Your tax return and investment portfolio affect many of the same decisions. Selling an investment, drawing retirement income, or making a charitable gift can change both your finances and your tax bill. It helps when the professionals advising you understand those connections.
A CPA who also provides investment advice can coordinate this work. Separate tax and investment professionals can do so as well. The useful question is how they share information, divide responsibilities, and help you act before a deadline.
At NRACPA, tax and accounting services are provided by NRACPA LLC. Investment advisory services are offered through Archer Investment Corporation. These are separate engagements, and clients are not required to use both. Our Wealth Management page explains the advisory relationship.
When is coordination useful?
Consider a household preparing for retirement. A portfolio withdrawal may meet its spending needs, but the choice of account can affect taxable income. A tax projection can help the advisor compare those choices before the withdrawal takes place.
Other situations that benefit from a shared discussion include:
- Selling investments or managing a concentrated stock position
- Considering a Roth conversion
- Making a large charitable gift
- Selling a business or planning an ownership transition
- Coordinating investment accounts with an estate plan
The purpose is to evaluate the financial and tax consequences together. It does not guarantee lower taxes or better investment returns.
Does your financial advisor need to be a CPA?
Not necessarily. A CPA background can be useful when tax questions are a significant part of your situation, but the credential alone does not establish investment expertise. A financial advisor who works well with your existing CPA may also meet your needs.
Compare the person’s relevant experience, services, professional registrations, and communication process. The SEC’s investment-adviser guidance explains how to check registration and review the services and fees an adviser offers.
What should you ask at a first meeting?
Ask for specific examples of how the relationship would work:
- Who will prepare my returns, manage my investments, and answer routine questions?
- How will you coordinate with my other professionals, with my permission?
- Which planning and implementation services are included?
- What are the fees for each service, and what might cost extra?
- How are potential conflicts of interest explained and addressed?
- Can I engage you for tax services or investment advisory services separately?
Written agreements should describe the scope and responsibilities. Review the advisory firm’s Form ADV and other disclosures, and ask about anything you do not understand. NRACPA’s disclosures and regulatory documents describe the separate CPA and advisory relationships.
What does ongoing coordination look like?
A useful process starts with current information: recent returns, investment statements, income expectations, cash needs, and upcoming decisions. The people involved should agree on who maintains projections and who follows up when something changes.
For example, you might discuss a planned business sale before signing documents, or review a possible conversion before instructing an IRA custodian. An annual return supplies important history, but decisions during the year need updated numbers.
The right meeting schedule depends on your circumstances and the services you have engaged. Ask when reviews occur and how to raise a question between meetings.
When might a simpler arrangement be enough?
Someone with straightforward tax needs and a simple investment plan may not need an ongoing combined relationship. Others prefer to retain separate specialists. Either arrangement can work when the responsibilities, costs, and communication are clear.
A combined relationship also does not replace every specialist. Estate documents should be addressed with qualified legal counsel, and insurance questions may involve an insurance professional. Confirm which matters your advisor handles and when another professional is needed.
Start with your questions
Bring the decisions you are facing and the questions you want answered. We can discuss whether Tax & Accounting, Wealth Management, or both are appropriate for your situation.
Prospective clients can book a free initial consultation. If you already work with the firm, book a meeting to discuss your existing services.
Sources
- SEC Investor.gov: Investment advisers and choosing a professional
- SEC Investor.gov: Investment Adviser Public Disclosure
This article provides general information, not individual tax or investment advice.
This article provides general information. Tax and investment decisions depend on your individual circumstances and current rules. Contact the office to discuss your situation.
