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