Personal Finance (Not Investing) • My CPA told me he has money in AUM: red flag?

While some accountants do it, and apparently it's allowed for accountants, I think it's a conflict.

Not going to say it is forbidden, but best practice would not have your FA doing your taxes or vice versa. I believe some professional orgs actually do preclude such arrangements.

So here's the practical problem I've seen: an FA simply not being sufficiently tax-aware (like when you say "tax loss harvesting" you get a blank stare) and missing obvious tax reduction opportunities, while a CPA felt her job was just to prepare returns according to what transactions have been done, even if it was obvious that optimizations would have been possible. I imagine that with more observations what I'd find was either that, or the two bickering with each other and providing conflicting advice.

The situation I envision for myself is that there will be a point when I can't handle my own finances (not even as well as I do now, not that that's exactly perfect), and when that happens I'll want to deal with as few providers as possible - and definitely won't want to deal with conflicting recommendations or having to coordinate between different people with overlapping involvement.

Of course everybody will say just hire super-competent providers, but we all read the threads here every day that discuss how difficult that is, and remember that by the time you need someone you might not be in the best position to evaluate competence. And if you say find someone early on... as with my comment about age, there's a good chance that they'll have moved on, be retired, or dead by the time you actually need their services.

Who said the FA should be ignorant of taxes. Similar who said a CPA shouldn’t consider a complete business picture and even make recommendations. But it is best to have two independent parties.

Statistics: Posted by tibbitts — Fri Aug 30, 2024 8:03 pm — Replies 49 — Views 3995