What is a financial consultant?

What does a financial consultant do?

“A financial consultant is a trusted professional with the necessary knowledge and experience to help others with personal and business financial management,” said Terry Parham, the chief financial officer of Innovative Wealth Building.

Financial consultants can help you with many different parts of your financial plan. This may include goal-setting, debt payoff, budgeting, investment planning and more.

Financial consultants are professionals who may or may not be licensed financial advisors. The term “financial consultant” is a general term that can refer to financial planners, tax professionals, financial coaches or a chartered financial consultant (ChFC).

It’s important to understand the differences in the types of financial consultants you can work with, as there are different regulations and standards for each.

Financial consulting services

Here are a few of the different services that may be offered by financial consultants:

• Goal-setting: Financial consultants can help you clarify and detail your financial goals. This includes putting together a list of goals and timelines of when you want to reach them.
• Debt payoff strategy: You can work with a financial consultant to create a debt payoff plan that makes the most sense for you. This may include negotiating rates, consolidating debts or referring you to a debt management provider.
• Budgeting: Financial consultants can help you put together a budget based on your income and monthly expenses. They can help point out areas where you can save more and be your accountability partner in sticking to the budget.
• Investment planning: Financial consultants who are licensed may be able to provide comprehensive investment planning services, including choosing a portfolio construction, risk assessment, rebalancing and even executing trades for you.
• Insurance planning: Some financial consultants can help you pick insurance plans and help ensure your coverage is adequate.
• Retirement planning: In addition to general investments, financial consultants may be able to help you build a retirement plan based on your goals and timelines. This can include opening retirement accounts, asset allocation strategies and withdrawal strategies.
• Tax strategies: Some financial consultants may be able to help with general tax planning strategies. But most are not licensed tax professionals and cannot prepare your tax returns for you.

Financial consulting costs

The cost to hire a financial consultant will vary by the type of services you need and what credentials the consultant has. Here are a few various cost estimates for working with a financial consultant:

• A financial coach with no licensing or credentials may charge $100 for a one-hour session.
• A ChFC may charge $1,200 for a three-month consulting program.
• A licensed financial advisor may have no upfront charges, but may earn a commission on investments they sell you.
• A fee-only financial planner may charge several thousands of dollars for a financial plan, or charge for assets under management (around 1% per year).

» MORE: How to choose a financial advisor

Who needs a financial consultant?

Financial consultants can help you at varying stages of your financial life. Here are a few examples of times when you could benefit from hiring a financial consultant:

• Just married: Meeting with a financial consultant can help you navigate the world of combining finances, insurance planning and how to handle your money as a new couple.
• Deep in debt: A financial consultant can help you come up with a clear-cut path out of debt.
• Just started investing: Guidance from a financial consultant can help steer you in the right direction for your investment goals and risk tolerance.
• Inherited money: A financial consultant can help you optimize how to responsibly use large sums of money.
• Close to retirement: A financial consultant can help make sure you’re on track as you near retirement.

As you can imagine, there are countless situations where you would benefit from meeting with a financial consultant to help you navigate big money decisions. But a financial consultant isn’t for everyone. If you feel confident in your financial management, or simply cannot afford to hire a financial consultant at this time, you probably shouldn't. But if you're at a pivotal point in your life and would benefit from some financial guidance, a financial consultant may be for you.

“When should you hire a financial consultant?” said Parham. “When you’re ready, willing and able to make committed steps to improve your financial life. You don’t have to be rich, you just have to be willing and able.”

» MORE: Financial goals and knowledge gaps

How to find a financial consultant

There are several ways to find a financial consultant to work with, depending on your budget, your needs and what services you require. But before you start your search, you’ll want to make sure you are very clear on what type of help you want.

Here are a few questions to ask yourself before searching for a financial consultant:

• What do I need help with? (investing, budgeting, debt payoff, planning, goal-setting, etc.)
• Do I want to find someone who can manage my investments for me?
• What is my budget?
• Do I want to work with someone who is licensed?

The answers to those questions will help you narrow down who you’re searching for.

Here are a few places to search for a financial consultant:

• Referrals from family or friends
• Wealthtender financial advisor search
• XY Planning Network
• The National Association of Personal Financial Advisors (NAPFA)
• CFP.net search

Bottom line

Whether it’s for budgeting, debt payoff, insurance or tax strategies, working with a financial consultant can help you get clear on your financial goals and optimize your money. But not all financial consultants are licensed investment professionals, so it’s important to understand what you need before hiring one.