What Is a Financial Consultant?
Few, if any, professionals have as many titles for what they do as financial advisors. There's financial advisors and financial planners. Wealth advisors and wellness advisors. Financial consultants and financial coaches. It's enough to make anyone struggle to keep who's who straight, even said professionals.
Aspiring financial fill-in-the-blanks may be just as baffled by the titles on job postings and career opportunities as their future clients. This article will break down one of the most commonly confusing financial titles: financial consultant.
What Is a Financial Consultant?
A financial consultant is an advisor by any other name. Ultimately, there is no difference between a financial advisor and a financial consultant. The terms are largely marketing tools designed to appeal to the type of clients you or your company want to attract.
This highlights an often-contentious aspect of the financial services industry: "There are no rules or regulations that define what someone can call themselves in our business," says John Anderson, managing director of Practice Management Solutions, Independent Advisor Solutions at SEI in Oaks, Pennsylvania. "To me, this is a problem for both the client who is trying to find advice and the advisory firm who is looking to differentiate their services."
In an industry rife with jargon and confusing marketing, it seems wrong to add even more ambiguity. And yet, firms persist. Fidelity Investments, TD Ameritrade and Charles Schwab refer to advisors as financial consultants. Mercer calls 401(k) advisors financial wellness consultants.
When asked about its choice of nomenclature, Fidelity replied that, "Customers that leverage Fidelity's wealth management offering work with a wealth management advisor and customers that engage with Fidelity in a more consultative role work with a 'financial consultant' -- both instances provide customers with a dedicated, 1-to-1 relationship."
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TD Ameritrade has gone so far as to add a bullet to their senior financial consultant job descriptions stating that: "Candidates who qualify for this role might have title and job responsibilities similar to financial advisors, wealth management advisor, wealth management, financial planner, financial planning, investment advisor." So really, a financial consultant by any other name is still a financial advisor. Or financial planner. Or investment manager.
What Does a Financial Consultant Do?
Whether you're a financial consultant, financial advisor or financial magician, your core duties and responsibilities will largely be the same. The duties and responsibilities of financial consultants include:
-- Providing financial guidance and investment solutions to investors, often requiring the ability to distill complex financial concepts into actionable strategies.
-- Proactively prospecting for new clients.
-- Engaging current and prospective clients with events and seminars.
-- Building and maintaining strong relationships with clients.
-- Collaborating with other financial professionals, such as attorneys, accountants, and investment managers, to ensure your clients' holistic financial needs are met.
-- Staying abreast of relevant news and economic or financial events that may impact your clients.
Educational Requirements for Financial Consultants
Financial consultants need a bachelor's degree or equivalent combination of education and experience. Your degree can be in any major, but business or finance degrees are helpful and may be preferred by potential employers.
Once you start working, you'll likely need to get your Financial Industry Regulatory Authority (FINRA) licenses. These can vary depending on the firm you work for and your specific job duties. Most financial consultants need their Series 7 (General Securities Representative Exam) and Series 66 (Uniform Combined State Law Exam) licenses. The Series 66 can also be satisfied with a combination of the Series 63 (Uniform Securities Agent State Law Exam) and 65 (Uniform Investment Advisor Law Exam). You may also need to obtain your state insurance license to sell annuities and other insurance-linked products.
Not all firms require FINRA licenses. Registered Investment Advisors (RIAs) where you won't be selling investments but rather focusing on creating financial plans might only need a certified financial planner (CFP) credential. Even at brokerage firms where you sell products, a CFP is often preferred.
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Financial Consultant Salary
Since their job functions largely mirror those of financial advisors, the salary expectations for financial consultants are similar to those of financial advisors. Financial consultants can expect to make a little over $90,000 per year on average. Those in the top quartile may make closer to $163,000 while younger consultants or those in lower income areas may earn -- than $60,000.
That said, financial consultants' salaries can vary widely -- even from year to year. When working for a major brokerage firm, the bulk of a consultant's pay comes from bonuses. Financial consultants are typically paid a modest base salary (say $50,000), then earn bonuses based on the assets they bring into the firm each year with adjustments for customer satisfaction survey feedback. These bonuses are referred to as "variable pay" and can range from less than 10% to over 70% of a consultant's annual compensation.
In a good year with lots of new clients, advisor's bonuses could eclipse their base pay. In a poor year, they may find their take-home pay nearly halved.
Other consultants may be paid through commission, a lot like the salary-plus-bonuses scheme described above but with the bonus based on the products sold. Financial consultants who work for themselves as registered investment advisors or for smaller firms may be paid through other means. For instance, fee-only advisors are paid either a flat hourly or annual fee or a fee based on the percentage of assets they manage.
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Financial Consultant Vs. Financial Advisor
Financial consultant or financial advisor, which should you be? The most likely answer: whichever your employer wants you to be. At the end of the day, the name you go by matters less than the value you provide.
"Firms need to be clear on who they work with, what issues their clients face and how they help solve those issues," Anderson says. "The client will have predisposed ideas on what the titles mean, so the advisory firm needs go beyond the title and share a value proposition that will resonate with their target audience."
Rather than focusing on the title beside your name, look at the services you provide or want to provide. A financial advisor can consult just as well as a financial consultant can advise.
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