CPAs?
t's a relatively easy decision to hire a CPA to prepare your tax plan and return, but turning your financial future over to a CPA is an entirely different proposition. Read this article to find out why some CPA firms are risky alternatives when it comes to planning and investing your assets.
Types of CPAs
Some CPA's and firms provide financial services and some don't.
- According to the AICPA, 65% of CPA's do not provide planning and investing services.
- 35% of CPA's provide planning and/or investing services.
- Some CPA's provide tax and planning/investing services
- Some CPA's no longer provide tax services and specialize in providing planning and investing services.
Internal or External Services
The 35% of CPA firms that provide financial services have three business models that represent different levels of risk:
- Some CPAs provide tax and financial services. Are they real financial experts?
- Some CPA firms have subsidiaries that provide financial services. Is there a conflict of interest when they refer tax clients to these companies?
- Some CPA firms partner with third parties and revenue share with them. Is there a conflict of interest when they refer tax clients to third parties that share revenue with them?
Specialized Expertise
A primary issue is whether the CPA has the specialized expertise to provide high quality financial planning and investing services. Like tax, these are complex services that require significant amounts of education and experience. Whether CPA firms have internal expertise or relationships with third parties, it's very important that you verify their financial services' credentials and business practices. Just because the firm is good at tax it doesn't mean it's good at providing high quality financial advice.
Another Revenue Stream
Some CPA firms, like other types of businesses, offer financial services to generate additional revenue from current relationships. Consequently, they are more focused on increasing their profits than they are on providing high quality services that will help you achieve your financial goals.
Third Party Services
Some CPA firms choose to provide planning and investment services by contracting with third parties. That way the CPAs can focus on tax-related services and third parties focus on planning and investment services. Then they cross-refer clients to each other. This can be an effective strategy for the CPA firms and their clients as long as the third party has the necessary credentials and ethics.
Registry Disclosure
The Paladin Registry profiles a significant number of CPAs who provide tax and financial services or just financial services. These CPAs meet the Registry's high minimum standards for credentials, ethics, and business practices.
