What Is A Financial Consultant And What Do They Do?

Mid adult business man working alone in his office

Halfpoint Images/Getty Images

Financial consultants can help clients develop an overall financial strategy and address specific needs such as retirement planning, tax strategy and more. Here’s what you should know about financial consultants including when it’s best to hire one and how to find a financial consultant in your area.

What is financial consulting?

Financial consulting involves developing an overall financial plan including retirement planning, estate planning, tax strategies, debt management and more. Financial consultants are very similar to financial advisors and the two terms are often used interchangeably.

A financial consultant may also hold the chartered financial consultant (ChFC) designation, but the designation isn’t required to call yourself a financial consultant. Be sure to understand the education and professional certifications of a financial professional before hiring them.

Financial consulting may also refer to management consulting, where consultants are hired by a company or organization to work on specific projects or develop solutions to financial challenges.

What do financial consultants do?

A financial consultant will first get an overall picture of a client’s financial situation. They’ll work to understand your assets and liabilities, your short- and long-term financial goals, as well as your risk tolerance.

From there, financial consultants can help you come up with a plan that addresses your needs and goals. They may help you set up retirement accounts, determine how much you need to save in order to meet your goals, or identify suitable investments for your portfolio.

You’ll likely experience a variety of financial needs during your life and financial consultants can assist with many of them. Everything from saving for retirement to estate planning to dealing with unexpected job loss may be areas that financial consultants can assist with.

Financial consultant vs. financial advisor: How they differ

Financial professionals use different terms to refer to themselves, so there is often little difference between a financial advisor and a financial consultant. However, just like in other professions, just saying you’re a financial consultant or advisor doesn’t make you a good one. You’ll want to understand the training and education of a financial consultant before hiring one, paying particular attention to the professional certifications they hold.

Financial consultants may hold the ChFC, chartered financial analyst (CFA), or certified financial planner (CFP) designations. They may hold additional licenses that allow them to sell investments. One of the best questions to ask a financial consultant is whether they’re a fiduciary, which means they’re legally required to put a client’s interest before their own or their firm’s.

When to get help from a financial consultant

Hiring a financial consultant comes down to your individual circumstances and needs. In general, the smaller your investment portfolio is and the simpler your financial life operates, the less likely it is that you’ll need a financial consultant. You may benefit from using a robo-advisor, which automates the investing process based on your goals and risk tolerance for a lower cost than traditional advisors.

However, if you have a more complicated financial situation or need help with specific areas such as tax strategy or estate planning, a financial consultant could be particularly helpful to you. Some consultants may require a certain amount of assets before agreeing to take you on as a client, so you may need to wait until your portfolio has reached a certain level to start working with one.

You also may be able to schedule one or two sessions at an hourly rate if you have a handful of questions about the financial impact of specific life events such as marriage, having children or receiving an inheritance.

How to find a financial consultant

One of the best ways to find a good financial consultant in your area is by asking friends and family for referrals. They’re most likely to give unbiased advice on who may be best to hire and whether they’ve worked with consultants in the past that they’d recommend. You may also be able to find consultants and advisors by searching websites such as CFP’s letsmakeaplan.org.

It’s easy to find a qualified financial advisor to guide you through life’s most important financial decisions.

Try Bankrate’s free AdvisorMatch service to quickly get connected to a CFP® professional who can help you achieve your financial goals.

Leave a Comment