The Perfect Pair: Benefits of Having a CPA and Financial Advisor

[ 0 ] April 2, 2012 |

Financial advisor Megan Poore on why two heads might be better than one during tax season

Ah, ‘tis the season. Not the holiday season, a time of year when we are tempted to run up our spending, but tax season, when we pull the blinders off and ask “Where is my money going?” Of course I may be more excited about tax season than my personal finance and small business minded cousins, the accountants who stare down the April 17, 2012 tax deadline with steely reserve. This annual IRS deadline affects our mutual clients, and usually by April 1, I’m pretty chummy with accountants because we are working together to resolve the financial decisions of the prior year.

Related: 6 Tax Preparation Tips to Make Tax Season Easier

Which is why I want to make this tax-time plea: let’s get together more often. Whether you work for a company, own a small business or are self-employed, there are a lot of advantages to introducing your CPA and financial advisor. In addition to the benefits of shared planning, we can discuss strategies for maximizing your income and minimizing your tax obligation.

One advantage of having a CPA-FA team is strategic planning. For example, clients who own their own businesses may have choices when investing for retirement among traditional IRAs, SEP IRAs and Roth IRAs. Each strategy may have a different implication come tax time. Working directly with a CPA ensures that we are using the optimal investment strategy all year long.

Related: Tax Calculators, Child Tax Credit, and Tax Cuts, Oh My!

Another benefit of a strong CPA-advisor team is the luxury of planning outside of tax season. The fall is great time to begin short-term financial planning for the year ahead, and it gives us an opportunity to communicate before the tax season rush. We may even make life easier. One of my clients was writing a big check at the end of each year to fully fund her 401(k). Her CPA and I encouraged her to increase her monthly contribution significantly to avoid adding so many zeros to that end-of-year check. My client benefits from the dollar-cost-averaging of month investments compared to the lump sum contribution, and she writes a much smaller check at the end of the year. Plus, if her business income decreases drastically, she and I can adjust her 401(k) contributions to avoid over-contributing.

Related: Secrets from the Tax Back Room — Tips for the Self-Employed

Working together, your CPA and financial advisor can serve as strategy, operations and customer support throughout the whole year. Some other ideas that you and your advisors could review and decide together include:

Megan Poore

For retirees: When do you want to “double up” on property taxes? In retirement, the two biggest tax deductions are usually property tax payments and charitable giving. It might make sense to double up every other year on both. For example, on odd years, pay property taxes and charitable contributions in January and December, allowing a bigger tax deduction on odd years and a bigger tax bill on even years (using standard deduction).

For company-employed workers: Maximize 401 (K) – Most corporate employees already know that a 401(k) is a fantastic way to reduce your tax load and save for retirement. Work with your CPA-financial advisor team to ensure that you are contributing at least enough to take full advantage of the match. (Rule No. 1 of financial advising is “Never turn down free money.”) Also, we urge clients to consider a Roth IRA if income is within limits. You will not receive a deduction for a contribution, but a Roth IRA currently allows for tax free withdrawals in retirement.

For self-employed workers: There are several different retirement plan options for self employed. The right one will reduce your tax liability and help you to save for retirement. If you are not sure which one to use for 2012, simply start putting money aside so that you have the funds when the end of the year rolls around.

As on any team, your CPA and financial advisor benefit from knowing who has the ball and where it’s going. Each professional helps you differently with your overall game plan for the future.  So introduce them after April 17 – the ball’s in your court.

Megan Poore is a senior advisor associate with Lucien, Stirling & Gray Advisory Group in Austin, Texas. She can be reached at

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Category: Career, Money, Views on the News

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About Megan Poore: Financial Planning can be complicated, but I simplify it. We explore your financial landscape, discuss goals and create a solid plan. Together, we create a foundation that works for you today, tomorrow and for generations [...]
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