become more critical than ever.

Financial planners guide and assist with various financial matters, from investment and retirement savings strategies to estate planning and tax management.

Their primary goal is to help individuals and families achieve their financial goals while minimizing risk and maximizing returns. The services offered by financial planners are diverse and customizable, tailored to each client’s unique needs, circumstances, and risk tolerance.

Some typical financial planning services include wealth management, risk assessment and management, asset allocation and diversification, estate planning, trusts, and financial planning for significant life events such as marriage, divorce, and the birth of a child. Whether you are just starting to build your financial future or are well-established, a financial planner’s guidance and expertise help you mitigate risk and ensure a solid financial future for you, your loved ones, and future generations.

CPAs vs. Financial Planners: What’s the Difference?
Certified public accountants (CPAs) and financial planners might seem interchangeable as professions, but there are, in fact, several key differences.

Generally speaking, CPAs specialize in tax accounting, auditing, and assurance services. Financial planners focus on helping clients with their financial goals, such as saving for retirement, paying off debt, or wealth-building.

Both professions have unique skill sets and qualifications. CPAs must pass a rigorous exam and adhere to strict ethical standards, while financial planners may hold a bachelor’s degree or professional certification, such as a Certified Financial Planner (CFP®). Those using the title of Financial Planner or Financial Advisor are not mandated to have a license to practice; however, they do require securities licenses to sell certain investment products.

In summary, CPAs and financial planners both deal with finances. And while their roles sometimes overlap, the value and services they provide differ significantly. Many people and businesses work with CPAs and financial advisors as separate entities, but a strong partnership between the two ensures continuity.

In other words, having both factions in your corner means all aspects of your finances are aligned and working together. You’ll maximize opportunities on your tax return, increase efficiency in tax planning, and minimize capital gains tax.

Benefits of Partnering with a Financial Planner for CPAs
Building wealth sustainably and successfully requires a strong understanding of tax considerations. When CPAs partner with financial planners, they become an economic powerhouse, helping their clients make better-informed investment decisions while maintaining tax efficiency.

Let’s explore the benefits of a fully aligned advisory team.

1. Improved client services
When CPAs and advisors work together, the client experience improves immensely—the relationship is strongly aligned to achieve the client’s goals, resulting in better results faster. Working together eliminates cross-purposes and disagreements. Plus, the client has two sets of eyes on their finances, each bringing a unique perspective to the table.

Financial planners do not offer tax advice, but their decisions and suggestions may have significant tax implications. The client benefits from aligned advisory, especially when preparing for significant life changes, such as marriage, retirement, or the sale of a business.

With all critical expertise under one umbrella, it’s one less thing for the client to worry about. Happy clients tend to stay put.

2. Expanded service offerings
CPAs often focus on specific niches, specialties, or industries. Growing a practice can be challenging in this environment, as clients outside these niches are often referred elsewhere. When clients are sent to an outside firm, there is a risk they will not return.

Establishing a partnership with a financial planner enables CPA firms to expand their capabilities, add specialized expertise, and offer unparalleled value to their clients. Extending capabilities to include financial planning helps firms grow their bottom line and attract clients outside their usual audience. Over time, the firm’s reputation will strengthen, strengthening trust and building loyalty.

3. Access to a broader range of financial planning tools
CPAs and financial planners use markedly different tools and strategies to do what they do. Access to a broader gamut of planning tools gives CPAs an advantage over competing firms and financial planners working alone. Financial planners also benefit, as they can better understand the tax implications of their client’s investments and design the portfolio to take advantage of the opportunities.

4. Increased revenue opportunities
Strong partnerships translate to increased revenue opportunities. Packaged together, CPA services and financial planning represent massive value to the client and greater earning potential for the firm.

An aligned advisory is a premium service that pays off immediately. Rather than hiring, referring, or contracting to add expertise, a partnership allows you to keep business in-house. Once the partnership is established, the firm can start marketing expanded services immediately, accept new types of clients, and send value to the bottom line.

5. Reduced risk and liability
When clients work with CPAs and financial planners separately, risk increases. Your client’s risk then becomes your risk. By partnering with a financial planner, risk is mitigated because you’ll know exactly what decisions your client is making so you can stay on top of tax implications and prevent unfortunate financial decisions.

