Need Tax Strategy? Find a good CFP®. Need Taxes Done Right? Find a good CPA (or EA).
Life just tends to get more complicated as we get older. Whether it's a pending liquidity event, planning for kids, or aligning cash flows, you may decide that it’s time to seek professional help. Figuring out the right type of help can be challenging.
Three of the most trusted (fiduciary) professionals are CERTIFIED FINANCIAL PLANNERS™ (CFP®), Certified Public Accountants (CPA), and Enrolled Agents (EA).
While all play crucial roles in your financial well-being, their expertise, focus, and the value they bring to the table are distinct. Understanding these differences can help you build the right team for your financial future.
Note: this blog post will focus on CFP® and CPAs but it’s worth noting that an Enrolled Agent (EA) is the highest credential awarded by the IRS. EAs are also qualified to prepare tax returns in the same manner as CPAs.
The Roles: Quarterback vs. Wide Receiver
If you think about your collective financial well-being as a football team, the CFP® is your quarterback, while the CPA is your wide receiver. You need both to win.
As the quarterback, the CFP® calls the shots, leading the strategy for your financial future. They help you align your goals, develop a plan, project tax implications, and coordinate all the moving pieces of your financial life.
Down the field, as a wide receiver, the CPA executes one very specific play—that is, they ensure that your tax returns are prepared compliantly for the prior year.
Therefore, the primary difference between a CFP® and a CPA lies in their approach to your finances:
Value Add: Forward vs. Backward Looking
A CFP® is a forward-looking strategist, focused on holistic financial planning. This includes strategies and projections pertaining to:
Tax forecasting and optimization
Equity compensation strategy
Insurance needs analysis (but only as a fiduciary, without any actual sales)
Estate planning
Debt optimization
Cash flow forecasting
Housing affordability and rent vs. buy analysis
Acting as an accountability partner and general coach
And, asset management (of course)
On the flip side, a CPA is a backward-looking executioner focused almost exclusively on tax preparation and compliance.
Their primary concern is what strategies you have already executed this year and how will you report them properly.
While some CPAs do offer tax planning and can provide strategic advice, their main engagement is typically centered around annual tax filings and compliance.
Meeting Frequency: On Demand vs. Annually
You’re likely to have a very different type of engagement with your CFP® and CPA – and one isn’t better than the other. They’re just different.
CFP® meetings are typically on demand throughout the year. A good CFP® should offer white-glove service, available whenever you need to discuss any major financial decisions or updates to your plan.
Most clients only meet with their CPA 1-2 times per year, usually around tax season. The engagement is generally limited in scope, focused on ensuring your tax return is accurate and complete.
Net-Net: It Takes Two to Tango.
Given their different roles, many people benefit from working with both a CFP® and a CPA (or EA):
Comprehensive Planning and Tax Forecasting: A qualified CFP® can help you map out your entire financial life, including long-term goals and tax strategies to achieve them.
Tax Preparation: A CPA ensures you’re compliant with tax laws and helps you avoid costly mistakes.