The Global Financial Market in the Year 2020, was at USD$ 79.4 billion. In the year 2022, the financial market was valued at USD 85.8 billion. The projected growth by the year 2030 is USD 135.6 billion. With this projected growth, there is a parallel growth in the demand for financial consultants to manage financial wealth not only for businesses but on an individual level too. Are you planning to step into this role? If yes, then here is a brief insight into the prerequisites, roles, and responsibilities that go into shaping a Financial Consultant Profile.
Brief History of the Birth of Consulting
The early 20th Century saw the introduction of new technology in the business industry. This helped improve the production processes and rates and helped in the faster growth of the company.
This, in turn, led to a higher demand for consultants not only for the production department but also for managing the manpower and finances of the company.
In 1906 Arthur D. Little the world’s first Management Consulting firm was established, which is still in business and imparts financial consulting services too. In 1926 McKinsey and Company, was founded by James McKinsey.
It is now counted among the leaders in the financial consultancy industry. In the 1930s, post the Great Depression, the need for financial consulting expertise evolved to manage Government Agencies and financially weak businesses.
In the same time frame, the Glass-Steagall Banking Act was passed which increased the demand for Financial Consulting. By the year 2010, strict tax laws and the Dodd-Frank Wall Street Reforms and Consumer Protection Act were introduced.
The Patient Protection and Affordable Care Act in 2010 gave birth to many financial and compliance challenges. Due to these acts, a Financial Consultant Profile requires expertise not only in business but also in personal financial management.
During the COVID-19 pandemic, the demand for the Financial Consultant Profile increased to help plan for mitigating risks for businesses against such unpredictable challenges. The US Department of Labor has predicted an addition of 3,34,000 new Financial Consultant profiles by 2029.
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Education and Qualification for a Financial Consultant Profile
An individual looking to foray into a Financial Consultant Profile must have some basic education and qualification needs that qualify them to step into the world of financial consulting. The following are the education must haves to fit into a Financial Consultant Profile :
Bachelor’s Degree:
A bachelor’s Degree from an accredited institution in subjects like finance, accounting, economics, business, statistics, or any other related field.
Master’s Degree:
An MBA in Business, Finance, or related fields is not a necessity, but it helps gain faster promotions in any organization.
Certification:
There are a number of certifications a Financial Consultant has to obtain in order to start practicing in a certain field of consulting. Here is a list of the certification courses one must obtain :
- Chartered Financial Analyst – This designation carries the same weightage as an MBA in Finance. CFA-certified consultants have expertise in the area of investment analysis and portfolio management.
- Certified Financial Planner – This course helps to gain expertise in investment planning, tax planning, estate planning, insurance planning, retirement planning, and asset management.
- Certified Public Accountant – This certification course is for licensed accounting professionals and is awarded by the Board of Accountancy, which is different for each State. In some countries, a CPA certification is equivalent to a CA. The certificate holders are experts in tax planning, tax preparation, auditing, and all the other accounting services.
- Chartered Alternative Investment Analyst – This certification is awarded by The Chartered Investment Analyst Association and has two levels to clear. A CAIA is considered an expert in areas of venture capital, hedge funds, private equity, derivatives, and real estate investments.
- Financial Risk Manager – The FRM managers are trained to deal in the area of financial risk management involved in the business.
Core Skills and Competencies
The Financial Consultant Profile is not only about getting the required educational qualification, but it is a combination of technical skills and interpersonal skills too. To be a successful Financial Consultant, the following set of skills and competencies have to be developed :
Industry Knowledge-
A Financial Consultant has to have excellent knowledge of the financial industry. All the market developments, changes in market trends, knowledge of new trends, tax laws, financial regulations, and all the new technologies being introduced.
As the clients depend on the financial consultants to give them sound financial advice, thus they should be committed to learning continuously and be in touch with whatever latest is happening in their particular area of expertise.
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Financial Analysis –
A good Financial Consultant should have excellent analytical skills. They should be able to analyze investment portfolios, cash flow statements, revenue structures, financial statements, and other financial data.
They should be able to predict trends in the data, predict anomalies and risks if any, and be able to make accurate informed data-backed decisions. This core skill is acquired and cannot be taught, thus a consultant has to be very observant.
Research and Strategic Planning –
Market research is critical for a Financial Consultant to be able to make suitable strategic plans for the clients that help them reach their final financial goals.
A well-informed Consultant helps clients set their financial targets, regulate their cash flow, find the best funding strategies, and help in better resource allocation. Research and strategic planning help in creating a beneficial financial roadmap for the client.
Business Development and Wealth Management –
An integral role of a Financial Consultant Profile is consultative selling for client acquisition. They have to excel in the skill of extracting the actual requirements of the client and advise them on adopting the best possible plans that work in the client’s preference without sounding like a salesman but as a trusted financial advisor.
