Should I use a CPA and Financial Advisor?

[RockSplat]

My married-filing-jointly income is about $165,000. I work full time for $95K (w-2) and have an LLC that produces $45K a year. My wife makes $23K a year.

I use Vanguard and use the Target Retirement funds and their 529 for my daughter's college savings. They seem simple but I am concerned that I might be missing out on good advice.

From a tax standpoint I have avoided using a CPA in the past and hired a cheap bookkeeper for information here and there. I then did my taxes with Turbotax. This worked but I spent more than 10 hours doing my taxes.

I am smart enough to get by without a CPA or financial advisor but I think from a time management and peace of mind standpoint I should hire a CPA and financial advisor.

I know a financial advisor that I could use and who seems trustworthy. I also have a CPA in mind that seems to be very sharp. Of course moving from Vanguard to a financial advisor would mean biting off 5% up front (I have about $75,000 at Vanguard).

The CPA would cost me about $1300 or so the first year then probably $900-1000 each year after that. I consider my time worth about $50 an hour. I feel like I spend too much time researching financial matters and taxes. If I focused this time on my business then I would probably make more money in the long term.

Thoughts? Your advise is appreciated.

[mickeyd]

Hey RockSplat,

Quote:

I am smart enough to get by without a CPA or financial advisor but I think from a time management and peace of mind standpoint I should hire a CPA and financial advisor.

I think that you have zeroed in on the real dilemma that you face. Is your time away from your company too valuable to spend on investments and taxes? The money that you put into the VG TR fund would not necessarily have to come under the control of an advisor. Perhaps a fee only advisor would be the way to go.

[target2019]

I believe you need a competent tax-preparer, not necessarily a CPA.

You don't want to grow unfamiliar with your financial situation. You need professional(s) to carry out the tasks you want, at competitive price. For a VG fund such as you have, there is no reason to hire financial advisor, except to get a financial plan.

[dex]

I don't think you will find much support for using a financial planner here - if you must see if you can find a fee based one and also understand all the investments you are advised to use.
Another option is similar to the CPA advise below - prepare an investment plan and have the financial planner advise you on what they would do differently.
As far as a CPA - there is a middle ground. You prepare the tax return and then have a CPA review it and give you tax planning advise.

[LOL!]

Great financial advice is absolutely free if you know where to look, so I cannot imagine using a financial advisor because of all the extra risks associated with that.

You can get someone to do your taxes, but even that is not hard to do. You could try a CPA once and see if it has value to you. A lot of that 10 hours with TurboTax is probably finding the data that you would have to find for a CPA anyways. Data entry is not time consuming. As you age, you tend to know what you need and thus keep better records all in one place (one shoebox instead of 8 shoeboxes in 3 different locations). And if you keep doing it yourself, then each year has only a very little incremental new knowledge needed.

You didn't state how you get self-employed income, so it's hard to judge whether a CPA would help you. I do a little self-employed consulting and a CPA would not help my situation at all.

[Animorph]

The value trade is up to you. I've always done the taxes, though they are becoming very time consuming. I don't think there are too many tricks to filling out the forms, though planning is a different story. Your prices sound pretty steep to me though. You might want something a little simpler.

I did a one-time consultation with a financial planner. I don't think I learned a whole lot of new stuff, but I did confirm that I was doing the right things (and DW felt better). Once you are set up, I definitely wouldn't pay for a financial planner on top of mutual fund expenses. The financial planner should guide you to tax efficient strategies as well as giving investment advice,

So I'd recommend a cheap tax preparer and a one-time consultation with a financial planner to discuss tax, estate, insurance, and retirement planning.

[Sarah in SC]

I would echo the idea of having a check up done by a financial planner (fee only) to see where you stand and to review parts of your plan like estate and tax planning. You may find a good CPA with a PFS designation (meaning they essentially have a CPA and a CFP) who could do hourly advising on your particular situation and then you could decide going forward if you want to consult them each year.