At first glance, the battle of tax advisor vs financial advisor may seem evenly matched. And while there are some overlaps in the services they provide, each discipline requires unique certifications and an intricate understanding of complex, specialty-specific regulations.

To become a tax advisor, one would likely obtain the qualification of Certified Public Accountant (CPA). To be recognized as a financial advisor, earning the CERTIFIED FINANCIAL PLANNER™ (CFP®) certification is encouraged. Be wary of anyone claiming to be either a tax advisor or financial advisor without these certifications. Their knowledge may not be comprehensive or up to date.

Other than certification requirements, the main difference between a tax advisor and a financial advisor is their areas of expertise. A tax advisor is licensed to complete tax returns, and they assist clients by minimizing tax liabilities and assisting with tax audits. Tax advisors will have the most current knowledge of IRS regulations and are especially important resources in complying with tax laws.

A financial advisor, on the other hand, is not always licensed to prepare tax returns. Instead, these professionals focus on developing an informed strategy to manage your finances. A CFP® professional is licensed to set up accounts like IRAs, and they will provide guidance to help clients budget, save, and invest for a brighter financial future.

Do I Need a Tax Advisor or a Financial Advisor?

Chances are, you’ll need both. Successfully managing your wealth is a team effort. You’ll need specialists licensed to help you grow your wealth, plus specialists dedicated to protecting your capital from taxes. The instances in which you will need to consult a tax advisor vs financial advisor are specific to your situation. However, examples of when you will need each are listed below.

Tax Advisor

  • Preparing tax returns & financial statements
  • Understand tax implications of recent financial decisions
  • Recording and tracking income and expenses
  • Representation during a tax audit

Financial Advisor

  • Advice on managing stocks, bonds, and alternative investments
  • Planning college expenses
  • Retirement planning
  • Stabilizing emotions during market volatility

Rather than consulting two separate groups, Morgan Rosel Wealth Management has created a family office style practice that includes access to both financial advisors and tax advisors. This strategy enables communicative and collaborative wealth management and tax guidance.

What to Avoid

When seeking a financial professional to manage your wealth, it is typically wise to avoid Registered Representatives. They operate based on suitability standards, which means their advice only has to be suitable for the client without regard to client interest. This can open the door for biased, self-serving suggestions. Instead, you should move toward Registered Investment Advisors or CERTIFIED FINANCIAL PLANNERS™, who are governed by fiduciary standards and required to put their clients’ interests first.

You should also avoid working with someone who does not listen to your needs. If you have a consultation with an advisor who is only focused on the contents of your portfolio, they may not be a good fit. They should also ask about your lifestyle, spending habits, and values. Your finances are more than the sum of numbers—they are the life events and goals that you are working towards. Your financial advisor should manage your assets with this top of mind.

Finding the Right Advisors

Your financial assets are important, and understanding the difference between a tax advisor and a financial advisor can help you leverage the appropriate services when you need them most. If you are uncertain or stressed about managing your wealth, you’ll need to find advisors who show empathy and understanding toward your unique situation.

The right advisors will be professionals whom you trust. Professionals who are available to assist with your needs and treat you as a priority. Nikolaj Ehlers

Finding a team of advisors under one roof who can guide, guard, and help to grow your financial wealth doesn’t have to be an impossible task. To learn more about how Morgan Rosel Wealth Management can help secure your financial health, reach out to us on our contact page or give us a call at (303) 647-3801.

This commentary reflects the personal opinions, viewpoints and analyses of the MorganRosel Wealth Management, LLC (“MRWM”) employees and guests providing such comments, and should not be regarded as a description of advisory services provided by MRWM or performance returns of any MRWM Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. MRWM manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. MRWM may recommend the services of a third-party attorney, accountant, tax professional, insurance agent, or other specialist to clients. MRWM is not compensated for these referrals.