A CPA must often be cognizant of gathering investment information as part of their fiduciary duty, if it applies to their client. As accountants become more involved with their client’s investments, they must be aware of what information is needed. More importantly, they must understand how this information impacts their client’s tax situation and their overall financial profile.
CPAs who want to be effectively involved in planning the investments of their clients must have a transparent, readily available way to do so. Any effective plan depends on seeing every element clearly. But that is not enough. In order to build any effective tax planning strategy, an accountant must understand their client’s holdings, the rationale for investing in these holdings, and the methods being employed.
But what accountants do not realize is that besides a more effective tax strategy, gathering investment information helps bring you and your client closer together. This helps not only craft a more effective strategy but further raises the profile of the accountant as a trusted financial resource and trusted advisor in the eyes of their clients.
Acting as a Trusted Advisor
In many ways, a CPA must act as a trusted advisor as part of their fiduciary responsibility. As a “conductor” of the financial affairs of their clients, they need to have the information necessary to make decisive and meaningful decisions. These decisions will have a lasting impact upon the lives of their clients, so these decisions must be made carefully, and with great consideration.
At 4Thought Financial Group, we believe that the CPA gets an automatic head seat at the table when it comes to the financial affairs of their clients. When a wealth management firms works in cooperation, not competition, with a client’s CPA, a more effective tax planning strategy and more effective investing experience can be created. But more than that, a more effective tax planning strategy makes for a more effective financial plan.
Fiduciary Responsibility Makes Investing More Effective
The prevailing theory is that the adherence to a fiduciary responsibility will simply be enough to curb any associated investment fees and ensure that clients get the best advice. While there is some validity to this hypothesis, there are a number of risk factors that will affect the real outcome. With that being said, there are ways to mitigate the effects of these risks, though they cannot be eliminated.
Although it is easy to presuppose that a fiduciary standard is simply better for investment returns, CPAs typically give little thought on how to effectively implement an investment methodology that adheres to this standard and can produce competitive investor returns. Also, often investment managers give little thought about how to integrate this methodology into the overall financial plan of their clients, and how to explain it all to their tax advisors.
4Thought stresses the importance of the CPA working in concert with their clients’ investments. We feel that by providing a more transparent view of a client’s portfolio and a full understanding of our unique investment methodology, we offer better services to CPAs and their clients than they would otherwise have access to.
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