Business networking is essential for building strong business relations in the financial industry. Thus, a financial consultant has to be outgoing and possess excellent communication skills to be able to participate in business events and networking activities.
Regulatory Compliance-
A Financial Consultant should ensure all financial dealing is in compliance with the laws and regulations governing the financial industry. This ensures that there are no unnecessary legal proceedings and fines that may cause loss not only to the client but also huge reputational damage to the consultant’s reputation and the company they are associated with.
Client data confidentiality and protection of the client by mitigating risks caused due to non-compliance work in the best interest of the Financial Consultants reputation and client engagement.
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Financial Technology-
In today’s scenario, the financial industry is evolving at a very fast pace, thanks to the introduction of new technologies. Businesses require results at a less turnaround time which is accurate and data-driven and not based on assumptions.
These all are possible with the help of new financial modeling software, and data analytic software. Analyzing financial statements, performing ratio analysis, predicting trends in the data, assessing possibilities in the risk by pinpointing the anomalies in the trends in a business, evaluating the financial health of a company, and gathering data on the various investment options present in the market are just a few of the roles which are not possible manually.
Thus, to ensure imparting excellent service to the client in order to gain their trust and confidence, a Financial Consultant has to constantly upgrade themselves with the knowledge of the latest technological developments in their area of work.
A Financial Consultant Profile embodies trust, honesty, and transparency, thus a high level of integrity and ethical conduct has to be maintained uniformly throughout the career span. They have to provide fair, unbiased opinions that are in the interest of the client and align with their goals. They have to be transparent in their expertise fees.
All the advice given should be in accordance with the laws and regulations. In instances where there is a difference in opinion or interest, they should be able to conduct themselves with a high level of integrity, and calmness, and should impart fair and just advice.
Client Engagement-
Effective communication is an integral skill set that a Financial Client should master in. A consultant has to be able to present their findings in an effective and crisp manner with the help of charts, graphs, and tables to the clients.
He should be able to present complex financial jargon in easily understandable terms. Good convincing power is required to be able to convince the client to make correct decisions.
A consultant should be a keen listener to be able to understand the needs of the client, extract relevant information, and be able to make the right strategic planning for them.
Good interpersonal relationships help in building trust, building a good network of clients, building long-term relationships, and customer retention.
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Communication Skills and Leadership Qualities –
There are many financial terms and techniques that are difficult to comprehend, and the responsibility of explaining them in layman’s terms lies with a Financial Consultant.
Thus, very crisp and clear communication skill is a prerequisite for a consultant. Consultants have to be good at their written skills as they have to prepare reports, draft proposals, and advice for investments.
Effective leadership quality is another set of skills that a consultant should master in, as they have to guide the clients to make correct financial decisions, despite having conflicting opinions. Also to develop good relationships with colleagues and clients the art of effective communication and leadership should be developed effectively.
Financial Consultant Vs Financial Advisor
There is a general misconception that a person working in a Financial Consultant Profile is the same as a Financial Advisor. The following points are the areas where both differ:
Scope of Service –
A Financial Consultant has expertise in a broader financial services spectrum. They not only give advice on investment planning but also deal in strategic planning of divestments, Mergers & Acquisitions, revenue generation and structuring in a business, debt management, and real estate investment planning to name a few.
A financial advisor generally may deal only on the individual level and provide guidance on retirement planning, individual tax planning, and investment plans.
Education Qualification –
An individual planning to step into a Financial Consultant Profile needs to get additional certification in the particular financial product stream to gain more expertise. A financial advisor may not be required to add additional certification to their profile as they mainly focus on an individual level only.
Both Financial Consultants and Financial Advisors need to be licensed and registered with Registered Investment Advisors to be able to impart advice on investment instruments. For a Financial Consultant Profile handling risk management degrees like Financial Risk Manager can be a requisite.
Technology –
A Financial Consultant has to be trained in data analysis and financial modeling software as they have to speculate the data trends and detect any anomalies in the trends.
Compensation –
A Financial Consultant may charge by the hour, project-based, or a fixed percentage on the assets under management. A Financial Advisor generally charges a fixed fee for the financial services they impart.
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Job Roles in a Financial Consultant Profile
There are various job roles that a Financial Consultant can be employed under, here are a few roles :
Financial Wealth Manager –
This role is generally in financial planning firms, independent consultants, and wealth management firms. They deal mainly in investment instruments and planning.
Investment Consultants –
This role is in major asset management firms, investment management organizations, consultancies, and big corporates. They deal with portfolio management, investment management, and opportunities. They conduct market research and analysis of the competitors.
Tax Consultants –
This role in businesses deals with dealing with corporate laws, tax saving planning, maintaining tax compliance, and preparing tax returns. They deal mostly in corporate laws and may also deal with individual tax services.
Risk Management Consultants –
Giant Corporates and business houses employ risk managers to constantly keep analyzing the changes in the internal financial data trends and recommend the predicted and unpredictable anomalies posing as a risk to the business.
