An investment consultant is a financial professional who provides advice on how to manage investments, aiming to help clients meet their financial goals. They analyze financial data, recommend investment strategies and often assist in selecting and monitoring investments such as stocks, bonds or mutual funds. Investment consultants work with individuals, businesses or institutions, offering insights tailored to the specific needs of their clients.
If you’re interested in creating a financial plan for your investment and retirement goals, SmartAsset’s free tool can connect you with up to three financial advisors who serve your area.
Investment Consultant Services and Client Types
Investment consultants can be investment advisors, financial planners, investment managers or financial advisors. Their work involves analyzing a client’s financial situation and status, and using this information to help the client set goals that they can achieve.
Clients may include individual investors, fund managers and trustees. Investment consultants support these clients in considering the pros and cons of particular investments and in organizing their important documents, reports and information.
Investment consultants may assist with the development of investment policy statements, the research and selection of investment managers, the monitoring of investment performance, vendor searches and more.
Investment Consultant Background and Certifications
Not just anyone can give a person or business investing advice and call themselves a professional consultant or advisor. Investment consultants are professionals whose primary job or function is to do this work.
More specifically, there are various legislative and regulatory contexts from which they came about and within which they are required to work. Financial advisors in general became more prevalent with the start of the Employee Retirement Income Security Act (ERISA) in the 1970s. Beyond this, the Investment Advisors Act of 1940 requires that “firms or sole practitioners compensated for advising others about securities investments must register with the SEC and conform to regulations designed to protect investors.”
Usually, becoming an investment consultant requires a bachelor’s degree and educational background in economics, accounting, business administration, finance or a similar topic of study. Investment consultants typically need detailed knowledge about investment theories and practices, financial markets and various business models.
It is also beneficial for investment consultants to have experience in or knowledge of tax planning, asset allocation, risk tolerance and management, retirement planning, estate planning, etc. This helps the consultant stay prepared and able to support a variety of clients at various stages in life or experiencing a range of financial situations or circumstances.
Investment Consultant Fees and Compensation
These professionals often charge by the hour or a percentage of assets under management (AUM). The median salary of an investment consultant can vary based on the source of the information, However, according to GlassDoor, the median base pay for an investment consultant in 2024 is between $66,000 and $123,000, while their additional compensation can range between $68,000 and $126,000.
According to Payscale, a salary data website, the average base salary of an investment consultant is approximately $96,000 in 2024, while total compensation can range between $67,000 and $265,000.
Types of Investment Consultants
Sometimes, a client will allow an investment consultant to act as a fiduciary for them, giving the consultant permission to make financial decisions on the client’s behalf without needing to ask for prior approval or permission.
More specifically, here are four types of investment consultants:
- Financial planners: These may include Certified Financial Planner™ (CFP®) professionals.
- Financial advisors: Usually need to take a Series 65 or Series 66 exam and give financial advice.
- Money managers: Typically work for asset management firms, fund managers or hedge funds and make investment decisions on behalf of clients.
- Registered representatives: These include stock brokers and bank representatives who work for financial organizations that make and sell financial instruments and are paid a commission to sell investment insurance products.
These investment consultants are different from wealth advisors or wealth managers, who work with high-net-worth clients, usually take a holistic look at clients’ finances, and focus on growing and preserving long-term wealth.
When and How to Work With an Investment Consultant
The kind of professional financial help that you might need depends on your individual situation. If you don’t have a very high net worth and want more tailored financial advice on investing, it might be useful to speak with an investment consultant.
However, if you need some guidance on investing and tax-related consequences, as well as other financial topics, it might be better to get a financial planner to support your needs. But, if you have a high net worth and need much support in investing, retirement, taxes and estate planning, it could benefit you to work with a wealth advisor.
Word of mouth can be a fairly efficient way to find an investment consultant or any other kind of financial professional, as you might be able to find trustworthy recommendations from other financial professionals you already know from banks or other financial institutions that you already have relationships with. People in your circles might also be able to refer you, and internet searches could help as well, but they’re often too broad to get any specific sense of a consultant or the firm they work for.
To narrow down your search, SmartAsset’s free online matching tool can help you connect with fiduciary advisors who serve your area.
Bottom Line
Managing your investments is possible to do on your own, but it doesn’t hurt to get a sense of what resources that are out there. If you find that you might be in need of a little more expertise and support but aren’t ready for consulting someone like a wealth advisor, then an investment consultant might be right for you.
Tips for Investors
- Whether you are thinking of working with an investment consultant, a wealth advisor or another type of financial professional, you may want to compare different options. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Consider diversifying your portfolio according to your risk tolerance and time horizon. You can determine your own asset allocation based on a combination of these factors. This means that your portfolio may feature a larger percentage of stocks vs. bonds – or vice versa – based on your risk profile and how close you are to needing the money.
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