How much do you pay in financial advising and accounting services?

Question

Hello BP,

It is time for me to renew my contract with our tax strategist/financial advisor. We are upgrading our services to have them take over our accounting and book keeping as well. We are happy with their services and they helped us implement a lot of strategies to lower our taxable income and claim deductions. However, their fees seem high, so I’m curious what others are paying for these services. Their total fee for all financial advising and accounting services is $14,367 for the year. They paid for themselves last year by getting us a refund of $16k through an amended 2021 return that our current accountant did.
I’m trying to decide if I should add their accounting services for that price or start looking for a new accountant again, which isn’t a fun process. Thanks.

Denver McClure · Answer

Hey Account Closed, when searching for a financial advisor, you'll always want to ensure they are transparent with their fees. They should be clearly listed on their website and included in any monthly/quarterly statements. AUM fees are common as you and your advisor are both building a strategy around growing your portfolio value, so it would be normal to see fees around 0.5% - 1.5% AUM depending on what services they offer. I suggest speaking with several advisors to find someone that shares similar values with yourself (ex: investing in rental real estate), and supports those goals regardless if it helps their business or not.

I can't speak to tax planning fees, but I agree with @Jeff Nash on this one.

Jeff Nash · Answer

Account Closed I want to make sure I understand what you mean by financial advising as that can be a vague and broad term. Does your tax strategist hold various designations which might include being a CPA/CFP/EA/PFS Series 65, 7/63? Does the scope of your engagement include tax preparation, tax planning, investment advisory services, accounting services, preparing a financial plan and monitoring it periodically, etc? That amount you said you were charged is not rounded off so I am curious. When it comes to the services I outlined they are usually assessed in different ways such as a rate per hour, fixed fee per month/quarter based on time estimated collaborating with the client, financial resources that need to be managed and allocated (% of AUM/AUA), and overall complexity of the clients situation. Based on the example you provided which was really just specific to tax (and maybe bookkeeping) it seems like you got a low return without knowing the details. The compliance work (tax preparation and bookkeeping) obviously just has to be done and is a certain cost whereas strategizing/consulting/advising (whatever you want to call it) is an investment on your part and should produce some type of ROI or multiple of return on savings. We personally have segregated these services by different operating entities so that they are not commingled and it's more ala carte.

Account Closed · Answer

Thanks all for the feedback, it has been helpful. I should add that the services aren’t just for REI, they include financial advising and accounting for my wife’s realtor business which is s-corp.

Steve Vaughan · Answer

It completely depends on the quality of service you are receiving vs need Account Closed

I have a young investor realtor buddy. A rental, 2 small kids. He has a FA and CPA. 'He built his team.'

His FA has him in fee-bloated insurance products while he didn't know mmkts and tbills are paying over 4%.

His RE/income situation need doesn't seem to warrant more than software could do.

Accounting never made sense to me even with dozens of rentals because I'd have to compile and report to them anyway. Super easy these days to keep things straight IMO.

Carlos Ptriawan · Answer

I don't need financial advisor, sometimes I teached financial to them. In the age of robo advisor I dont think financial advisor is needed.For CPA I pay 2k-3k.

Carlos Ptriawan · Answer

investigate outsourcing of bookkeping with good cloud based software.

Vicki X. · Answer

Account ClosedHow big is your portfolio? You may want to call a few accountants to get a quote. It doesn't matter where they are located. Bigger Pockets has a CPA page: https://www.biggerpockets.com/blog/tax-partners

You can check out Brandon Hall's firm. They have a good reputation. For full disclosure, they've been working together with Azibo in building our rental accounting software. You can also learn about his practice through the Tax Smart Real Estate Investors podcast, and hacking real estate podcast.

Hope it helps.

Account Closed · Answer

Thanks Vicki. I've contacted a couple accountants from that list, including Brandon (although he was not on that list). I've read Amanda and Matt's books and they are great! Looks like they only offer courses though, otherwise I would contact them.

Account Closed · Answer

Hi Simon, not sure what you mean. I've never heard of a tax strategist or accountant doing that, nor would I want them to. I manage my own properties.

Chris Picciurro · Answer

Great question - our CPA firm does not offer bookkeeping services. We partner with trusted QBO certified partners to deliver that. It is very difficult for a CPA firm to delivery bookkeeping in a cost effective manner as well as tangle with seasonal work compression. Having your CPA focus on tax strategy, advising and preparation is key!

How much do you pay in financial advising and accounting services?

How much do you pay in financial advising and accounting services?

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