Joining Forces_ Why It’s Important for Your Financial Advisor & CPA to Work Together

Joining Forces: Why It’s Important for Your Financial Advisor & CPA to Work Together

By Jonathan Harner, CFP® 

In virtually every industry and every area of life, it is common to see two professionals team up and work together for a common cause. If you’re a baseball fan, you know that the pitcher and catcher have a close-knit relationship working to get the batter out. A doctor relies on their nurses and attending physicians to ensure the best outcome for their patients. 

Your personal finances shouldn’t be any different. A financial planner can take their service to the next level by working with your CPA (certified public accountant) to create the best tax planning strategy for you.

Your Finances Require a 360-Degree View

At Wichita Wealth Management, we take a holistic approach to helping our clients. That starts with creating a one-page financial plan, and then we work on a variety of topics, like choosing the right investments, minimizing taxes, and ensuring our clients won’t run out of money in retirement. 

We take great pride in our work and are confident in our abilities. Yet we know that we don’t know everything, and we value working with other professionals who can assist our clients. A CPA, for instance, is an expert in the field of taxes and can offer unique insights that help us come up with the best plan of action.

The Role Your Financial Advisor and CPA Play in Your Taxes

While financial advisors and CPAs have different jobs, an integral part of their work revolves around taxes. Approaching in different ways, they often have unique perspectives to add to the discussion. Let’s discuss how each approaches this important topic:

A financial advisor will approach your taxes as one component of your overall financial plan. Taxes will be a key component to get right, just like it is with investments, retirement income, and estate planning. 

The goal of a financial advisor is to take advantage of tax planning opportunities so you can lower your lifetime tax liability. This includes determining the right investments for the right type of accounts, the best ways to distribute your investments to generate a retirement income, and more complex tax strategies like Roth conversions and tax-loss harvesting opportunities.

A certified public accountant (CPA) will take a detailed look at your taxes, with a particular focus on the tax situation in the current year. They want to review all your income and categorize it properly, as well as ensure you’re taking full advantage of all deductions offered to you. There are a number of tax credits and deductions that have detailed requirements, and a CPA can see if you qualify.

The Benefits of Working Together

There are a number of benefits when you combine the knowledge of a financial advisor with a CPA. The financial advisor will be able to look at your big-picture planning opportunities, while the CPA will bring an intricate knowledge of the tax code and the necessary rules to follow.

A few examples of how a financial advisor and CPA may be able to reduce your tax burden:

  • Roth conversions. If you have most or all of your investments in tax-deferred accounts like a traditional 401(k) or IRA, consider if you should convert a portion of your funds to a Roth IRA while you’re in a lower tax bracket. You will have to pay taxes on the amount you convert, but once the funds are in a Roth IRA, they can continue to grow without paying taxes, and distributions are also tax-free (as long as you follow the applicable rules). Speaking of rules, this is a fairly complex strategy and it would be helpful to combine both your financial advisor and CPA’s expertise to properly implement it.
  • Gifting opportunities. If you are charitably inclined, there are a number of ways your gifting can save you money in taxes. Two popular ways to give while saving on taxes are a donor-advised fund or a qualified charitable distribution. Your financial advisor can work through the implications of what that gift means to your financial plan, while the CPA can manage the tax implications of that gift as it relates to your tax return.
  • Tax harvesting. It never feels good to see a loss in your investments. There is a silver lining, though. If you have a loss in a taxable account and you sell it, you can offset the amount you lost against any investment gains you may have, or even against your earned income (up to certain limits).

We Can Help You Save on Taxes

Contact us now to get started at Wichita Wealth Management, and let us team up with your CPA and help implement the best tax strategy. Schedule a strategy meeting here or contact me at 316-722-1010 or to get started.

About Jonathan

Jonathan Harner is a CERTIFIED FINANCIAL PLANNER™ practitioner at Wichita Wealth Management, a fee-only, fiduciary financial advisory firm dedicated to helping their clients thoroughly prepare for retirement. Jonathan’s goal is to simplify the complex so his clients can experience confidence and peace of mind as they work toward and live out their retirement dreams. He specializes in developing and implementing tax strategies that maximize his clients’ money and builds a tax-efficient withdrawal plan for retirement. Jonathan loves finding opportunities for his clients to save money and is dedicated to continual learning and growing in his profession so he can provide solutions for his clients’ financial needs. When he’s not working, you can find Jonathan spending time with his wife, Annie, and their daughter, staying active in his church community, and participating in his two favorite (but vastly different) hobbies: CrossFit and Dungeons & Dragons. To learn more about Jonathan and how he can help you, connect with him on LinkedIn or Facebook.

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