When it comes to planning for your future, having a trusted and capable financial advisor is important. But the truth is, even the best financial advisor can’t do everything. A successful financial life often requires more than investment advice. It requires a team.
Think of it as a trio of professionals working behind the scenes: a financial advisor, an attorney and a CPA. Everyone has a specific area of expertise – his or her own lane – but when those lanes intersect, working together can make a tremendous difference.
The Financial Advisor: Your Financial Road Map
The financial advisor’s primary role is to help you make informed decisions about your money and your long-term financial goals. This may include investment management, retirement planning, income and tax planning, risk management and helping you determine how much you need to save to reach your objectives.
A good financial advisor looks at the big picture. Where are you today? Where do you want to go? What obstacles could get in the way? And perhaps most importantly, how do all of your financial decisions work together?
But there are times when a financial decision crosses into another professional’s area of expertise. That’s where the other members of the team become important.
The Attorney: Protecting What You’ve Built
An attorney brings expertise that a financial advisor typically doesn’t have. Estate planning, wills, trusts, powers of attorney and other legal documents can play a critical role in determining what happens to your assets and who can make decisions on your behalf.
Your financial advisor may identify an estate-planning concern, but the attorney is the one who can provide legal advice and prepare the appropriate documents. It’s also important to review and update, if necessary, your estate plan every five years. Life happens, people we love pass away, and estate plan documents will require revision.
This is an important distinction: each professional has his or her designated lane. Your financial advisor shouldn’t practice law, just as your attorney shouldn’t manage your investment portfolio.
The CPA: Helping You Navigate the Tax Landscape
Taxes can have a significant impact on financial decisions. That’s where a CPA comes into play.
A CPA understands the tax implications of decisions involving investments, retirement accounts, business interests, charitable giving and other financial matters. Your financial advisor may recognize an opportunity or a potential tax issue, but your CPA can provide the specialized tax advice needed to determine the best course of action.
Also note that CPAs and tax preparers are different. A tax preparer’s primary job is to prepare and file tax returns. Many preparers are competent and experienced, but they may not have the same education, licensing requirements, or scope of practice as a CPA. CPAs can do tax preparation, but their expertise extends well beyond simply completing a tax return.
The Power of the Team
The real value comes when these three professionals communicate. Imagine you’re approaching retirement and considering a major financial decision. Your financial advisor can evaluate how it affects your investment and retirement plan. Your CPA can evaluate the tax consequences. Your attorney can determine whether there are legal or estate-planning considerations.
You don’t necessarily need three professionals sitting around the same table for every decision in your life. In fact, most of the time, they won’t. But when an issue crosses professional boundaries, having a team that’s willing to communicate can be invaluable for building, protecting and preserving a successful financial future.
Tracy L. Campbell is a partner and financial advisor at Meriwether Wealth and Planning, an independent Registered Investment Adviser (RIA) firm headquartered in downtown Minden, La. E-mail Tracy at tracy@meriwether.com. Disclaimer: This content is for general knowledge and education, not a substitute for professional advice.