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- Financial consultants provide expert advice on a wide range of topics, like estate planning and wealth management.
- Financial consultants and advisors offer similar financial services, but they have different credentials.
- Before hiring a potential financial consultant, make sure to research their credentials.
When searching for professional money and investment advice, you may have come across titles like “financial consultant” or “financial advisor.” Although these titles sound similar, financial consultants and advisors aren’t the same thing.
If you’re looking for an expert to help you create a personalized financial plan based on your current situation, you’re probably looking for a financial consultant.
What is a financial consultant?
Financial consultants create personalized financial plans based on a client’s whole financial picture, including factors like debt, assets, living expenses, and investment goals. Although financial consultants typically offer similar guidance and advice as financial advisors, the two jobs require different credentials.
Financial consultants typically have a degree in finance or a related field and can be designated as chartered financial consultants (ChFCs), which is a certification currently only offered through the American College of Financial Services. Financial consultants must also have at least three years of financial planning experience to earn the ChFC designation.
Keep in mind that there are financial consultants who do not have the ChFC certification.
“As long as they have passed the appropriate state and federal licensing requirements, they can use any name they want — advisor, consultant, planner, wealth manager — provide any range of services, and charge in different ways,” says Brent Weiss, CFP and head of financial wellness at Facet.
While these non-certified financial consultants and advisors may still offer useful advice, you won’t get the same level of guaranteed expertise that you would with a certified consultant. You also won’t get the same degree of trustworthiness as you would with a CFP or fiduciary.
People seeking professional financial advice should do their best to identify and recognize the different financial licenses and certifications, explains Weiss.
“These credentials not only represent a profound understanding of financial principles, but also a commitment to ongoing education and ethical standards,” states Weiss.
What does a financial consultant do?
A financial consultant’s main job is to create a customized financial plan to help you reach your goals. If you need help coming up with goals, a financial consultant can help with that, too. And depending on their specialties and experience, a financial consultant may offer a variety of services, including:
“In general, financial consultants offer a range of services tailored to individual client needs,” says Weiss. “They may look at one aspect of your finances, offer a one-time consult, or review your entire financial picture and develop an ongoing plan. You need to know the right questions to ask to determine the services they will provide.”
Ensure that the financial consultant you’re meeting with specializes in the topics you need guidance on. For example, if you need help with estate planning, make sure you are meeting with a financial consultant who specializes in estate planning strategies. Someone who specializes in tax strategies won’t be as useful for your situation.
What is a financial consultant vs. financial advisor?
While “financial consultant” and “financial advisor” are often used interchangeably, they don’t mean the same thing. Financial consultants are a type of financial advisor. All financial advisors are financial consultants, but not all financial consultants are advisors. The best financial advisors are either fiduciaries or CFP-certified.
It’s not uncommon for financial experts seeking further education to be certified as both a ChFC and a CFP (or other financial certification like a CFA).
Certified financial advisors earn their titles from The Certified Financial Planner Board of Standards, Inc. (CFP Board) after years of education in over 70 financial specialties. To be a certified financial planner (CFP), financial advisors and planners must have extensive practical advisor experience and follow high ethical standards.
“While a ChFC has more education and experience than many others in the field, it’s really more like a CFP-light,” Weiss says. “The CFP Professional designation remains the gold standard.”
Most CFPs adhere to fiduciary duty regulations. This is a legal and ethical duty that requires financial advisors to put the best interest of the client first. ChFCs can earn fiduciary status, but they are not required to. So if you came down to picking between an advisor with ChFC credentials versus a certified CFP, the CFP is typically the better option.
However, financial consultants and ChFCs can still provide knowledgeable financial advice on a range of topics. If you or someone you know,has had a good experience with a financial consultant, there’s no reason to switch to someone else. Strong customer reviews, recommendations, and years of experience can speak to the quality of a financial consult almost just as much as certification can.
What fees do financial consultants charge?
How a financial consultant charges you can vary. Some financial consultants may charge a flat rate, hourly rate, project fee, or a percentage of your assets under management (AUM). When considering a potential financial consultant, one of the first questions you should ask is how they charge.
“Try to avoid fee models that create conflicts of interest, like commissions and paying a percentage of how much you invest. You want your advisor to offer unbiased advice and sit on the same side of the table as you,” says Weiss.
How to find a financial consultant
The easiest way to find a financial consultant is through referrals from friends, family, or colleagues. However, you can also find consultants online through organizations such as:
On these websites, you can access a wide range of advisors, planners, and consultants with varying certifications and credentials on different financial and investment topics. Make sure to thoroughly look through your options to find the one that best fits your needs.
“When meeting a potential financial consultant, ask about their qualifications, experience, areas of expertise, and fee structure. It’s also important to understand their approach to financial planning, how they tailor their services to individual client needs, and the types of clients they work with,” says Weiss.
Financial consultant — Frequently asked questions (FAQs)
Yes. Financial consultants make money by charging clients a flat rate, hourly rate, AUM fee, or project fee. Some financial consultants may also earn commissions, which means they make a profit when they recommend and sell certain financial products to clients. However, financial consultants who are certified as CFPs or fiduciaries can’t earn commissions.
Financial consultants are worth it if you’re seeking professional financial advice and guidance on topics like retirement, tax planning, estate planning, insurance products, and inheritance. Financial consultants assist clients in implementing custom financial plans to help them reach their goals.
You can become a financial consultant after several years of experience in finance or a related field. As long as you meet state and federal licensing requirements, you can refer to yourself as a financial consultant. However, to become a chartered financial consultant you must earn your certification through the American College of Financial Services.
Should you hire a financial consultant?
Financial consultants are finance and investment experts who provide a wide range of services to clients like estate planning, wealth management, retirement planning, insurance strategies, and general financial planning. Anyone with a bank account and financial goals can benefit from meeting with a financial consultant.
However, “financial consultant” is a general term that doesn’t guarantee a level of trustworthiness or expertise. Technically, anyone meeting state and federal licensing standards can call themselves a financial consultant or financial planner. For that reason, make sure to do your research on all potential financial consultants and advisors.
While non-certified consultants can still offer beneficial advice, certified ChFCs have the reputation, experience, and training necessary to get you where you need to go.
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