Job & Career

Investment Consultant 101: What They Do, How They Charge, and How to Work with Them

author-img By Sarmind Safi 5 Mins Read 11 September 2023

investment consultant

An investment consultant is a financial expert who offers planning, advice, and/or investment products to investors. They work closely with clients to develop customized investment plans that help them meet their needs and achieve their financial objectives. They would include many financial planners and advisors.

Investment consultants may operate independently for a bank or an investment firm and have experience in a wide range of financial areas. Moreover, they typically hold a work license, have experience in the financial services sector, and have received education in a related field.

An Investment Consultant knows things that no investment books or real estate investment books can teach.

Understanding an Investment Consultant

Understanding an Investment Consultant

A financial advisor collaborates with customers to develop an investment plan. Individuals or businesses, from small startups to larger conglomerates, can be clients. The investment consultant oversees the assessment of the client’s financial status as well as creating a strategy to help them achieve their objectives.

Among their responsibilities are keeping a close eye on the client’s investments as well as assisting them when their financial goals alter over time. Many investment consultants establish long-term working relationships with their clients due to the nature of their work.

These financial experts can operate independently or in a variety of environments, such as banks, asset management companies, and private investment firms. They offer their clients a vital service that helps them better manage their money as well as get their financial situation in order.

Investment Consultant Salary and Experience

Investment Consultant Salary and Experience

Employment experience, as well as a college degree, are prerequisites for becoming an investment consultant. A financial advisor requires a variety of essential skills, including the ability to solve problems, perform calculations, and effectively communicate. This final ability is crucial because consultants may have to be impartial in the face of emotion as well as explain difficult financial concepts to their clients.

They may be compensated with a fixed salary in addition to fees and/or commissions. A personal financial advisor is the profession that most closely resembles an investment consultant, according to the U.S. Bureau of Labor Statistics (BLS). In 2020, the average compensation for a personal financial advisor was $89,330 annually or $42.95 per hour.

Personal financial advisor employment is predicted to increase by 5% between 2020 and 2030. According to PayScale, an investment consultant’s base pay averaged $73,057.2 per year.

Based on data, an investment consultant makes, on average, $79,000 annually. This includes taxable wages, tips, bonuses, and more, and it is based on information from 206 TurboTax users who indicated that they were employed as investment consultants. The salary range for an investment consultant can be $37,000 to $243,000, depending on factors such as location, employer, education, and experience.

Types of Investment Consultant

Investment advisors can be divided into four groups:

Registered Reps

These are financial advisors who work as stockbrokers and bank representatives and are compensated with commissions for recommending insurance as well as investment products. They are employed by financial institutions that design, market, as well as sell financial instruments. These are referred to as sell-side firms. Registered representatives normally hold a Series 6 or Series 7 license.

Financial Planners

Financial planners are investment consultants who oversee the personal finances of their clients. They might create a budget to assist a client in paying for college. A certified financial planner (CFP), certified public accountant (CPA), or personal financial specialist (PFS) credential is held by qualified financial planners.

Financial Advisors

These investment advisors provide both general as well as tailored financial guidance. They usually have a Series 65 or Series 66 license, and their pay is based on charging fees.  

Money Managers

Money managers are investment advisors who choose investments for their clients. They are employed by buy-side companies like hedge funds, asset management companies, as well as fund managers.

Tips for Investors

  1. It’s a good idea to compare your options before choosing to work with an investment consultant, wealth advisor, or other financial professional. Using free online tools, you can find up to three local financial advisors to meet with as well as interview at no cost to determine which one is best for you. If you’re prepared to find an advisor who can assist you in reaching your financial objectives, then get going right away.
  1. Always remember to diversify your portfolio according to your risk tolerance as well as time horizon. You can use a mix of these factors to determine your own asset allocation. This implies that you can invest in a variety of stocks, bonds, mutual funds, alternative investments, as well as other securities.  

Such difficulties are rare for institutional investors. There are obstacles in the way of reaching your investment objectives due to the current testing market environment. Regulations are changing, and sustainable investing is evolving concurrently. More than ever, specialized knowledge as well as oversight are required.

Things to Keep in Mind as an Investment Consultant

Things to Keep in Mind as an Investment Consultant

There are certain portfolio structures that have performed well over the last 20 years. Institutions must address the following issues as they stress-test their strategies.

Here are things to keep in mind as an investment consultant:

  • Being aware of market trends and how they may impact your capacity to meet your investment goals. Identifying medium-term market prospects as well as risk-reduction strategies.
  • Keeping an eye on projected levels of funding and asset-liability management. Implementing any adjustments required to reach them.
  • Determining the most effective strategy to control, minimize, or eliminate risk for defined benefit pension plans as they approach their destination.
  • Picking asset managers with high ratings. Having enough data to produce manager outperformance through the selection of excellent active managers.  
  • Creating and carrying out sustainable investment strategies. Drafting laws that will adjust as sustainable investing changes. Investigating reputable money managers.
  • Figuring out methods to cut operational expenses and enhance governance. Analytical methods can yield major savings in areas like asset transfers, custody and securities lending, and operations in general.

It’s crucial to keep an eye on changes in regulations and your portfolios in addition to tackling these difficulties.

How an Investment Consultant Plans?

How an Investment Consultant Plans

The process of portfolio optimization involves three steps.  

