The Differences Between an Accountant and Financial Planner
Accountants and financial planners are two of the most essential assets for any company. Furthermore, as the trend of entrepreneurship will increase in the 21st century, there is only going to be a high demand for both of them. Likewise, if you are just starting college or wanting to change careers, both an accountant and a financial planner can be rewarding. The income is decent and there are tons of opportunities for growth and continuous learning.
What is an Accountant?
An accountant is a person whose main responsibility is to record, analyze, and present information about financial transactions. There are two types of accountants: public accountants and internal accountants. The internal accountants are responsible for internal auditing, bookkeeping, and financial forecasting. However, public accountants are responsible for external auditing, which is required by law for any publicly-traded company.
What is a Financial Planner?
A financial planner is one who advises and helps individuals and corporations to meet their short-term and long-term financial goals. In terms of capabilities, financial planners must have good knowledge about the working of the market. Likewise, they must be able to analyze current trends and suggest measures to tackle difficulties in the business world. Furthermore, they must have a decent knowledge of legal developments and their effect on the business. Moreover, they must have strong communication and networking skills as they are likely to search for clients on their own.
Before we head into learning the difference between an accountant and a financial planner, let us learn some of the similarities. In both of these professions, you will be asked to work with numbers. Therefore, you have to be extremely good at Mathematics and crunching numbers. Furthermore, modern technology is at the heart of every business and it has made its way into every business operation. Thus, sharpening your computer skills is a must if you want to gain a competitive advantage. Moreover, communication skills are essential as they are for any other profession.
Typically, accountants have a bachelor’s degree in accounting or a similar discipline. Accounting clerks and accounting assistants may not require a specific degree or even a college education. However, if you want to have a more valuable and high-paying career, having a bachelor’s degree is essential. The licensing board requires at least a bachelor’s degree when you apply for certifications such as CPA (Certified Public Accountant).
In the case of financial planners, a bachelor’s degree is a common requirement. You may come from finance, economics, business, statistics, or similar backgrounds. Likewise, you can have a general knowledge of financial planning or you may specialize in specific areas of wealth management like taxes, insurance, or risk management. Similarly, if you want to work for large advanced companies, an MBA will be an essential requirement. You will have to pass rigorous tests in multiple areas of finances if you want the Certified Financial Planner (CFP) certification.
One of the major areas of difference between an accountant and a financial planner is the necessary skills. As an accountant, you must have an eye for close detail. This is because you have to keep track of every penny that goes in and out of the company. Likewise, you must have strong computer skills as you will be mostly working with spreadsheets, documents, and presentations. It cannot be stressed enough that you must have good mathematical skills as that is what you essentially do. Similarly, good analytical skills are necessary to identify areas of cost-saving and improvements. Furthermore, strong communication skills are a must as you have to work with clients in stressful situations.
For financial planners, research and analytical skills are the most important ones. You essentially need to keep up with changing market trends and demands. A balance of both the depth and breadth of financial knowledge will prove extremely valuable for your employers. Likewise, strong computer skills will help you prepare charts and reports easily. Since time is money, good time management skills will ensure a proper work-life balance and ensure a stress-free career. You must have advanced decision-making skills as you will be the key advisor to a company through thick and thin. Similarly, since you have to collaborate with multiple people and departments, you must have good teamwork skills. Lastly, you must have extreme loyalty and dedication to your customers or companies.
Income may be a primary deciding factor when you choose between an accountant and a financial planner. Internal accountants typically work full time and are paid a salary. Public accountants are typically part-time and some of them work independently. The median income of normal accountants goes north of 60,000 US Dollars per year while CPAs tend to make up to 80,000 US Dollars per year. This will grow as your experience and education grow. Furthermore, they also depend on the size of the company and the country you are working in.
Financial planners, on the other hand, are typically paid in terms of commissions. Some of them charge hourly rates and some of them receive a mix of commissions and fees. According to Glassdoor, financial planners in Hong Kong earn an average salary of HK $15k per year. As you grow your competency and network, this will surely increase.
From this blog, we have understood the difference between an accountant and a financial planner. Similarly, we have learned the basics of what both of these do and when you should choose one over the other. If you like to research and analyze and want to be paid in terms of performance, financial planning can be a good choice. On the other hand, if you are good with numbers and have attention to detail, accounting might be more rewarding.
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