Financial advisors may be liable if they fail to consider a client’s suitability for a particular investment. An advisor must have a good understanding of the client’s financial situation to make those determinations. Working in partnership with the client’s CPA helps to illuminate blind spots, reducing risk and liability.

How to Choose a Financial Planner to Partner With
As with any partnership, whether you’re starting a business or getting married, it’s critical to know what and who you’re committing to. Understanding what attributes, qualities, and qualifications to look for before you begin your search is always a good idea. Here are a few considerations when choosing a financial planner to partner with.

1. Criteria for selecting a financial planner
Choosing the right financial planner should be done strategically. As a partner, they represent your business, so their values and approach should align with yours and your brand’s.

Think first about what your clients want. Asking their opinions and soliciting suggestions may help you choose an advisor better aligned with your clients’ needs.

Look for financial planners with a solid reputation and track record of success. Happy, successful clients speak volumes about who they are. Talk to people, get recommendations, and ask for opinions. Ask people you know. Talk to people in your industry. Research reviews online to see what the rest of the world says about them.

You need to find someone that represents value to you, someone you feel confident about, so it’s essential to consider all options.

2. Qualifications to look for
One key factor to consider in a financial planning partner is whether the financial planner or advisor is acting in a fiduciary capacity. The fiduciary standard is a legal and ethical requirement that certain financial planners must adhere to when providing financial advice to clients. This standard mandates that financial planners must act in the best interest of their clients, putting their clients' needs before their own. This means that financial planners must provide advice that is both suitable and beneficial to their clients, and avoid any conflicts of interest that may lead them to recommend products or services that do not serve their clients' best interests. The fiduciary standard is a crucial component of the financial planning industry, as it ensures that clients can trust their financial planners to act with integrity and provide them with objective advice that is tailored to their unique financial situation. Not all financial planners are obligated to act as fiduciaries.

There are several other certifications and licenses that are prevalent with financial advisors and planners. Licenses such as the series 6, 7, 63, 65, and 26 allow individuals to offer certain products and charge specific fees for their services. There is also the certified financial planner or CFP designation. CFP professionals are required to complete a comprehensive course of study in financial planning, pass a rigorous exam, have relevant work experience, and adhere to a strict code of ethics and professional standards.

3. Compatibility and communication skills
All good partnerships rely on strong, transparent communication. You need to be able to work well with your partner; otherwise, it will be challenging to accomplish your goals of business growth, increased profitability, and customer satisfaction.

Your new partner must also communicate well with your customers and meet the high standards they have come to expect from you and your firm. You don’t need to be best friends, but your philosophies must be aligned to work well together. A common goal, teamwork, and collaborative nature are essential.

4. Background and experience
Ideally, you’ll want to choose a partner with some background in the niches you serve. This will allow you to provide immediate value to your clientele without seeking out or marketing your services to an entirely new client base. Practical experience is always preferable. CFP certifications, for example, require 6,000 hours of professional experience or 4,000 hours of apprenticeship in addition to coursework and exams.

Financial planners must also have excellent soft skills, which can only be gained from dealing with customers in real-world situations. Success would be elusive if your advisor could not communicate well with clients or others in your office. Ensure your new partnership is built on a mutual desire to deliver excellence, improve the lives of others, and elevate the firm’s mission and vision.

Best Practices for a Successful Partnership
A successful partnership doesn’t just happen; it’s planned well and built on solid foundations of trust and shared goals.

Keep in mind; you’re taking on a partner to add knowledge and new capabilities to your firm. Choose wisely, and you’ll benefit from a more robust network and an expanded client base.

Here are a few best practices to ensure a successful partnership. They’re no different than those you would emphasize when taking on a partner in any type of business.

Communication and collaboration
We previously discussed the importance of good communication and soft skills when working with clients, but when it comes to working with others toward a shared goal, it is one of the most potent attributes a team can have.

Collaboration requires open and transparent communication. When collaboration is enabled in this way, stakeholders are aligned, and success is easier to achieve. Be intentional about the process to keep ideas and information flowing.

Here are a few tips to help you achieve this:

Hold frequent meetings. Meet as often as necessary to share information, discuss business, and measure progress toward stated goals. When                      partners are open with each other, there are fewer miscommunications and more wins to celebrate.

