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Should a Certified Public Accountant Do Your Financial Planning?

Joanne Cleaver

Don't be surprised if the certified public accountant calculating your income taxes tries to sell you on financial planning services. As accounting firms expand their scope of services, many are seguing into the financial advisory business.

"There's a lot of intersection between the two disciplines," says John Gustavson, a director in the Minneapolis office of CPA firm Clifton Larson Allen. He'd know: He's both a CPA and a certified financial planner.

CPAs earn advanced degrees and must pass a roster of tests to become licensed. They are required to keep their professional qualifications up to date. CFPs take a different set of tests, which are administered by the Certified Financial Planner Board.

There's a reason accountants see tax season as their big chance to win new clients for advisory services. Consumers who have sufficiently complicated finances to justify the services of an accountant probably have enough complexity, or own enough assets, to also justify the services of an advisor. In other words, if it's worth it to hire an accountant, it's probably worth it to hire an advisor.

[See: 13 Lucky Events That Call For a Financial Plan.]

Tax season is the time of the year when worried Americans seek expert advice, thus opening the door to additional services -- or so accountants hope. The American Institute of Certified Public Accountants estimates that 25 percent of its 394,000 member accountants also offer some financial planning services. That translates to 114,000 accountants ready to recommend additional services, either directly or by referring you to the advisory division within their firm.

Your tax return is a good place to start anyway, because it's a snapshot of your income streams, and that's what an advisor wants to see first, Gustavson says. But most CPAs specialize in a technical financial area, such as taxes. It's the financial planner who will quarterback your relationship by reviewing the whole picture, from taxes to investments, insurance and estate planning, he adds.

[Read: 3 Big Secrets You Should Tell Your Financial Advisor.]

If you're considering a CPA firm for advisory services, here's how to figure out if it's a good fit for your needs.

-- Ask about the Personal Financial Specialist designation. Not to be confused with the CFP qualification, the PFS is an additional expertise that only CPAs can earn through additional education, experience and by passing an exam. You can find a CPA with the PFS credential at www.findacpapfs.org.

-- Make sure the CPA firm offers full-fledged financial advisory services, especially if you are familiar with its work based on a corporate relationship. Some firms specialize in only business-to-business categories, such as commercial real estate and corporate tax, points out Andrea Millar, who leads the personal financial planning division of the AICPA.

-- Find out who will "own" the relationship. At some firms, the first professional you work with essentially "owns" the relationship. At others, an internal referral may also result in a new primary point of contact. Clarify who you will be working with on an ongoing basis.

-- As always, make sure you understand how the advisor is being compensated. CPAs are typically paid by the hour, which means they are comfortable giving unbiased advice about the value of other services, especially services sold by commission-based agents such as investments and insurance. At some firms, such as Clifton Larson Allen, personal financial advisors are salaried, minimizing any internal conflict of interest.

-- Is the accountant comfortable quarterbacking your hand-picked team of advisors and commission-based agents? Tony Panebianco, director of family wealth strategies for New York-based CPA firm Grassi & Co., says some clients might want to assemble a new team of advisors partly comprised of existing relationships and partly with newly engaged professionals.

Similarly, Panebianco says, be sure to understand how the accounting firm itself handles external referrals so that the compensation structures are transparent.

[Read: A Guide to Financial Advisor Fee Structures.]

Despite their best intentions, many accounting firms may not have enough staff to dedicate to personal financial planning, says Marc Rosenberg, managing partner of The Rosenberg Associates Ltd. in Wilmette, Ill., a consulting firm that advises CPA firms. The profession is experiencing a talent crunch, he explains, and many CPA firms can't hire enough accountants, let alone financial planners.

In his opinion, the best bet is a CPA firm with a stand-alone staff of financial planners. If your accounting firm doesn't offer that? "It could be a clue that you need a bigger firm," Rosenberg says.

Finally, don't forget that referrals work both ways. Just as your CPA can refer you to a financial planner, your certified financial planner can almost certainly refer you to a certified public accountant.