1. Examine the Most Recent Managerial Insights and Macro Perspectives

It is difficult in today’s markets to sort through the complex macroeconomic signals and choose the best investment managers. If you feel that you need help locating highly rated managers and actionable ideas, then get in touch with one of them. Investment consultants are available to offer you the assistance you require both now and in the future.

2. Concentrate on the Most Effective Tactics for Reaching Your Desired Results

The first step in solving any issue is to critically evaluate your journey plan and the timeline you have set for its completion. An investment consultant collaborates closely with a client to determine what adjustments can be made right away and to create a risk management plan.

3. Implement Low-risk and Low-cost Strategies

Specialized teams help you put strategies into action that help you achieve your objectives. Moreover, they always prioritize execution while attempting to keep expenses and risks to a minimum.

What Does a Real Estate Investment Consultant Do?

What Does a Real Estate Investment Consultant Do

A real estate property consultant is an expert who provides guidance to buyers and sellers of real estate, assisting them in making well-informed decisions regarding the properties they purchase and sell. Moreover, they can assist you by analyzing the finances of any particular property. Alternatively, they can assist you with strategic planning while building your portfolio. Their responsibility in transactions is asset management.

Typically, a real estate investment consultant works with investors rather than residential property buyers and sellers. Property development is their area of expertise as property investment consultants. Moreover, they are frequently asked to provide guidance and full project management for development projects.

Finding locations that are ideal for the project and the needs of the principals may be part of their job. They might also perform feasibility studies and competitive analyses. While investing consultants typically have a background in finance and investing, property development consultants typically have a marketing background.

Types of Real Estate Investment Consultant

Types of Real Estate Investment Consultant

A specialist in property investment consulting can offer many services. Which of these services real estate consultants typically concentrate on or specialize in can be used to classify them. Although most real estate consultants work with a wide range of clients, some will focus on real estate investment or development. In any case, consultants will carry out in-depth studies and acquire the knowledge required to counsel the kinds of clients they decide to concentrate on.  

How and When to Collaborate with an Investment Consultant?

How and When to Collaborate with an Investment Consultant

Depending on your unique circumstances, you may require a different kind of professional financial assistance. If you don’t have a large net worth, then it could be helpful to consult with an investment consultant. Or if you would like more specialized financial advice on investing. It might be wiser to hire a financial planner to assist you if you require advice on investment, tax implications, and other financial matters.

However, working with a wealth advisor could be advantageous if you have a high net worth. It could also help if you require a lot of assistance with investing, retirement, taxes, and estate planning.

Finding an investment consultant or any other type of financial professional through word of mouth can be an effective strategy. You may be able to find reliable recommendations from other financial professionals you already know at banks or other financial institutions with which you have established relationships. Your social network may be able to recommend you, and online searches may also be helpful. But they are frequently too general to provide you with specific information about a consultant or the company they work for. You could be able to find local advisors by using free online matching tools to focus your search.

Investment Consultant Fees

Investment Consultant Fees

The Bureau of Labor Statistics (BLS) projects that employment as a personal financial or investment consultant will likely increase over the next ten years, from 2019 to 2029. One of the most promising careers for employment and income over the next ten years or so is financial management, among other related fields.

These experts frequently bill by the hour or as a portion of the assets under management (AUM). Their salary ranges widely. On average, they fall between $65,000 and $80,000, based on sources like Indeed, Glassdoor, and ZipRecruiter.

How To Become an Investment Consultant?

How To Become an Investment Consultant

Not just anybody can call themselves a professional advisor or consultant and offer financial advice to an individual or business. This is the main task performed by professionals known as investment consultants.

To be more precise, they have different legislative and regulatory backgrounds and must operate in different contexts. Following the Employee Retirement Income Security Act (ERISA) in the 1970s, the number of financial advisors increased generally. In addition, “firms or sole practitioners compensated for advising others about securities investments must register with the SEC and conform to regulations designed to protect investors,” according to the Investment Advisors Act of 1940.

A bachelor’s degree and prior coursework in economics, accounting, business administration, finance, or a related field are typically prerequisites for working as an investment management consultant. Typically, investment consultants require an in-depth understanding of financial markets, different business models, and investment theories and practices.

Having expertise in tax planning, asset allocation, risk tolerance and management, retirement planning, estate planning, and other related areas is also advantageous for investment consultants. This keeps the consultant ready and able to assist a wide range of clients. They can do it through different phases of life or facing different financial or situational challenges.

Wrapping Up

Although you can manage your investments on your own, it doesn’t hurt to familiarize yourself with the resources available. If you discover that you could use a bit more knowledge and assistance but aren’t quite ready to speak with a wealth advisor or other professional advisor, then an investment consultant might be a good fit for you.

Your next real estate investment can greatly benefit from the assistance of a real estate investment consultant. Particularly if you’re a busy investor with little time to thoroughly investigate a property, then this should be a great step.

If you have thoughts to share or questions on what an investment consultant does, then please leave a comment below. We would love to hear from you!

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Sarmind Safi

Sarmind is a Writer and an aspiring Editor who has experience in various short and long-form niches. Her academic pursuits intensely mold her industry background in content creation. She holds a Master's degree in Literature, and when not writing for professional purposes, she can be found re-reading old classics of Jane Austen and the Brontë sisters. She is super fond of cats and enjoys hours of doom-scrolling through memes on social media while cuddled up with a cup of desi chai. She likes to think she is an intellectual badass (colloquial: nerdy bore), and now all she needs is a sewing kit to complete the look!

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