What Is A Financial Consultant?

A financial consultant is a professional who will help you better understand your financial situation and come up with a plan so that you can reach your goals. As a type of financial advisor, financial consultants can have different types of certifications and training to help with more specialized needs, like insurance planning. Some may hold nationally recognized designations and work on a fiduciary basis.

To help you discern what you need, we’ll break down exactly what a financial consultant does, the benefits of working with one and how to choose one who’s the best fit.

What Does A Financial Consultant Do?

A financial consultant works with clients to help figure out which financial moves will help them achieve what they want in life. These professionals look at factors such as the client's financial situation such as their assets, debts, income and expenses to get an overall picture. Depending on the financial consultant's licensing, they may also be able to advise and manage client's investments.

Services financial consultants may provide include:

• Tax planning
• Estate planning
• Investment management
• Retirement planning
• How to manage monetary gifts and inheritance
• Insurance planning
• Budgeting and allocating expenses

Services will vary by type of financial consultant, such as a Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC).

ChCF vs. CFP

Both CFP and ChFC qualifications require testing and cover much of the same content. Those who receive either the Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC) credential can work with clients on financial planning services such as retirement planning, tax planning, estate planning and investing assistance. Some can even help you with insurance planning and work with you to ensure you’re financially protected.

Though both designations are similar, there are some differences between them, the main one being the certification process. The CFP is seen as more stringent because not only does a candidate have to go through coursework, they also need to pass a rigorous 6-hour exam. They also need to meet practicum requirements and pass a background check before being certified. The ChFC offers the same in-depth courses, but without the exam.

In many cases, those who have the CFP tend to work with clients on a fee-only basis and to prove they’re a fiduciary (working in the best interest of the client). ChFC can also work as financial consultants, but typically with clients who may not need a heavy focus on investments and taxes.

Financial Advisory Vs. Consulting

The terms “financial advisor” and “financial consultant” can be used interchangeably. Both types of professionals have various designations and work with clients in a variety of ways. Whatever the professional calls themselves, working as a fiduciary helps to ensure the financial consultant works in your best interest. In other words, they’re legally bound to recommend tactics and products that help you reach your goals, and not because they may receive a larger commission, for instance.

Benefits Of Using Financial Consulting Services

Some benefits of working with a financial consultant include:

• Diversification of your investment portfolio based on when you plan on retiring and how much risk tolerance you can handle.
• Speaking as a neutral party on how to achieve your financial goals, and which ones to prioritize.
• Getting insights into the latest laws and regulations when it comes to taxes and estate planning.
• Helping you stick to the financial goals and plans you’ve set.
• Getting assistance in planning for the unexpected.

How To Find A Financial Consultant

There are several ways to find a financial consultant that’s the right fit for you. The first factor to consider is why you want to hire a financial consultant. Doing so can help you narrow down your selection criteria.

For instance, if you want someone who is going to help you with creating a financial plan after your child is born and walk you through estate planning needs, someone who specializes only in insurance may not be the best choice. Or, if you want someone who can help you maximize the returns on your investments, then it’s best to find someone who has plenty of experience helping their client do so.

Once you’ve narrowed down a list, take the time to speak to each financial advisor to see whether your personality matches with theirs. After all, you will need to trust your consultant, so getting along with this person is key. You’ll also want to be clear about what their business model is. Learn how the financial advisor makes money, whether it’s based on commissions, hourly or flat fees, or a combination of both. Be sure you’re comfortable with the pricing model before making a decision.

Financial Consultant FAQs

Still unclear on what exactly a financial consultant is? Read the following frequently asked questions to learn more.

What is a Registered Financial Consultant?

A registered financial consultant (RFC) is a professional who offers financial advice to clients and adheres to a strict code of ethics to be able to do so. All members need to have certain professional designations such as the CFP and additional licensing in investment and life insurance.

How much does a financial consultant cost?

Fees for financial consultants will vary depending on their specialties and pricing model. Some charge by the hour or per session, or work off commissions. As a potentially less expensive alternative for investment help, you can consider using a robo-advisor.

Should I get a financial consultant?

Your financial situation can influence whether you should have a financial consultant. If you feel you can benefit from getting professional advice on more complex financial topics and scenarios, then hiring a financial consultant may be a smart move.

The Bottom Line: A Financial Consultant Can Keep You On Track To Reach Your Financial Goals

A financial consultant is someone on your team who can help you with understanding your finances and reaching your financial goals. Since there are many different types of financial consultants, be sure to take the time to assess your needs and speak with potential advisors in person before hiring one.

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