What is the Difference Between a Tax Advisor and CFP?


There are a number of different financial experts that are capable of providing today’s busy professionals with the financial advice that they are looking for. However, not all financial experts do the same thing or focus on the same type of service.

Two of the financial professionals that most people turn to are tax advisors and Certified Financial Planners (CFPs). These two have many similarities, but there are a few key differences that should be noted as well.

Ultimately, the best way to determine whether you need a tax advisor or a CFP is to understand what these two professionals do and what their responsibilities include.

What are Tax Advisors?

A tax advisor (also known as tax planners) is a specific type of financial professional that focuses on income taxation. Tax advisors can be CPAs (certified public accountants), general accountants or even tax attorneys. These are the professionals that you turn to when you need help with income tax preparation or if you questions regarding your taxes.

While these individuals are involved with your personal finances, they will primarily focus on only the income tax related aspects of these finances, while certified financial planners are going to have more access to other parts of your finances, including saving and planning for the future.

Since tax advisors must have a great deal of knowledge of finances in order to prepare income tax returns and give tax advice, they are often confused with CFPs, because they do have a great deal of financial knowledge. While a tax professional may have some quality advice on your personal finances, they are typically not trained in the way financial planners are to offer advice for the future.

What are CFPs?

CFPs, or Certified Financial Planners, have a more general focus when compared to tax advisors. Financial planners are able to offer all different types of financial advice to their clients. While they can provide assistance with income tax queries, they are not necessarily trained specifically in income tax practices.

In order to be a Certified Financial Planner (as opposed to just a standard financial planner, which is a far more general title), an individual has to pass the Certified Financial Planner Board of Standards (CFP Board). They can also take additional tests to pass other boards or to gain additional certifications.

If you are looking for a trained financial planner that can offer you advice about your current and future spending and saving habits, it is typically best to look specifically for CFPs, as someone who is just a “financial planner” can be anyone from an insurance agent to a tax attorney.

What to Look for When Hiring One of These Professionals

When it comes to telling the difference between a tax advisor and a Certified Financial Planner, typically the best thing that you can do is to look at an individual’s credentials. There are all different types of financial planners and tax advisors, but by looking at the type of certifications that the individual has behind their name, you can find the right financial professional for the job. Some tax planners may have a Certified Tax Planner credential behind their name while some financial planners may be certified in specific areas of financial advice such as estate planning. Ultimately, looking at the type of extra training an individual has will tell you if they have the skills and experience that fit your personal financial needs.

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