Identifying The Distinct Roles Played By Accountants And Financial Planners

On the surface, accountants and financial planners are two distinctly different occupations. On the one hand, accountants focus on recording, summarizing, analyzing and reporting on a business's financial transactions and are a virtual requirement for publicly traded entities. Financial planners, on the other hand, specialize in tax planning, portfolio management, and retirement planning. 

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Both certified public accountants and certified financial planners have their own degree requirements and sets of tests before certification; accountants, however, need to hold an advanced degree to certify, whereas financial planners can qualify for certification with an accredited bachelor's degree. 

There are, however, plenty of overlaps between financial planning and accounting. Whether through taxes or investments, both are heavily geared toward providing their client with a big picture perspective of their finances and to maximizing potential cash flows and revenue streams. While the need for certified public accountants may be reserved for high net worth individuals, certain tax situations that become complex enough to need a certified public accountants may also require the assistance of a financial planner. 

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In response, many certified public accountants have themselves decided to diversify and become certified financial planners themselves, owing to the ease with which the skills from one field transfer to another. People who are both certified public accountants and financial planners are often active at tax time when the former specialization is more prominently needed. 

There are benefits and drawbacks to all-in-one personnel. Hiring one particularly competent person may be serendipitous for some individuals, allowing them to cut back on the costs of maintaining a financial team. Likewise, a single person handling everything may not be able to perform competently in all disciplines, leading to minor slip-ups that could add up over time. 

A certified public accountant, Lewis Daidone works as a consultant for BlackRock, specializing mainly in investment management. For more updates on accounting, subscribe to this blog.

Resilient Portfolio: Investing Strategies for the Disciplined Investor

How you invest your hard-earned money, obviously, is an important decision; and how you go about making your investment choices is even more important. Asset allocation, diversification and dollar cost averaging are proven, time honored and successful ways to help you to achieve your investment goals.

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Asset allocation
Asset allocation is about not putting all your eggs in one basket. It's the ultimate protection should things go wrong in one investment class or sector, as is likely to be the case from time to time. Asset allocation attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to your risk tolerance, goals and investment time frame.By keeping things carefully balanced, you'll be able to endure market fluctuations without losing sleep.

Diversification
Diversification is a risk management technique that combines a wide range of investments to potentially minimize investment risk.  Finance blogger Ken Faulkenberry defines investment diversification as "a portfolio strategy combining a variety of assets to reduce the overall risk of an investment portfolio.“ A basic, diversified portfolio might include several investment categories such as stocks, bond and cash.

Dollar cost averaging
Often considered the best friend of the ordinary investor, dollar cost averaging is a strategy whereby you allot fixed investment amounts at predetermined times (monthly, quarterly, semi-annual, or annual), regardless of the movement in stock or bond prices. As a result of buying a fixed dollar amount of a particular investment on a regular schedule regardless of the share price, more shares are purchased when prices are low, and fewer shares are bought when prices are high.

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Lewis Daidone  is an investment operations consultant currently working at BlackRock. His wide ranging experience includes mergers and acquisitions, successful start-up and exit strategies and  business process re-engineering. . Know more about him on LinkedIn.