An investment consultant is a financial professional who provides investors with investment products, advice, and/or planning. They perform in-depth work on formulating investment strategies for clients, helping them fulfill their needs and reach their financial goals. Many financial advisors and financial planners qualify as investment consultants.
Investment consultants gain experience in several facets of the financial world and may work independently, at a bank, or for an investment firm. They possess education in finance-related fields, have industry experience in financial services, and must be licensed to practice.
Key Takeaways
- An investment consultant assists clients in formulating and implementing investment strategies, as well as constructing and maintaining their portfolios.
- They actively monitor their client’s investments, adjusting holdings as financial objectives evolve over time.
- The job market for personal financial consultants is forecasted to grow over the next decade.
- Becoming an investment consultant typically requires a college degree and relevant work experience.
- Professional investment consultants must be properly licensed to advise clients.
Understanding Investment Consultants
An investment consultant collaborates with clients—be it individuals, small businesses, or larger corporations—to form tailored investment strategies. They review financial situations and design plans to achieve client goals. Their responsibilities include continuously monitoring investments and evolving the strategy in alignment with changing financial objectives. Due to the nature of their work, investment consultants often foster long-term relationships with clients.
These professionals operate in various settings: banks, asset management firms, private investment companies, or independently. They play an essential role in helping clients organize their finances and upgrade their financial situation. Many have expertise in tax and estate planning, asset allocation, risk management, education savings, and retirement planning.
Experience and Pay for Investment Consultants
To become an investment consultant, one requires a college degree and relevant work experience. Key skills necessary include problem-solving, mathematics, and effective communication, with the latter being vital for explaining complex financial ideas and maintaining objectivity.
Investment consultants earn remuneration through fees, commissions, or a set salary. According to industry data, the average annual base salary for an investment consultant is around $73,057. As per the U.S. Bureau of Labor Statistics, the median annual pay for personal financial advisors was $89,330 in 2020, with expected job growth of 5% from 2020 to 2030.
When considering hiring an investment consultant, inquire about their fees, fee structures, and any potential commissions.
Types of Investment Consultants
Registered Representatives: These consultants, including stockbrokers or banking representatives, earn commissions for selling investment and insurance products. They typically hold a Series 6 or Series 7 license.
Financial Planners: These professionals manage clients’ personal finances and may hold credentials such as Certified Financial Planner (CFP), Certified Public Accountant (CPA), or Personal Financial Specialist (PFS).
Financial Advisors: General and personalized financial advisors often charge fees for their services and must typically hold a Series 65 or Series 66 license.
Money Managers: They make investment decisions for clients, usually working for asset management firms, fund managers, or hedge funds.
Qualifications for Investment Consultants
Investment consultants generally hold a bachelor’s or graduate degree in finance-related disciplines like accounting, business, or economics. They may also complete coursework in investments, taxes, risk management, and estate planning. Many choose to obtain professional credentials such as the Chartered Financial Analyst (CFA) or Certified Financial Planner designation.
Consultants must be licensed in the United States, with most licensed by the Financial Industry Regulatory Authority (FINRA) and overseen by the Securities and Exchange Commission (SEC).
Choosing an Investment Consultant
Before hiring an investment consultant, thoroughly research their background. Review their compliance records for any serious breaches, such as insider trading incidents. Check their fiduciary status and criminal record, and evaluate their qualifications, licenses, education, and association memberships. Arrange an in-person meeting to ensure they grasp your financial goals and are accessible.
How Much Does an Investment Consultant Make?
Investment consultants typically earn by charging fees, commissions, or a base salary. The average annual base salary is about $73,057.
How Do I Become an Investment Consultant?
A bachelor’s degree is usually required, with preferred concentrations in business and finance. Many go on to obtain a master’s degree, typically an MBA. Necessary licenses include Series 7 and Series 63, obtained via relevant exams. Entry-level positions require minimal experience, but significant on-the-job experience is crucial for career advancement.
Is an Investment Consultant Considered a Good Job?
Job satisfaction and perspective on a ‘good’ job vary per individual, but being an investment consultant generally offers many benefits. It comes with the satisfaction of helping clients achieve financial goals, potentially high salary without caps based on performance, and flexible hours.
Related Terms: investment advisor, financial consultant, wealth manager, financial planner.
References
- U.S. Bureau of Labor Statistics. “Personal Financial Advisors: Occupational Outlook”.
- PayScale. “Investment Consultant Salary”.