In addition, they have to be constantly updated about changes in government policies, political scenarios, and global market changes to predict the risks and plan risk mitigation strategies.
Corporate Finance Consultant –
Financial Consultants are employed in corporate firms to conduct data analysis and work on financial modeling software to assist them with Mergers & acquisitions, financial forecasting, financial budget planning, equity and shares, debt analysis and planning, and capital structure analysis.
Financial Services Industry –
Banks, investment firms, brokerage firms, asset management firms, and insurance firms fall under this category.
Consulting firms deal with risk management, strategic financial planning, Mergers & Acquisitions, and business evaluation. A few big consultancy firms globally are The Boston Consulting Group, Bain & Company, Deloitte, PwC, and Tata Consultancy to name a few.
Government and Non-Profit Organizations –
Financial Consultants have opportunities to work with Public Sector companies, education institutions, health organizations, and charities. In these sectors, they are responsible for financial reposting, adherence to compliance, grant management, and financial planning. A few big Public Sector companies in India are Oil and Natural Gas Corporation, Bharat Petroleum Corporation Ltd., Gas Authority of India, and Coal India Ltd.
FAQs
Q. What is a Financial Consultant and what services do they provide?
A Financial Consultant is a professionally qualified individual who analyzes the proposed financial goals of either a business or an individual and proposes strategic plans to meet these goals. When dealing with large corporates, or business houses a Financial Consultant has to analyze the cash flow, financial data trends, and financial statements, and asses the financial health of the company.
They help in improving the cost management and the operational efficiency of the company by analyzing various investment opportunities. They help in informed decision-making for resource planning in a company by analyzing data trends and modeling methods. They help in planning various methods to help mitigate risks for the company, especially in the area of revenue generation. There are financial consultants who assist individuals with their investment planning, tax planning, asset management, and retirement planning.
Q. What Qualifications and skills are required to become a Financial Consultant?
A Financial Consultant has to have a bachelor’s degree in accounting, economics, business finance, statistics, or any other field with similar subjects. Some businesses look for individuals with a Master’s in Business Administration with Finance as a major subject or equivalent. Additional certifications like Chartered Financial Analyst (CFA), Chartered Financial Planner(CFP), Chartered Public Accountant (CPA), Chartered Alternative Investment Planner, and Financial Risk Manager help in gaining further expertise in a particular area.
A Financial Consultant has to be skilled in interpersonal relationships which is a requisite for client engagement and retention. Clear and crisp communication skills are another skill set that ensures that a consultant is able to make presentations and is able to communicate strategic decisions and findings involving financial jargon in simple layman’s language.
Q. What are the codes of conduct that a Financial Consultant to be aware of?
Financial Consultants have to regularly indulge in market research and keep updating themselves with the latest products and technologies in the financial industry to be able to make relevant decisions for the clients that work in their interest. They should maintain a high level of client confidentiality and never breach trust by sharing any sensitive data. During instances of conflicts and differences in opinions, a consultant should be fair and plan steps that align with the goals of the client. A consultant should ensure at every step of planning all governing rules and regulations are being followed to ensure no legal complications or penalties are levied.
Conclusion
When it comes to the question of wealth management, not only businesses but even personally such a Financial Consultant is sought after who possesses a diverse set of skills and qualifications. When we talk about education a consultant with the degrees like Chartered Financial Analyst(CFA), or Chartered Financial Planner(CFP) speaks volumes about his/her expertise, knowledge, and credibility.
The most significant responsibility of a Financial Consultant Profile is being a strategic planner. They must give attention to detail as they have to evaluate complex financial data, do extensive market research, evaluate intricate details regarding the trends in the data, mitigate risk, and forecast long-term financial plans for the clients that align at the end with their goals.
They have to be technologically adept as the data presented nowadays is vast and constantly new technologies and software are being introduced to cut the time short for results. Being aware of the new software and modeling formulas enables them to impart data-driven informed decisions that are not impaired by assumptions. This also helps in mitigating risks for the clients. Consultants have to be abreast of the financial market and products constantly so that they can offer relevant investment plans, retirement plans, tax savings, and risk management plans.
A financial consultant should be high on ethical conduct as their main purpose is to gain the trust, maintain client confidentiality, and make sure even in cases where there are conflicts of opinion, work in the best interest of the client. Consultants have to ensure all relevant laws and regulations are kept in compliance while planning to avoid the risk of penalties, and legal complications.
There are skills that all consultants are expected to possess that are not taught in the classroom but have to be acquired with experience and constant hard work, and interpersonal skills are top in this. A Financial Consultant has to nurture good client relationships to win their confidence, and trust, and establish a good client network. Clear and crisp communication ensures the client that the strategic planning done by the consultant aligns well with their final goals. In addition, this skill helps a consultant to give presentations in front of the board members and clients. It also helps in explaining technical terms in simple ways.
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