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Image shows investment consultants analyzing some portfolio data.

An investment consultant is a financial professional who advises clients on financial goals. They support both individual and larger business clients in setting and meeting these short- and long-term goals. In a nutshell, investment consultants are trusted professionals who help their clients reach their financial objectives, whether that goal is to develop an investment strategy for an individual or maintain portfolios for a large corporation.

If you’re interested in creating a financial plan for your investment and retirement goals, SmartAsset’s free tool could connect you with up to three local financial advisors.

Investment Consultant Services and Client Types

Investment consultants are similar to 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

Image shows a student studying to be an investment consultant.

Not just anyone can give a person or business some 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.

Fees for Investment Consultant

According to the Bureau of Labor statistics BLS, personal financial or investment consultants are likely going to grow as an occupation through approximately the next decade (2019 to 2029). Related professions such as financial manager is one of the most promising jobs for employment and pay over the coming 10 years or so.

These professionals often charge by the hour, or a percentage of assets under management AUM. Salaries can vary, the average ranging from about $65,000 to $80,000 according to sources such as Glassdoor, ZipRecruiter and Indeed.

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 include CFPs and CPAs who manage clients personal finances.
  • 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 could help connect you with three local advisors.

Bottom Line

Image shows a client speaking to an investment consultant.

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, it’s a good idea to compare different options. SmartAsset’s free tool matches you with up to three financial advisors in 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.
  • Always remember to diversify 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 investments may range from different kinds of stocks and bonds to mutual funds, alternative investments and more.

Photo credit: ©iStock.com/wutwhanfoto, ©iStock.com/FatCamera, ©iStock.com/skynesher

Nadia Ahmad, CEPF® Nadia Ahmad is a Certified Educator in Personal Finance (CEPF®) and a member of the Society for Advancing Business Editing and Writing (SABEW). Her interest in taxes and grammar makes writing about personal finance a perfect fit! Nadia has spent ten years working as a seasonal income tax assistant, researching federal, state and local tax code and assisting in preparing tax returns. Nadia has a degree in English and American Literature from New York University and has served as an instructor/facilitator for a variety of writing workshops in the NYC area.
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