Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Investment Consultant

What it is:

An investment consultant is an educated investment professional who helps people and businesses set and meet long-term financial goals.

How it works (Example):

An investment consultant is similar to an investment advisor, financial planner, investment manager, or financial advisor.

An investment consultant analyzes a client's current financial status and helps the client set reasonable, achievable financial goals. He or she can address a broad array of questions competently. Investment consultants also make investment recommendations, provide objective advice, and help clients weigh the financial consequences of life decisions. They also help clients stay organized.

Investment consultants must have expertise in tax planning, asset allocation, risk management, retirement planning, and estate planning in order to help clients at all stages of life and in a variety of circumstances. In some cases a client will let his or her investment consultant act as a fiduciary, meaning that the client gives the consultant permission to make decisions on the client's behalf without consulting the client for approval beforehand. Investment consultants often either charge by the hour or they charge the client a percentage of the assets under management. 

Why it Matters:

Investment consultants help millions of people get financially organized and help them make educated life decisions.

In most states, anyone can call himself an investment consultant because there are few licensing requirements and little regulation. There are several credentials that financial advisors can obtain, however, and the most common is the Certified Financial Planner (CFP) designation. An advisor must pass the CFP test, have an appropriate level of prior education, sign a code of ethics, and have several years of actual planning experience before obtaining the right to use the CFP designation. CFPs must also obtain a certain number of hours of continuing education every year to keep the designation.

Several organizations help people find qualified investment consultants, including the National Association of Financial Advisors (NAPFA), the Financial Planning Association (FPA), and the Certified Financial Planner Board of Standards.