In the popular T.V. show “The Office,” accountant Oscar Martinez is branch manager Michael Scott’s go-to employee for financial questions. In one scenario, Michael asks Oscar to “describe a budget surplus to me like I’m a 10-year-old.” After Oscar finishes explaining, Michael responds, “Okay. Now explain it again like I’m five.”
In “The Office,” this relationship between Michael and Oscar is comedic, with Michael asking overly simple questions. However, like most good jokes, there is some truth behind it. In general, upper management’s core skills are managing, hiring and training talented employees. While they should still have a baseline knowledge of accounting/finance, these areas may not be their core competency.
For this reason, many accountants can end up in consultancy roles helping companies create long-term strategies to meet their financial goals and needs.
Accountants can be such valuable employees that Phil Knight, the founder of Nike, famously only hired accountants and lawyers when starting his company. He reasoned that people in these professions had sharp minds and proved they could master complex subjects. Programs like the Lamar University online Master of Business Administration (MBA) in Accounting program help prepare students for such valuable accounting roles.
Why Accountants Play a Crucial Role
More so than other professional roles, accountants have a unique insight into how a business performs.
Most other employees have a scope confined to their role or department. For example, a marketing professional will know how a specific ad campaign performs for the company. An engineer will know what language the company’s website uses in back-end coding. The Director of HR will know which positions a company seeks to fill. However, none of these employees usually see how the business performs in terms of overall profit/loss.
On the other hand, an accountant will know a company’s exact revenue, expenses and profitability. They can also help the company make strategic financial decisions like where to invest capital, improve operating margin or other metrics, or (in Oscar’s case) where to best allocate a budget surplus.
With this in mind, sometimes the role of an accountant can become blurred with that of a financial advisor.
What Separates a CPA From a CFP?
A Certified Public Accountant (CPA) and Certified Financial Planner (CFP) are both financial professionals with overlapping areas of expertise. However, the most significant difference is that each profession requires specific licensure.
A CPA is licensed to provide tax advice, counsel and prepare tax returns. While they can offer investment advice, they cannot make executive investment plans directly. If a business wants to institute a financial or wealth management plan, it will need to contact a CFP licensed to buy/sell different types of investments.
Nina Mitchell, senior wealth advisor and principal of The Colony Group, describes “a financial advisor as an architect, builder and general contractor, all in one role, and an accountant as an independent contractor or specialist.”
The financial advisor usually helps strategize the bigger picture, while the accountant focuses on project-based transactions.
Another key difference is that, for tax purposes, a business must employ or consult with at least one CPA. The same isn’t necessarily true for CFPs. Since a CPA is readily available, they could be the company’s first contact when establishing a financial plan.
What Are the Key Elements of a Financial Plan?
Even a small enterprise has a broad range of financial needs. For example, these are just a few different subsectors under the broad umbrella of financial planning:
- Investment plans for employees (IRA, 401(k), SEP IRA, Solo 401(k))
- Which asset classes to invest in and why (stocks, bonds, real estate, fixed income)
- The corporate structure ratio between debt and equity
- Insurance plans (business, homeowner, personal, life, disability)
- Tax planning
- Evaluating investment performance
- Projecting revenue, ROI and other key metrics
Most of these categories could be broken down even further into subcategories. Additionally, most of them require a high-level education to understand, which is why business owners and managers turn to CPAs for advice.
In fact, the best managers will know when to delegate difficult questions to experts. As a CPA, there is an immense opportunity to master these topics and make yourself an indispensable employee for your organization, which applies to in-house accountants, agencies and consultants.
Since financial planning and accounting are both broad topics, one of the most efficient ways to gain this knowledge is to earn an MBA in accounting. Some programs, such as the one offered by Lamar University, teach students critical concepts such as corporate accounting, risk analysis, budgeting and forecasting. The program can be completed entirely online in as few as 12 months. This degree will set you up for a career in C-Suite management.
Learn more about Lamar University’s online MBA in Accounting program.
