Can someone help me understand the difference between services provided by PMW, FA, and accounting firms?

NormanB's picture
Rank: Chimp | banana points 5

Hi all,

Pardon is this has been asked plenty of times. It has recently come to my attention that my brother in law has an accounting firm that essentially manages and handles his finances in every conceivable way ( pays his bills, makes sure there's no fraudulent charges, handles all logistics related to his real estate, advises on investments, etc...).

What's the difference between an accounting firm that provides these services vs a financial advisor (let's say a firm started by a CFP) vs a private wealth management firm? Are there overlap in the services provided here? Or are they distinct? Are there services one would provide that the other wouldn't?

If there are resources that cover the differences and services provided by each, please let me know. Thanks for the help!

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Comments (4)

Best Response
Sep 15, 2017
NormanB:

Hi all,

Pardon is this has been asked plenty of times. It has recently come to my attention that my brother in law has an accounting firm that essentially manages and handles his finances in every conceivable way ( pays his bills, makes sure there's no fraudulent charges, handles all logistics related to his real estate, advises on investments, etc...).

What's the difference between an accounting firm that provides these services vs a financial advisor (let's say a firm started by a CFP) vs a private wealth management firm? Are there overlap in the services provided here? Or are they distinct? Are there services one would provide that the other wouldn't?

If there are resources that cover the differences and services provided by each, please let me know. Thanks for the help!

Essentially, your BIL is an accountant moonlighting as a Financial Adviser, and a Financial Planner. (note: no designations are required to be held for any of the titles you mentioned, in my mind my poodle/terrier mix is all three.)

The question is essentially, how proficient is the individual in each field. If I don't have GI problems, I let my GP check me out, if my family has a history of heart disease I go to a specialist.

An Accountant (most well known degree, CPA, but not all CPAs focus on tax, one focusing on forensic fraud may be horrible in tax) works the books. what you owe, what you have, etc. it can be personal taxes or corporate accounting, it is all under accountancy. Investments, planning, etc are out of scope.

A Financial Adviser does what the name implies, recommends things based on your finances. In actuality, this is frequently a guy who manages your investments for a fee (express or implied) quality varies widely.

Most WM shops try to put everything under one roof for HNW clients who can't be bothered.

I break things internally before we roll them out so people don't break them externally, and find data problems. I also know the story behind every one of our ETF's performance quirks back to inception. Our PMs come to me when they need help.

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Sep 26, 2017

Most WM shops try to put everything under one roof for HNW clients who can't be bothered.

At least in my experience, the big wirehouses will NOT touch tax issues and will, in fact, aggressively distance themselves from tax. Too much liability. Not sure if smaller WM shops do CPA stuff too (i.e. filing your taxes).

There is usually coordination between a financial advisor and CPA though - as investment decisions are commonly driven by, or at least consider, tax consequences (especially for HNW clientele).

Sep 27, 2017
The Piker:

Most WM shops try to put everything under one roof for HNW clients who can't be bothered.

At least in my experience, the big wirehouses will NOT touch tax issues and will, in fact, aggressively distance themselves from tax. Too much liability. Not sure if smaller WM shops do CPA stuff too (i.e. filing your taxes).

Sorry, I simplified to keep things short. You are correct about wirehouses. I was thinking about some RIA shops where they'll have a CPA on shop and offer a package where they take care of everything for clients.

I break things internally before we roll them out so people don't break them externally, and find data problems. I also know the story behind every one of our ETF's performance quirks back to inception. Our PMs come to me when they need help.

    • 1
Sep 27, 2017

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