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8 Things Advisors and Accountants Should Know

28 min watch

What Financial Advisors and Accountants Need to Know About Each Other: A Complete Guide

For Financial Advisors: Understanding Accountants

Key Dates and Deadlines

  1. October 15th Deadline
    • Extension deadline for tax returns
    • Extremely busy period for accountants
  2. April 15th Deadline
    • Individual tax return deadline
    • Peak busy season for accountants
    • Tip: Avoid scheduling meetings near these dates

Important Tax Forms

  1. Form 1040
    • Personal tax returns
    • Individual client documentation
  2. Form 1120
    • Corporate tax returns
    • Indicator of business owner clients

Accounting Terminology

  1. GAAP
    • Generally Accepted Accounting Principles
    • Standard accounting guidelines
  2. Accounting Methods
    • Accrual Basis: Recording when earned/incurred
    • Cash Basis: Recording when received/paid

Important Industry Changes

  • 2018 Tax Cuts and Jobs Act
  • Standard deduction changed from $6,500 to $12,000
  • Impact: 63% reduction in itemized returns
  • Significance: Changed CPA-client relationships

For Accountants: Understanding Financial Advisors

Key Industry Terms

  1. AUM (Assets Under Management)
    • Measurement of advisor's business size
    • Basis for fee calculations
  2. Insurance Products
    • IUL: Indexed Universal Life Policy
    • Fixed Indexed Annuity (not a security)

Revenue Models

  1. AUM Fee Structure
    • Typically 1-1.5% of assets managed
    • Split between various parties
    • Alternative: Flat fee arrangements
  2. Premium Financing
    • Can borrow money for insurance premiums
    • Requires minimum net worth (usually $1M+)

Industry Organizations

  1. IMO (Insurance Marketing Organization)
    • Middleman between carriers and agents
    • Insurance-focused
  2. BD (Broker-Dealer)
    • Handles security transactions
    • Commission-based
  3. RIA (Registered Investment Advisor)
    • Company, not individual
    • Fee-based advice
    • IAR: Individual advisor representative

Investment Products

  1. Insurance Policies
    • Can take loans from permanent policies
    • Cash value accumulation
  2. ETFs (Exchange-Traded Funds)
    • Different from mutual funds
    • Generally lower cost

Building Successful Partnerships

Essential Questions to Ask

  1. About Clients
    • Who is your ideal client?
    • Any specific industry niches?
    • How many business owner clients?
  2. About Business Growth
    • Current client acquisition methods
    • Biggest business challenges
    • 24-month business goals
  3. About Partnership Structure
    • Revenue sharing arrangements
    • Roles and responsibilities
    • Communication protocols

Common Challenges

  1. Financial Advisors
    • Primary challenge: Client acquisition
    • Marketing effectiveness
    • Building trust
  2. Accountants
    • Primary challenge: Time management
    • Client service capacity
    • Proactive planning

Building Trust

  1. Professional Understanding
    • Respect busy seasons
    • Understand business models
    • Recognize expertise
  2. Personal Connection
    • Get to know each other personally
    • Build relationship foundation
    • Establish trust beyond business

Best Practices for Collaboration

  1. Focus on mutual value creation
  2. Establish clear communication channels
  3. Respect professional boundaries
  4. Build relationships before revenue
  5. Maintain regular contact
  6. Share relevant client information
  7. Coordinate service delivery

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