What Is a Financial Consultant?

A financial consultant is a type of financial advisor who can conduct an audit of your current financial situation and strategize a plan to help you reach your future goals.

What does a financial consultant do?

Financial consultants work with their clients to help them structure their assets and build strategies to support long-term financial goals. For example, if a client wants to save for retirement but isn’t sure how, a financial consultant can recommend the type of account to use, suggest specific investments and answer questions about how much to save.

Depending on their training, background and certification level, financial consultants may be able to assist clients with more specialized needs, such as tax preparation and insurance. The terms “financial consultant” and “financial advisor” aren't regulated, which means they're often used interchangeably.

» MORE: Types of financial advisors

What is a chartered financial consultant (ChFC)?

A chartered financial consultant (ChFC) designation indicates that the consultant completed a financial planning program through the American College of Financial Services. ChFCs may offer more specialized services than other financial advisors, such as business or divorce planning, and they undergo continuous education requirements to maintain their titles.

To be clear, not all professionals who call themselves financial consultants hold a ChFC designation. They may hold another credential (e.g., CFP) or none at all. Always ask any potential financial advisor about the specific certifications they hold.

» MORE: 10 questions to ask a financial advisor

Do I need financial consulting services?

Financial consultants look at the whole picture of a client’s financial life, including debts, assets, expenses and income, to help clients determine what those goals should be. Financial consultants who have the proper licenses may also manage their client's investments.

The kinds of services you receive from a financial consultant will also depend on who you work with. Services may include:

Whether you need a financial consultant depends on your circumstances.

• If you're looking for investing help and have a fairly simple investment portfolio, you could use a robo-advisor as a low-cost way to manage those investments.

• If your investments are somewhat complex or you need help on topics other than investment management — like estate planning, tax help, or paying off debt — it may be worth working with a financial consultant or advisor.

It may also be a good idea to get some advice from a financial consultant when you experience major life changes or events. Getting married, having a child, receiving an inheritance or changing your job can have serious implications for your finances. Talking with a professional can help you navigate these changes and make adjustments to your overall financial plan.

» Ready to dive deeper? How to choose a financial advisor

Financial consultant vs. financial advisor

There is often no difference between a financial consultant and a financial advisor. Many firms use the terms interchangeably.

Both financial consultants and financial advisors can hold a variety of licenses or designations. Many hold FINRA licenses, such as Series 7 and 66 licenses, which allow them to sell investments. (FINRA is an organization that regulates broker-dealers.) Others may be ChFCs or hold another specialized certification, such as a certified financial planner (CFP).

Because there is little regulation governing what finance professionals call themselves, the duty is on the consumer to be extra diligent when working with one. One of the best ways to ensure you can trust your financial consultant is to find a fee-only fiduciary.

Some people who call themselves financial consultants may be fiduciaries, but the term does not imply a fiduciary standard of care like the CFP designation usually does. According to the American College of Financial Services, ChFCs are held to the "American College Code of Ethics," not to a fiduciary standard. Financial consultants or advisors who are fiduciaries don’t accept commissions for investments they sell and are required to work in their clients’ best interest.

Always check a potential advisor's background to find out exactly what their certifications and licenses mean. For example, some CFPs are fee-only fiduciaries, but not all.