CA or Financial Planner ?

Until now, Chartered Accountants were consulted for investments and tax related decisions.

But now, when qualified Financial Planners are available to provide you their service, how prudent it is to take advise from a CA on financial matters ?

CA 's as per their qualifications are experts in taxation and are not in a position to take a holistic view of a person's finances over a lifetime. They may also not be current on their knowledge about the latest financial products available in the market in the ever changing scenario in the financial services industry.

They may be able to guide you on the tax savings possible on purchase of a particular financial product but would be ill-equipped to advise you on how the product will fit into your overall financial plan. It is also doubtful whether CA's have the capacity to advise their clients on financial planning by giving adequate time when they are already overburdened with their auditing and tax planning role. 

Also, buying financial products keeping only tax savings in mind is a very inefficient approach since it may not be compatible with your intentions of achieving your goals based on your investments.

Tax savings should be a by-product of purchasing a financial product and not the main aim.

A Financial planner provides you advise based on your income, cashflows, age, liabilities and goals to be achieved which a CA will not be in a position to do so.

For example, while tax deductions upto Rs.1 lac are available under Sction 80C of Income Tax act, the number of instruments under which such deductions are available vary from PPF or EPF , ELSS , Pension Funds, Infrastructure Bonds upto Insurance policies and Principal repayment of a housing loan. While the tax advantage is the same if you invest your entire amount in any one instrument, each has a different features and benefits in terms of nature, risk attached, lock-in period etc. and will play a different role in achieving your goals. The CA may advise you only from the tax saving purpose to take advantage of the entire amount or to fill the gap. Whereas a Financial Planner will not only advise you on saving tax but will also guide you in your investments taking the overall picture into consideration. A Financial Planner is equipped to advise you on risk management, insurance planning, retirement planning, investment planning and all this in a very tax efficient manner.

In the end it is not a question of investments alone. Investments once made need to be looked into on a regular basis in terms of their performance and utility in light of changed life situations. A bad investment will result in your goal not achieved. To avoid such a scenario, one needs to monitor and evaluate these investments and make course corrections regulary. A CA is not in a position to do so while a Financial planner has sufficient knowledge to take care of the same.

So it is advisable to get your tax planning advise from a CA but for advise on your goal based investments as well as saving tax in the bargain, it is better to take the services of a Financial Planner.