What Is a Financial Consultant?

A financial consultant is a type of financial advisor. A financial consultant will conduct an audit of your current financial situation and strategize a plan to help you reach your future goals.

Financial consultant definition

Financial consultants work with their clients to better understand their assets and what they want those assets to do for them in the future. For example, if a client wants to save for retirement, but isn’t sure how, a financial consultant can recommend the type of retirement account to use, suggest specific investments and answer questions about how much to save.

Depending on their training, background and certification level, financial consultants may be able to assist clients with more specialized needs like tax preparation and insurance.

The terms “financial consultant” and “financial advisor” are often used interchangeably, but some financial consultants hold a designation called chartered financial consultant, or ChFC. ChFCs may offer more specialized financial planning than other financial advisors, such as business or divorce planning. To be clear, not all professionals who call themselves financial consultants hold a ChFC. Always ask any potential financial advisor about the specific certificates they hold.

What does a financial consultant do?

Financial consultants look at the whole picture of a client’s financial life, including debts, assets, expenses and income, to help clients determine what those goals should be. Financial consultants who have the proper licenses may also manage their client’s investments.

The kinds of services you receive from a financial consultant will also depend on the type of consultant you work with. They may include:

  • Estate planning.

  • Tax planning and tax strategy.

  • Gifts and inheritances.

  • Retirement planning.

  • Business and financial strategy.

What is the difference between a financial consultant and a financial advisor?

There is often no difference between a financial consultant and a financial advisor. Many investment firms use the terms interchangeably.

Both financial consultants and financial advisors can hold a variety of licenses or designations. Many hold FINRA licenses, such as Series 7 and 66 licenses, which allow them to sell investments. (FINRA is an organization that regulates broker-dealers.) Others may be ChFCs or hold another specialized certification, such as a certified financial planner, or CFP.

Because there is little regulation governing what finance professionals call themselves, the duty is on the consumer to be extra diligent when working with one. One of the best ways to ensure you can trust your financial consultant is to find a fee-only fiduciary. Financial consultants or advisors who are fiduciaries don’t accept commissions for investments they sell and are required to work in their clients’ best interest.