Financial advisors and financial consultants are broadly interchangeable job titles for financial professionals who help individuals and organizations manage money. Someone carrying either title may assist with preparing and executing strategies for budgeting, saving, investing, retirement planning, risk management, borrowing and estate planning. Consultants are sometimes described as more likely to provide services to their clients for a limited time, while advisors are more focused on the long term. If you’re looking for help with your long-term financial plan, consider finding the right financial advisor to work with you.
Understanding the Roles of Financial Advisors and Consultants
Financial professionals referred to as financial advisors or financial consultants help people, businesses, trusts and other entities make decisions about money. This can include a broad range of services, from preparing a family’s emergency fund to devising a succession plan for the owner of a business. They may assist with budgeting, taking out loans, investing, planning for retirement, tax management, philanthropic activities and almost any other activity involving money.
Financial advisors and consultants don’t have legal or licensing requirements like some professionals such as doctors and lawyers. Anyone can call themselves a financial advisor or financial consultant. However, most people using these job titles have college degrees and many have additional specialized training to earn designations such as certified financial planner.
Some activities that financial advisors and consultants engage in, such as selling securities, do require licenses. For instance, the Series 7 license allows them to sell securities. Stockbrokers, who are financial professionals focused more on facilitating securities transactions than on providing financial guidance, also need licenses such as the Series 7 to perform their work.
Registered investment advisor (RIA) is an official title for someone registered with the Securities and Exchange Commission. RIAs manage assets for their clients and may able be required to obtain a license from the state where they operate. RIAs must follow fiduciary duty standards and provide public filings describing their fees and services.
Differences of Financial Advisor vs. Financial Consultant
Perhaps the biggest difference between financial advisors and financial consultants is that there are a lot more financial advisors working today. Any online search for the terms turns up several times as many public mentions for financial advisors as for financial consultants in relation to both open jobs as well as speaking to the role itself.
Within individual organizations, one term may be preferred as a job title over the other one. For instance, the job title at Schwab is a consultant. Vanguard refers to people doing similar work as advisors. Within some organizations, a person providing financial guidance as a consultant may not have to solicit new clients as a part of their duty, while an advisor who otherwise does much the same work is also expected to bring in new business.
Another indication of the relative frequency of the appearance of the two terms is the names of financial advice companies. Several of the top firms in the field identified by SmartAsset call themselves “advisors” or “advisory” companies, while none employ the term “consultant” in their business names.
Length of Engagement
Sometimes a consultant may be seen as more likely to provide services to a client over a limited span of time. For instance, a consultant may assist a business owner with the one-time sale of the enterprise. An advisor, on the other hand, may work with clients over an extended period of time, helping with long-term goals like saving for retirement. However, these are tendencies and not hard and fast distinctions.
Pay for Open Positions
Job listing sites may post open positions using either term. Indeed.com, for instance, displays both financial consultant and financial advisor openings. The two job titles also have a similar base pay, with advisors averaging $74,987 base salary and consultants bringing in $78,505 on average. However, consultants also average another $20,000 in commissions, according to the job posting site. This may not be a true apples-to-oranges comparison as many financial advisors work in their own businesses and those salaries don’t get posted.
Financial advisors and financial consultants provide clients with guidance regarding their money and there is no clear distinction between the two titles. Each may assist individuals or organizations with budgeting, investing, insurance, tax management, estate planning and other needs. Financial advisors are generally easier to find than financial consultants, but within firms, one term may be preferred over the other. Neither job title requires licensing or necessarily implies specialized expertise, but many advisors and consultants do bring extensive education, experience and prestigious certifications to the work.
Tips for Financial Planning
- Whether you wind up with someone calling themselves a financial advisor or a financial consultant, professional assistance in making financial decisions can help you reach your goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- In addition to a financial advisor and financial counselor, other similar job titles include wealth manager, investment manager and financial planner. While each of these may provide somewhat different services, the differences are not clearly spelled out or universally followed. Ultimately, the only way to find out what a given financial professional can do for you may be to ask for details.
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