What is a Financial Consultant?

by Tammy Dray; Updated September 26, 2017
What is a Financial Consultant?

Financial consultants are professionals who work counseling clients in the use and management of their money, investment options and asset relocation. Depending on the situation, this can be something as simple as helping them create a budget, or as involved as giving them tools to help them get out of debt, understand tax liabilities or contribute to their retirement pension.

Identification

Financial consultants are trained in a variety of fields. While there is no specific degree required to become one, most financial consultants do have a background in finances, business administration or investment and banking techniques. Those offering brokerage services do need to be licensed by the FINRA (Financial Industry Regulatory Authority), which requires a series of tests from their members, such as the Registered Investment Advisor Law exam.

Significance

Most people go to a financial consultant because they are experiencing problems with cash flow or debts. Financial consultants, as a result, are experts in helping clients deal with expenses and with balancing income or learning to manage their debts. Because many clients do not have a sizable disposable income at the time they visit a financial consultant, the first step is often to try and organize liabilities so clients can work out a payment plan to cover their debts before they can start investing for the future.

Features

For those whose present financial situation is rather stable, investments and planning for the future come next in the list of financial priorities. In this case, the role of a financial consultant is to establish what type of financial issues should be addressed first. For example, families with small children often need to work on establishing a college account, while older people need to worry about estate planning and life insurance. Most financial consultants will recommend some type of investment or savings account, no matter the present financial situation of the client.

Considerations

In some cases, financial consultants have a specific area in which they work. This is especially true of those who handle investment planning, sometimes acting as brokers for the client. Others work on asset relocation or debt reduction. Financial consultants who have a specific focus may be a good solution for those who need to tackle urgent matters. For most people, however, somebody who can handle different aspects of their economic life would work out better in the long run.

Types

A financial consultant sometimes works directly with a business, rather than an individual. In this case, he may provide counseling and support at different stages, starting during the planning of a business soon to launch to helping an existing company get out of a financial rout. Some financial consultants work with businesses and companies on an ongoing basis, reviewing their situation every couple of months and providing suggestions on how to improve their capital influx or better manage the reinvestment of earnings.

About the Author

Tammy Dray has been writing since 1996. She specializes in health, wellness and travel topics and has credits in various publications including Woman's Day, Marie Claire, Adirondack Life and Self. She is also a seasoned independent traveler and a certified personal trainer and nutrition consultant. Dray is pursuing a criminal justice degree at Penn Foster College.

Photo Credits

  • S. Lancaster