What is a Financial Consultant?

Financial consultants work at all levels of the investment industry – from face-to-face advising to serving as a client’s personal representative online.

They can also offer services that are tailored to specific needs such as estate or tax planning.

Consultants may advise wealthy individuals and high net-worth families, or serve institutional clients such as corporations and non-profit organizations.

What Do Financial Consultants Do?

Financial consultants can be highly specialized or may work in a generalist capacity, with responsibilities that can include the following:

In terms of employment, financial consultants either work as independent advisors or as part of a brokerage firm.

The functions that both types perform are the same, however, those who work for a brokerage firm may not have as much autonomy because their transactions must be reviewed by compliance to ensure they meet all regulatory requirements.

In addition, those who work independently do not have to share a portion of their commissions with a brokerage firm.

In some cases, financial consultants are registered representatives of a brokerage firm and therefore cannot give investment advice unless they also have a securities license.

Many financial planners do not register with any government agency but instead form their own company to offer financial products and services.

Quite often this is an LLC or another type of business structure that provides certain liability protections for the owners.

Financial consultants can also take on other titles, such as financial advisors or financial planners. These are not legal job descriptions but rather terms to describe someone who gives clients advice about personal finance matters.

Qualifications of a Financial Consultant

While a bachelor’s degree is preferred by employers for financial consultants, a strong background in finance and the ability to analyze client data can compensate for lacking formal education.

In general, financial consultants must have at least one of the following:

1. Certified Financial Planner (CFP) Designation

This designation is the most common basis for becoming a financial consultant.

Financial planners who have earned this credential are qualified to give comprehensive financial planning assistance, but it is not required in order to offer advice on investments or insurance products for example.

2. Series 7 License

This is the designation associated with being a securities broker and financial consultant.

It would allow a person to sell and buy securities, as well as deal with investment planning for their clients.

3. Series 65 License

This designation is required by those who want to advise clients on retirement plans such as IRAs and 401(k)s.

4. A Bachelor’s Degree in Finance, Business Administration, or Economics With a Concentration in Personal Finance

A financial consultant should be educated about finance and familiar with money management techniques so they can provide sound advice to clients.

Financial Consultant vs Financial Advisor

There is no major difference between financial consultants and financial advisors. The terms may be used interchangeably in some cases; however, financial consultants may also be referred to as investment advisors or wealth managers.

Financial advisors, like financial consultants, can also call themselves planners or wealth managers.

Both financial consultants and financial advisors are eligible to sell and manage investment products as long as they have a securities license.

In addition, both financial consultants and advisors may be certified as CFP or hold similar designations.

Do I Need a Financial Consultant?

Anyone who needs help with their finances may benefit from hiring a financial consultant to assist them in various areas such as retirement planning, debt management, and education funding for example.

If you have a simple investment portfolio, you may choose not to hire a financial consultant. However, it may also be helpful to get one if you are handling multiple accounts.

If your investments are complex, or if you need someone you can trust in the area of estate planning, or you are looking for insurance advice, then hiring a financial consultant may be beneficial.

Major life events like getting married, having children, or going through a divorce will also be one of those times when you may need a financial consultant to help you with your decisions.

The Bottom Line

A financial consultant is an individual who analyzes your personal financial situation and provides you with investment planning assistance.

Not everyone needs the assistance of a professional planner, but many people find it helpful to have someone they can trust to provide them with objective advice.

Hiring a financial consultant is a major decision that should not be taken lightly.

It is important to do research and choose a professional who is experienced in the areas you need help with, as well as has a track record of satisfied customers.

Be sure to check references and request client testimonials before making a decision.

A financial consultant may help you create or manage an investment plan according to your unique goals. They can also suggest ways for you to save more money toward those goals, and guide you through the various types of insurance available for your protection.
The CFP designation is the most respected and highest credential in the world of financial planning. It signifies that a person has completed approved coursework and passed exams demonstrating their knowledge in financial planning fundamentals.
It is important to have a financial plan because it helps you determine what your goals are and how to achieve them. This also lets you know how much money is needed at any given point in time, as well as what type of investment vehicles would be suitable for certain financial goals. It may also help you plan for the unknown such as disability or job loss for example.
In order to become a financial consultant, one must be joining the profession which requires having completed or nearly completed four years of a college education. While a bachelor's degree related to finance is preferred by employers for financial consultants, a strong background in finance and the ability to analyze client data can compensate for lacking formal education. Also, to be more attractive to clients and employers, a financial consultant should have a Certified Financial Planner (CFP) designation, or a Series 7 or 65 license.
Life insurance protects your family by paying a death benefit to help offset funeral costs and other end-of-life expenses. It can also provide an additional income for survivors during the time they need it most, such as when there is an income loss due to one parent staying home to raise children.
True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.

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