What Is a Financial Consultant?
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A financial consultant is a type of financial advisor who can conduct an audit of your current financial situation and strategize a plan to help you reach your future goals.
What does a financial consultant do?
Financial consultants work with their clients to help them structure their assets and build strategies to support long-term financial goals. For example, if a client wants to save for retirement but isn’t sure how, a financial consultant can recommend the type of account to use, suggest specific investments and answer questions about how much to save.
Depending on their training, background and certification level, financial consultants may be able to assist clients with more specialized needs, such as tax preparation and insurance. The terms “financial consultant” and “financial advisor” aren't regulated, which means they're often used interchangeably.
» MORE: Types of financial advisors
What is a chartered financial consultant (ChFC)?
Some financial consultants hold a designation called chartered financial consultant (ChFC), which indicates that they have completed a financial planning program through the American College of Financial Services. ChFCs may offer more specialized services than other financial advisors, such as business or divorce planning, and they undergo continuous education requirements to maintain their titles.
To be clear, not all professionals who call themselves financial consultants hold a ChFC. They may hold another credential (e.g., CFP) or none at all. Always ask any potential financial advisor about the specific certificates they hold.
Do I need financial consulting services?
Financial consultants look at the whole picture of a client’s financial life, including debts, assets, expenses and income, to help clients determine what those goals should be. Financial consultants who have the proper licenses may also manage their client's investments.
The kinds of services you receive from a financial consultant will also depend on the type of consultant you work with. They may include:
Estate planning.
Tax planning and tax strategy.
Gifts and inheritances.
Retirement planning.
Business and financial strategy.
Whether you need a financial consultant depends on your circumstances. If you're looking for investing help and have a fairly simple investment portfolio, you could use a robo-advisor as a low-cost way to manage those investments.
If your investments are somewhat complex or you need help on topics other than investment management — like estate planning, tax help, or paying off debt — it may be worth working with a financial consultant or looking into online financial planning services.
It may also be a good idea to get some advice from a financial consultant when you experience major life changes or events. Getting married, having a child, receiving an inheritance or changing your job can have serious implications for your finances. Talking with a professional can help you navigate these changes and make adjustments to your overall financial plan.
» Ready to dive deeper? How to choose a financial advisor
How to find a financial consultant
There are three major options for people who are looking for a financial consultant or financial advisor:
1. Robo-advisors provide inexpensive portfolio management. If you’re interested in investing but don’t want to manage your investment portfolio yourself, a robo-advisor can do it for you. Some robo-advisors also offer financial planning services and tools.
2. Online financial planning services offer both investment management and other forms of financial advice. If you need more comprehensive financial planning than just investment management, online financial advisors can be less expensive than in-person advisors.
3. In-person financial consultants or advisors tend to be the most expensive, but developing a relationship with the same advisor over many years can be beneficial. An in-person advisor can get to know your personality, your family and your community — which can be a source of comfort when you’re buying a home, saving for retirement or figuring out how to pay for your child’s college tuition.
» Ready to research? Tips for finding a financial advisor near you
What is the difference between a financial consultant and a financial advisor?
There is often no difference between a financial consultant and a financial advisor. Many firms use the terms interchangeably.
Both financial consultants and financial advisors can hold a variety of licenses or designations. Many hold FINRA licenses, such as Series 7 and 66 licenses, which allow them to sell investments. (FINRA is an organization that regulates broker-dealers.) Others may be ChFCs or hold another specialized certification, such as a certified financial planner.
Because there is little regulation governing what finance professionals call themselves, the duty is on the consumer to be extra diligent when working with one. One of the best ways to ensure you can trust your financial consultant is to find a fee-only fiduciary. Financial consultants or advisors who are fiduciaries don’t accept commissions for investments they sell and are required to work in their clients’ best interest.
Always check a potential advisor's background to find out exactly what their certifications and licenses mean. For example, some CFPs are fee-only fiduciaries, but not all.