Check in with your partner daily, especially if you work outside the office. Doing so keeps you on track and keeps you both focused on the same t                      things.

Be a good listener. Your new partner has similar skills—but their expertise differs from yours. You may have occasion to disagree, but having                            different viewpoints might be the key to innovation. Invite new ideas and ensure your partner has an equal voice.

Define roles and responsibilities
The clearer you can define roles and responsibilities—who’s taking care of what—the less conflict you will experience. Some of the things you both do will inevitably overlap. But if you can be clear about those things and articulate policies to enact when that happens, workflows will be more efficient, and time will be better spent.

Other areas may include managing and scheduling staff, decision-making, financial contributions, salaries, and so on. Leadership and management roles should also be defined, especially when other employees are involved. Change can be jarring for employees as they may think they will lose their jobs. Be as clear and transparent as possible; explain why you are taking on a new partner, the benefit it will provide to the firm, and what they can expect in the weeks and months ahead.

Putting it in writing is always advisable so there’s no ambiguity. With a clear and concise roadmap you can both agree to, all parties are free to move forward and focus on their work rather than getting hung up on details or harboring resentments.

Establishing protocols and workflows
When bringing a new partner into your firm, consider that your clientele and staff have established workflows that help you maintain consistency and efficiency. Even if there is room for improvement, minimizing disruption at the outset is critical.

Take the time to document processes and workflows when possible, as doing so will make it easier for new people to understand. Improvements may be needed, but it’s always best to begin with a level playing field. Your new partner and their staff should comprehensively understand how things work, including your technology, your workflows, and your policies.

Maintaining ethical standards
Ethics and trust are critical in the financial industry. Firms known for their ethical practices are trusted, attract higher-value clients, and can build on their reputation to enable growth.

Ensuring you and your partner are aligned to similar values and ethics is essential. Once you’ve established those foundations, building a practice that exemplifies these standards is easier. Establishing an ethical culture requires strong leadership, honesty, fairness, and integrity. When company leaders demonstrate their commitment to ethical practices, morale improves, as do relationships between staff, partners, and clients.

In the financial world, ethics and standards are critically important. Clients need to be able to trust their advisory team, and firms have a responsibility to uphold professional and regulatory compliance standards. Failure to do so can result in fines, litigation, or legal action, all of which will impact the business’s reputation.

Evaluating and measuring partnership success
Success can be hard to gauge without measuring key performance indicators (KPIs). Establishing KPIs requires advance goal setting and regular check-ins so you can quantify the value of your partnership.

Some aspects are easier to measure, such as income, number of new clients, assets under management, average revenue per client, number of new leads, activation rate, etc. Others, such as client satisfaction and employee engagement, are less tangible but still critical. Strong client satisfaction may not be measurable from a numerical standpoint, but it leads to referrals and helps to keep clients in the fold longer.

Employee happiness is also a measure of a successful partnership. When staff is happy, they can focus on their work and are more productive. Happy employees tend to stay put, helping you maintain stability as you grow.

Conclusion
In conclusion, there are countless benefits to be had when CPAs partner with financial planners. Through partnership with an experienced advisor, CPAs gain a comprehensive suite of financial planning services, including retirement planning, trust services, education planning, insurance, and fee-based advisory programs.

Clients benefit from a 360˚  approach to wealth building and management, encompassing tax planning and financial advisory into a single, elegant solution that helps them realize their financial goals with less risk. CPAs can also refer clients to the advisory and receive compensation for the referral, further building their bottom line without adding complexity.

Tailored Cents is a financial planning firm that builds tailored financial plans for its diverse client base. If you are a CPA or CPA firm interested in exploring a partnership with a licensed financial planner, get in touch today. We’d love to show you how we can add value to your client relationships, expand your professional network, and generate more referrals as you grow your business.

Set up a call today, and let’s talk about it!

Final Thoughts
The financial industry today is more competitive than ever. Fintech, virtual firms, and online tools have diluted the market. Real estate and office leasing costs continue to rise, and the global staffing shortage prevents many firms from achieving sustainable growth.

Partnering with an experienced Financial Planner offers a path forward and a way to provide unsurpassed value to your clients without the risk and complexity of expanding your firm. Tailored Cents works with clients throughout the US, and we welcome the opportunity to help you meet your clients’ changing needs.