I am a specialist—a partner in a firm of Certified Public Accountants. I am a member of several investment teams and the quarterback of my own invest-ment team. I am a CPA.
A CPA is an unbiased analyst of the financial practices and conditions of companies and individuals. Each state, territory, and the District of Columbia has laws regulating the accounting profession and requirements for candidacy to the designation of Certified Public Accountant. For almost 100 years, CPAs have been trusted financial advisers to businesses and individuals. They come to the financial marketplace with broad-based knowledge and the expertise to make recommendations that are objective and indepen-dent.
But beyond the laws, regulations and standards of profes-sional conduct, your accountant knows you, the investor, probably better than any other single member of your investment team. As one of your advisory specialists, your CPA is a highly skilled technician, whose services include preparing your tax returns, interpreting the tax ramifica-tions of your investment strategies and representing you before the various taxing authorities. The very nature of those services affords this professional an x-ray—an intimate and detailed image of you and your financial goals.
Consequently, your association with your CPA will be very different than the relationship you have with any other member of your investment team. Unlike your acquisition specialists (the insurance agent, stock broker and real estate professional), your CPA has no product to sell, only service. As a "fee-only" advisor, your accountant can actually coordinate the involvement of these other special-ists to ensure that you achieve an integrated and diversified investment strategy.
Moreover, the CPA's role differs from that of the other advisory specialist on your team, the attorney. Throughout your investment career, your relationship with your lawyer will remain fairly constant. You will seek out your attorney for interpretation of the law and representation before the law; and you will rely upon him or her for a variety of technical services such as contracts, wills and trusts.
Conversely, your relationship with your CPA should change through the years. Initially you may turn to your accountant to advise you of the financial and economic effects of your investment strategies, in addition to their tax consequences. But over time, your CPA should gradually train you in the basic economic concepts of the business world as they relate to your financial goals. In this way, you, the investor, can begin to function with increasing independence, founded in knowledge; and you will develop the ability to attack and resolve financial problems on your own.
When you reach that stage of your investment career, you will begin to turn to your accountant for consultation rather than advice. The difference is this: when you seek advice from your accountant, you are looking for the solution to a problem. When a consultation is what you need, you have already worked out the solution to your problem and are seeking confirmation and fine-tuning.
As your relationship with your CPA changes in this way, you may be surprised to find that you may actually see your accountant more often. As you demand less of the funda-mental skills of a CPA, he or she will be free to explore new and advanced territories in your financial affairs.
Over the course of several installments of this column we have met all of the specialists who will comprise your investment team. Many months ago we learned that the foundation for a successful investment career has three parts. The first part is a material foundation made up of money and time. The second is the mental foundation requiring study and knowledge. And the final key is invest-ment professionalism_building an investment team com-prised of acquisition and advisory specialists who will assist you in your investment career.
As one of your advisory specialists, the CPA performs the duties of head coach for your team, advising you, the quarterback, in a wide variety of economic strategies and helping you best utilize the other members of your invest-ment team. And like a coach, the CPA's goal is to educate and train you to develop your own tactics to lead your team to victory.
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Moorman and Company, an accounting and personal financial management firm based in Palo Alto, serves the San Francisco Bay Area, Peninsula, and Silicon Valley from Hillsborough to Saratoga-Los Gatos, including Atherton, Menlo Park, Los Altos, Los Altos Hills, and Cupertino.