Key points
- Financial consultants are often hired by high-net-worth clients.
- These consultants typically work with complex financial situations.
- They may advise on investments, property holdings and long-term financial plans.
Financial consultants are similar to other professionals like financial advisors and financial planners. They offer personalized advice and planning services to clients, especially those with high net worth.
Though financial consultant is a specific title, it doesn’t necessarily differentiate one advisor’s skill set or expertise from another’s. Financial consultants hold many of the same certifications and designations as professionals with other common titles.
Before hiring a financial consultant, understand what they are, what services they offer and how they differ from other professionals.
Financial consultant definition
Financial consultants work with individuals and businesses and advise them on various aspects of their finances.
Some financial consultants work with large corporations and government agencies. They often review financial plans and identify strengths and weaknesses. They may offer expertise on accounting, insurance, risk management, government regulations and industry trends.
Financial consultants also serve people. They often work with high-net-worth individuals who have complex financial situations. They may advise on investments, property holdings and long-term financial plans.
Like other financial professionals, financial consultants don’t have one definition. They offer many services, from very broad to very specific, and can have different backgrounds, certifications and expertise.
What do personal financial consultants do?
Personal financial consultants help their clients achieve their financial goals by analyzing their situations and helping them develop either comprehensive financial plans or plans related to particular areas of their finances.
“They help their clients make smart decisions related to investing, insurance, taxes, retirement planning and more,” says Seth Diener, a private wealth manager at Diener Money Management.
Financial consultants may also offer help with budgeting, debt management and estate planning. Their services largely resemble those financial planners offer, but their clientele may differ.
Personal financial consultants are often hired by high-net-worth clients to address specific aspects of their finances or create holistic financial plans. High-net-worth individuals are those with at least $1 million in highly liquid assets. They may have different needs because of their complex financial situations.
Examples of financial consultants
Here are two examples of what working with a financial consultant can look like:
- You may seek the help of a financial consultant for a single issue. Perhaps you worry you aren’t properly managing your risk with your current insurance policies. You could hire a financial consultant to help you update your insurance coverage and take advantage of any tax benefits.
- You may hire a financial consultant to perform a full review of your finances. The financial consultant could look at your cash flow, insurance policies, investments, retirement accounts and tax situation and make recommendations that align with your financial goals.
Either way, personal financial consultants aim to “obtain maximum benefit with the lowest amount of risk possible,” according to the Institute of Financial Consultants.
What certifications do financial consultants have?
Certifications indicate expertise in a particular area. Financial advisors who hold a certification typically meet education and experience requirements and pass an exam. Many also commit to a code of ethics.
The following certifications are popular among financial consultants, according to Diener:
- Chartered financial consultant.
- Certified financial consultant.
- Certified financial planner.
- Chartered financial analyst.
- Certified public accountant.
- Personal finance specialist.
Financial consultant designations
The chartered financial consultant and certified financial consultant designations are specifically intended for financial consultants.
The American College of Financial Services issues the ChFC certification. It requires at least three years of experience in financial planning or a related profession, successful completion of an education program and a final exam, and commitment to The American College’s code of ethics.
The Institute of Financial Consultants issues the CFC certification. It requires at least three years of experience in the financial profession and successful completion of an online course and a capstone. The capstone can be a 15,000-word dissertation or a financial consultancy project. Members are expected to comply with the IFC’s code of ethics.
According to the Institute of Financial Consultants, personal financial consultants typically have backgrounds in accounting and financial planning and at least five years of experience in personal finance management. However, backgrounds vary.
Remember that having a ChFC or CFC certification is not required to work as a financial consultant. Some financial consultants have different credentials, such as CFP, CPA or CFA, while others have none. Work with a credentialed financial consultant if you want to ensure they meet certain standards.
Financial consultant vs. financial advisor
There are many titles in the financial industry, including financial consultant and financial advisor. Knowing what to look for can be challenging.
Financial consultants
“Financial consultant and financial advisor are often used interchangeably, but there can be subtle differences,” Kovar says. “However, in practice, the services provided by each can overlap, and the distinction is more about the professional’s chosen title than the nature of their services.”
Financial consultants, while providing many of the same services as financial advisors, tend to help high-net-worth clients, large corporations or government agencies, specializing in particular financial areas.
A professional’s title may not indicate their certifications. For example, many financial consultants are CFPs or CPAs. Likewise, someone could be a ChFC or CFC and hold the title of financial advisor.
As you search for the right financial consultant to work with, remember to pay attention to the credentials they hold, the experience they have and the services they offer. Those details can tell you more about a financial consultant than their title will.
Financial advisors
Financial consultants and financial advisors both provide personalized advice to clients on a variety of financial topics.
Simply put, a financial advisor offers financial advice to clients. It’s a broad term encompassing many financial professionals. Some financial advisors offer comprehensive financial planning services to clients, while others only sell investment or insurance products. Financial advisors also work with a wide range of clients, from those at the start of their financial journeys to those with significant assets.
How to find a financial consultant
Conduct your own research to ensure you find a consultant who suits your needs.
“Individuals can start by asking for referrals from trusted friends or family members,” says Taylor Kovar, a certified financial planner and the founder and CEO of Kovar Wealth Management.
Some organizations maintain databases of financial professionals, which can be excellent starting points. Here are several examples:
Working with a large wealth management platform that matches clients with financial professionals is another way to find a financial consultant. Facet and Zoe Financial are two such platforms.
Some final tips
Meet with each financial consultant you’re considering working with. You can often tell during an initial meeting whether a professional is the right fit. The relationship you have with your financial consultant requires trust and vulnerability, so finding someone you feel comfortable with is important.
Remember that your work isn’t necessarily over once you find a financial consultant. You also want to ensure the consultant is the right professional for you. Check out their background and certifications using one of the above resources.
Tip: You can use the Securities and Exchange Commission website to look up individuals who have been named as defendants or respondents in SEC federal court actions or administrative proceedings, respectively.
