What Is a Financial Consultant? (2024)

If you’re looking for a financial professional to help you achieve your financial goals, you may feel overwhelmed by all the different terms used. One of the most common terms used is financial consultant.

What Does a Financial Consultant Do?

Financial consultants may be regular financial advisors or certified professionals who hold the chartered financial consultant (ChFC) designation. They work closely with clients to help them understand their assets and financial goals. These goals can range from making appropriate retirement investments to investing a portion of savings for short-term gains.

Though the terms “financial consultant” and “financial advisor” are often used interchangeably, not everyone that calls themselves a financial consultant may have the official certification. However, that doesn’t make them any less reputable or helpful.

Certified ChFCs take specific courses and pass a certification test. They have the ability to advise clients on a wide variety of financial principles, including income tax strategies for businesses, retirement planning, estate planning and more. They are also required to participate in an annual recertification program to maintain their designation.

Financial Consultant vs. Financial Advisor

Financial consultants and financial advisors do similar work to help their clients with financial planning. The difference between the two depends on their training and certifications.

For example, a certified financial planner (CFP) is a type of financial advisor. This professional takes an exam at the end of their coursework to receive their certification from the CFP board. Alternatively, a ChFC takes an exam after completing each course throughout their studies. Oftentimes, CFPs can also be ChFCs, since the topics of study are so similar.

Keep in mind that there are also financial advisors who aren’t CFPs but still offer personalized financial advice. Understanding whether a financial advisor works under fiduciary duty is key when considering a financial professional to work with.

Under fiduciary duty, a financial advisor is required to work in their clients’ best interests and only recommend a financial plan and products that are best suited for their individual needs. This differs from advisors who may only work under suitability standards, which means they have to recommend products suitable to a client’s needs, but not always what’s best for them.

Financial advisors who make a commission off of products typically aren’t a fiduciary while those that are fee-only typically are.

What Services Does a Financial Consultant Offer?

A financial consultant offers a wide range of services that are tailored to meet the needs of each individual client. The types of services offered can vary, depending on whether or not the person is a ChFC.

ChFCs offer many services, including:

• Providing income tax strategies for individuals, small businesses and corporations
• Helping create a retirement and investment plan
• Creating estate planning strategies
• Giving advice on appropriate insurance products
• Planning for financial gift-giving and inheritances

If a financial consultant isn’t an official ChFC, there are still similar services they offer. For example, robo-advisors can be considered financial consultants. These automated software platforms manage investment portfolios for clients in exchange for a small fee. Some robo-advisors also offer the option of adding individualized financial advice to your account for an additional fee.

In-person financial consultants, also referred to as financial advisors, will give you a detailed plan for your overall financial picture. These professionals are beneficial to work with because you meet with them a few times a year and they get to know your lifestyle, decision-making perspectives and long-term goals. Establishing a close relationship with an in-person financial consultant can help propel you on your financial journey.

Do You Need a Financial Consultant?

Anyone can benefit from working with a financial consultant. You don’t need to be wealthy or have a large portfolio to work with one; a financial consultant is available to help you create goals regardless of where you are on your financial journey.

For example, if you want help planning for retirement, a financial consultant can help determine an investment plan based on your risk allowance and goals. If you need help saving for a down payment on a home or paying down your debt, a financial consultant can help you craft a plan to make it happen.

You should find a financial consultant that is suitable for your unique situation. If you have a complex portfolio, you’ll likely benefit more from working with a wealth manager who will help you with various aspects of your financial picture. If you’re just getting started, meeting with a financial consultant can be a good first step.

While searching for a financial advisor, you’ll also want to make sure that their fees and costs are suitable to your individual situation. If you’re looking for a more affordable option or don’t necessarily want a personalized financial advisor, consider using a robo-advisor to get started, as these are usually lower in cost.

As you research financial professionals to work with, always remember to double-check their credentials to determine if they’ll work within your best interests.