What Is a Financial Consultant?

Financial consultants. You may have come across them, be it through a Facebook ad, a TV commercial, or the Charles Schwab magnet adorning your aunt's fridge. However, are you familiar with the role and responsibilities of a financial consultant?

Simply put, financial consultants help people figure out the best strategy for their money situation. And that includes anything from helping a business with investment banking to showing someone how to get that retirement they daydream about.

However, when it comes to achieving your financial goals, how can you determine whether you need the assistance of a financial consultant or another professional? Let's explore this further.

Understanding the Role of a Financial Consultant

Financial consultants are individuals with professional training who offer advice on specific financial matters, whether for individuals or businesses. They cover a broad spectrum of topics, such as guiding individuals on making appropriate investments or providing businesses with advice on managing their funds and bonds.

These consultants are often affiliated with consulting firms, like Morgan Stanley or Charles Schwab, although some operate as self-employed professionals.

While many consultants have academic backgrounds in business, finance, or related fields, they typically also hold certifications, depending on their employer's requirements or their areas of specialization.

For instance, if you require assistance with managing bonds, you would seek a financial consultant with a Series 65 license. Alternatively, if you need guidance on estate planning, a consultant with the Certified Financial Planner (CFP) designation would be suitable.

In essence, for any specific financial concern you may have, there is likely a certified financial consultant equipped to address it.

Roles and Responsibilities of a Financial Consultant

A financial consultant evaluates all your assets, including bank accounts and investments, to gain a comprehensive understanding. Subsequently, they engage with you to formulate a strategy aimed at achieving your financial goals.

Let’s say you need some help on a profit and loss analysis for your business. A financial consultant would meet with you to understand your situation and then set up more meetings to come up with a game plan.

Or maybe you want to figure out the best strategy for buying a home. A financial consultant would draw up a plan and give advice on what money or assets you should use to buy your home. How many sessions you have depends on the consultant and your situation.

Financial Consultant vs. Financial Advisor vs. Financial Coach

Financial Consultant:

It’s safe to say that financial consultants are numbers people—and honestly, where would we be without our numbers people? They look at your entire situation, with your goal in mind, and then create a strategy to help you win.

Here’s the thing. A financial consultant can give you the plan to accomplish your goal, and they might even be available to answer questions or check in on you periodically. But their specialty isn't in helping you change attitudes or behaviors around the way you handle money. And that’s a big area to keep in check, considering personal finance is 80% behavior and only 20% head knowledge. But more on that in a minute.

Now, there are a lot of great consultants out there. But before you hire one, do your research. Some aren’t required by law to keep your goals front of mind (that’s a non-fiduciary advisor). There’s nothing to stop them from charging you unreasonable commissions or advising you to buy one of their products, even if it doesn’t benefit you. So, when you’re shopping for a consultant, you want to look for a fiduciary consultant—aka a consultant who’s legally bound to advise in your best interests.

Financial Advisor:

This is where things can get a little confusing. Financial consultants, financial advisors, financial wellness advisors (whatever you want to call them) are somewhat similar in function. You might see advisor more than you see consultant.

Market chaos, inflation, your future—work with a pro to navigate this stuff.

The only time title comes into play is when it might refer to the consultant’s certification or specific function. As discussed earlier, Certified Financial Planners are a type of consultant that specializes in a specific service (like tax work or estate planning).

Financial Coach:

Both financial consultants and financial coaches help you crush your money goals—but in very different ways. Financial consultants focus on your money’s behavior (that’s the 20% head knowledge we were talking about), whereas financial coaches focus on your behavior with money (that’s the other 80%). While consultants are looking at the numbers and the plan, coaches are guiding you, cheering for you, and keeping you on the straight and narrow. Not only can a coach help you prioritize and tackle debts or get you and your spouse on the same page with money, they may end up on your Christmas card list because they're so relational.

Consultants will define your what—what you want. Coaches will define (and remind you of) your why—the reason you made your goal in the first place. And don’t underestimate the power of your why. It’s the fire in your bones that gets from where you are to where you want to be.

Now, let’s make one thing clear: Financial consultants and financial coaches don’t compete with each other. In a lot of ways, a coach can be the bridge to a consultant. Coaches help you pinpoint and change behaviors so when it comes time to work the plan a consultant gives you, you’re ready to nail your goal. And financial coaches often send their clients to consultants to get help with certain issues (like estate planning or tax work). Basically, coaches play the Yoda role in people’s financial journeys.

Think of a financial coach as your personal trainer and a financial consultant as your workout routine. Lifting weights gets you results. But having a trainer beside you, showing you the right techniques and helping you keep your head in the game when you feel like quitting can get you to your goal.

Who to Choose for Your Team

At the end of the day, everyone’s situation is different. Think about where you want and need to start. Do you need help with your motivation to get to your goal? A coach can help with that, and they can help change the root of your problem: your mindset. Do you want to know what the heck you need to do with your investments? A consultant or advisor would be a great resource for that.

Now, a coach can't help you with your business goals or long-term investments, like our network of SmartVestor Pros can. But if you’re a stressed-out parent who’s scraping money together to cash flow your kid’s college or wedding, you need a coach. If you’re neck-deep in debt and considering bankruptcy, you (absolutely) need a coach. If you just don’t know where the road to retirement leads, a coach can help you find your next step for getting there.

So, if you’ve got a money problem—or a money goal—and want real, lasting change, let us help. Reach out to our network of coaches and start the path to financial peace.