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What Is a Financial Consultant and What Do They Do?


A financial consultant is essentially the same as a financial advisor. They often offer a number of services, with their financial advice being based on the client’s specific needs and goals. In some cases, a financial consultant may have more financial planning experience than the typical financial advisor. Financial consultants usually provide investment services as well, though.

If you’re looking for a financial advisor, SmartAsset’s free tool can match you with up to three advisors who serve your area.

What Is a Financial Consultant?

“Financial consultant” is a somewhat antiquated term that’s largely been replaced by the term “financial advisor.” Financial consultants may work for a firm or as a self-employed contractor, and their clients may be companies or individuals.

In short, financial consultants offer personalized advice to help investors build wealth. They may offer financial planning, identify well-suited investments and guide insurance decisions. They often direct the buying and selling of investments, like stocks and bonds, on their clients’ behalf. Some may also sell financial products.

A financial consultant usually meets with clients to assess their financial situation before they make any recommendations. Any time a client experiences a major life change (marriage, job change, retirement), they’ll likely request another meeting.

Consultants also spend time marketing their businesses. They often travel and work outside normal business hours to accommodate their clients’ schedules.

What Do Financial Consultants Do?

Financial consultants or advisors offer clients a big picture analysis of their finances. They break down different aspects of a client’s financial life, including assets, expenses and income, and help them create a financial plan to reach different types of goals. These goals can be focused on specific milestones like buying a home, relocating to a different city, retirement and paying for the education of a grandchild.

You should also note that financial consultants or advisors offer clients different types of services depending on their specialization. As an example, a certified financial planner helps clients in many areas of financial planning, including taxes, retirement, estate planning and insurance. But a chartered financial analyst focuses on portfolio management and financial analysis.

For a quick reference, the table below breaks down four more types of financial consultants or advisors and their common services:

Chartered Financial Consultant (ChFc)Financial planning, tax planning, investing, estate planning, retirement planning
Certified Public Accountant (CPA)Tax planning, audit and assurance services, bookkeeping, business management, forensic accounting
Personal Financial Specialist (PFS)Financial planning, wealth management, estate planning, retirement planning, investing, insurance
Chartered Life Underwriter (CLU)Life insurance, annuities, risk management

In addition to in-person financial consultants or advisors, robo-advisors are inexpensive portfolio management alternatives for clients who are trying to build up their portfolio. Generally, financial consultants or advisors charge higher percentages in fees when clients have less assets under management.

But, if you need more comprehensive financial planning advice, working with a consultant or advisor online could be a middle option. They are typically more expensive than robo-advisors, but more affordable than in-person advice. And they offer a wide range of services, including investment management and financial planning, for different specializations.

When hiring a financial consultant or advisor, you should work with a fee-only advisor, which means that clients pay them directly and they do not make money from commissions. If your consultant or advisor gets money from commissions, ask them about their fiduciary duty.

Financial Consultants vs. Financial Advisors

What Is a Financial Consultant and What Do They Do?

The terms financial consultant and financial advisor are almost synonymous. In fact, many financial advisors actually refer to themselves as consultants.

Both financial consultants and financial advisors help others make educated financial decisions, particularly investment decisions. Many are experts in comprehensive financial planning. You’ll likely need to look into financial advisors’ education, experience and certifications to differentiate which one is right for you.

Both consultants and advisors may have studied economics, accounting or finance in college. It isn’t uncommon for them to earn MBAs, and many hold advanced certifications. One of the most highly regarded certifications is the certified financial planner (CFP) designation, but there are many others of value.

For instance, the chartered financial consultant (ChFC) designation was introduced in 1982 as an alternative to CFP. The Institute of Financial Consultants issues ChFC designations after a candidate has completed five online modules, done 20 hours of continuing education and passed an online test.

The core curriculum for the CFP and ChFC designations are the same, but ChFC certifications require a few additional elective courses in financial planning. The consultant designation doesn’t require a comprehensive board exam like the CFP designation does though. Both CFPs and ChFCs are qualified to analyze your financial situation and give advice.

When Do You Need a Financial Consultant or a Financial Advisor?

Depending on your needs and goals, you may want to work with a specific type of financial consultant or advisor to help you reach different milestones in your financial life. You should keep in mind that the most practical time to hire a financial consultant or advisor will be when you have enough money saved to invest in those milestones.

One example for when a financial consultant or advisor could be useful is when you have to manage multiple retirement accounts. Financial advice may not be needed when you first open a 401(k). But as you move on through different jobs, and you have to juggle multiple accounts and additional financial concerns besides retirement could surface. A consultant or advisor could help rollover your accounts to create a financial plan that optimizes different investment and tax strategies.

If you are starting to build a portfolio, a consultant or advisor can help you manage and review it to keep on track with retirement and other financial needs and goals. And if you happen to lose money on your investments, a consultant or advisor can also help you re-evaluate your portfolio and diversify it to increase your net worth over time.

Financial consultants or advisors can help you create and manage an estate plan to pass on assets to loved ones or charitable organizations with minimal tax burdens. An estate plan not only protects inherited assets, but it can also implement a strategy to help them grow over time and ensure that your legacy can last for generations to come.

How to Find a Financial Consultant or a Financial Advisor

What Is a Financial Consultant and What Do They Do?

Everyone has a unique financial situation. Some financial consultants and advisors have a specialty or only work with certain levels of investors. You’ll need to find a financial advisor who works for you. You can use online search tools or ask for referrals from friends and family.

Once you have a few options, look them up online and get a sense of their services and experience. Then, prepare a list of questions to ask about their fee structure, account minimums, expertise and certifications and investing philosophy. You’ll want to meet a few options in person before you make a decision.

Brief History of Financial Advisor Terms

Originally, the person who did the job described above was referred to as a stockbroker or just a broker. At some firms, they were called account executives or registered representatives. Even retail bankers, insurance agents and accountants offered financial products and advice.

The investing industry went through a re-branding in the 1980s. Many financial professionals changed their titles from stockbroker or account executive to financial consultant. They hoped this would shift their image from transaction-driven salesmen to highly trained financial professionals with valuable investment skills and advice.

The title of “financial consultant” didn’t stick for long though. By the 1990s, people began to refer to the role as a financial advisor. Because a consultant’s advisory skills were chiefly important, this appears to be a natural progression.

Eventually, pressure mounted for these professionals to adhere to fiduciary standards. There previously hadn’t been much coordination or regulation among professionals. Thus, they developed a reputation for giving biased advice to sell more products even if the products didn’t fit the needs or circumstances of the consumer.

Bottom Line

Although the terms financial advisor and financial consultant basically mean the same thing, the distinction is important to understand. Gathering ample knowledge about the financial advisor industry will make your final choice a much safer bet. To figure out what kinds of specializations an advisor might have, pay close attention to their designations.

Financial Advisor Tips

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted 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.
  • When searching for a financial advisor to work with, try to stick with advisors bound by fiduciary duty. When an advisor is a fiduciary, they legally must act in their clients’ best interests at all times.
  • You should always look at a firm’s Form ADV, which is the SEC paperwork that all RIAs must fill out. In this two-part report, you can learn everything from how the firm will allocate your investable assets to whether it has an in-house expert on retirement planning.

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