Investment Consultant

What Is an Investment Consultant?

An investment consultant is a financial professional who provides investors with investment products, advice, and/or planning. Investment consultants do 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 would be considered investment consultants.

Investment consultants have experience in many different facets of the financial world and may work independently for a bank or an investment firm. They are usually educated in a financial field, have experience in the financial services industry, and be licensed to work.

Key Takeaways

  • An investment consultant helps clients formulate and put into place investment strategies as well as construct and maintain their portfolios.
  • As with other financial advisors, investment consultants actively monitor their client's investments and work with them as their financial objectives change over time to adjust their holdings.
  • The job market for personal financial consultants is poised to grow in the next decade (2020-2030).
  • Becoming an investment consultant typically requires a college degree and some work experience.
  • Professional investment consultants must also be properly licensed to advise clients.

Understanding Investment Consultants

An investment consultant works with clients to form an investment strategy. Clients may be individuals or businesses—small businesses to larger corporations. The investment consultant is responsible for reviewing the client's financial situation and formulating a plan to meet their goals. Their duties include actively monitoring the client's investments and working with them as their financial objectives change over time. Because of the nature of their work, many investment consultants develop long-term working relationships with their clients.

These financial professionals work in various settings, including banks, asset management firms, and private investment companies, or work independently. They provide an essential service to their clients, helping them organize their finances and improve their
financial situation.

Many investment consultants are experienced in tax and estate planning, asset allocation, risk management, education savings, and retirement planning.

Experience and Pay for Investment Consultants

Becoming an investment consultant requires a college degree and work experience. Some of the critical skills an investment consultant needs are problem-solving, math ability, and communicating clearly and effectively. This last skill is important because consultants may need to explain complex financial ideas to their clients and be objective in the face of emotion.

Investment consultants receive remuneration by charging fees and/or commission and may also receive a set salary. PayScale reported the average annual base salary for an investment consultant was $73,057.

The closest occupation to an investment consultant under the U.S. Bureau of Labor Statistics (BLS) is a personal financial advisor. The median pay for a personal financial advisor in 2020 was $42.95 per hour or $89,330 per year. The job market for personal financial advisors is expected to grow 5% from 2020 to 2030.

Before you hire an investment consultant, ask about their fees and fee structure, and whether they receive any commissions.

Types of Investment Consultants

Investment consultants may fall into four main categories:

Registered Represenatives

These are investment consultants, including stockbrokers and banking representatives, who are paid a commission to sell investment and insurance products. They work for what is known as sell-side firms—financial organizations that create, promote, and sell financial instruments. Registered representatives typically hold a Series 6 or Series 7 license.

Financial Planners

Investment consultants who manage their clients’ personal finances are known as financial planners. They may develop a financial plan to help a client manage college tuition fees. Qualified financial planners hold a certified financial planner (CFP), certified public accountant (CPA), or personal financial specialist (PFS) certification.

Financial Advisors

These investment consultants give general and personalized financial advice. Their compensation is based on charging fees, and they typically hold a Series 65 or Series 66 license.

Money Managers

Investment consultants who make investment decisions on behalf of a client are called money managers. Money managers work for buy-side firms such as asset management firms, fund managers, or hedge funds.

Qualifications for Investment Consultants

Investment consultants usually have a bachelor’s or graduate degree in a finance-related discipline such as accounting, business, or economics. Although it's not a requirement, they may also complete coursework in investments, taxes, risk management, and estate planning. In addition, investment consultants may seek professional credentials such as the chartered financial analyst (CFA) or certified financial planner designation.

Investment consultants must be licensed to work in the United States, as always, before working with an investment consultant check to see if their license is up to date, and review their credentials before hiring one.

In the United States, most investment consultants are licensed by the Financial Industry Regulatory Authority (FINRA), an independent regulator. The Securities and Exchange Commission (SEC) oversees the activities of investment consultants from the government level.

Choosing an Investment Consultant

Research an investment consultant's background before hiring their services. Review their compliance records and check for any serious breaches. For instance, check to see if they have been investigated for insider trading. It’s also prudent to check their fiduciary status and criminal record.

Check an investment consultant’s certifications to ensure they hold the correct licenses. Assess their education and association memberships to determine if they have the necessary experience and expertise. Before selecting an investment consultant, it's always a good idea to organize an in-person meeting to determine if they understand your financial goals and are accessible.

How Much Does an Investment Consultant Make?

Investment consultants receive their earnings by charging fees and/or commission, and some earn a base salary as well. According to PayScale, average annual base salary for an investment consultant is $73,057.

How Do I Become an Investment Consultant?

Most institutions require an individual to have a bachelor's degree for an investment consultant position. Preferred concentrations include business and finance, though not necessarily required. Many investment consultants have a master's degree, typically an MBA. Investment consultants are required to hold Series 7 and Series 63 licenses, which involve passing those exams. For an entry-level position, not much experience is required; however, to move up the corporate ladder, individuals will need to have significant on-the-job experience.

Is an Investment Consultant Considered a Good Job?

What is considered a good job will vary depending on the individual, but an investment consultant position provides many benefits that many jobs do not. An investment consultant comes with the job satisfaction of helping others achieve their financial goals. The salary potential is very high and often without caps depending on how much business one does. The hours can be flexible depending on how an investment consultant would like to structure their day, which would include meeting clients and making investment plans and choices.

Article Sources
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  1. U.S. Bureau of Labor Statistics. "Personal Financial Advisors: Occupational Outlook."

  2. PayScale. "Investment Consultant Salary."

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