What Exactly is an Investment Consultant?

Investment Consultant Working with clients

Investment Consultant

The title of this article poses an interesting question – one that we hear frequently, if somewhat sheepishly, from investors and fiduciaries. Usually the question isn’t an issue in the first couple of meetings; we of course explain in initial meetings what we do as investment consultants, and most people nod that they understand the nature of our work. But most people don’t understand at first; only after several meetings when some trust has been established will they ask “how is a consultant different from a stockbroker?”

Three Critical Questions

So in this time and space, let us address what we do as investment consultants; and let’s do it by answering 3 questions:

  1.  What’s our job?
  2.  What is our agenda?
  3.  What’s our product?

An Investment Consultant’s Job

Simply put an investment consultant provides unbiased analysis and advice as to the structure, implementation and monitoring of a client’s investment portfolio. A consultant doesn’t provide “products” or “funds” or “programs”.  Consultants provide advice and guidance.

This is inherently different from the approach which most investors – individual or fiduciary – have followed, an approach which has typically been product driven by product salespeople. The keenest examples of this are the platitudes which are offered by brokers and reps in response to questions which really demand critical thinking and specific application to the client’s situation.

We’ve all heard the response, “Our firm’s research department predicts a high probability of a soft-landing for the economy; we don’t think the Fed will tighten anymore, and as the economy slows that will reduce interest rates which will be good for stocks and bond. We recommend concentrating on (fill in the blank for the product of the day or this winning Morningstar fund).”

A true investment consultant will never say that for two reasons: First, it represents a press-release mentality crafted so everyone can live with it, but it is totally unrelated to the specific goals of any one client; and second, it presumes that savers should invest because the next market move is favorable. “We’re bullish on… this market or that market” is the worst thing in the world to say to anyone – a saver or an investor.

The reality is that as long as you, your heirs, your beneficiaries, your constituents, etc. are breathing, you are an investor now and should remain so until the last of the above is no longer breathing.

True investment consultants would offer the advice “being a saver, you have built up a substantial nest egg. But you are an investor and need to be a diligent investor to at least beat the ravages of inflation if not to actually accomplish something much bigger, and you should always invest pursuant to a long-term financial plan reflecting that fact.” The market’s next move really doesn’t matter.

What’s Our Agenda?

Our Job is the easiest to describe: to provide advice and counsel to investors – individual and fiduciary – as though they will always be investors, because they should always be investors. Our agenda is another matter. We all set agendas, either consciously or unconsciously. Human nature will push all of us toward setting an agenda which is emotionally comfortable. That’s not the same as the one which does the investor the most good. Our agenda must be the one that helps the client accomplish their stated goals; in a sense this involves modifying behavior somewhat.

The agenda must become:

  1. Defining conservative and aggressive properly in the context of inflation (just getting back the dollars you started with is not success),
  2. Making investment decisions irrespective of market highs and lows (trying to invest at “the right time” inevitably leads to dishearteningly poor performance), and c) selecting, hiring or firing investment managers based on better criteria than the manager’s enjoyment of golf, proximity to your neighborhood, or friendship with your accountant or attorney.

In short, setting the agenda becomes an exercise in framing the questions properly and objectively before we look for the answers.

What’s Our Product?

Our product isn’t mutual funds, private managers, equities, bonds, this computer program or that. In fact our product isn’t a product at all. Our “product” is our professional skills, experience and dedication to always doing what’s right for the client, our faith in the future and, certainly not least, our integrity.

Concluding Remarks From An Investment Consultant

The next time you get that call from that stockbroker with that great opportunity to invest in that great company, remember what his job, agenda and product are:

  1.  To earn a living by selling commissioned investment products rather than professional advice and counsel,
  2.  Will whip through something in several minutes which should take more than several hours to put together correctly, and
  3.  To sell you something the market research department has determined a lot of people want to buy.

As consultants, on the other hand, we have chosen to earn our livings by providing our experience, dedication, commitment, faith and integrity to our clients. We are driven by a hierarchy of objective criteria which must be followed if the client’s interests are to be served. Although time consuming and totally unrelated to what a research department says “America wants to buy,” it is successful in identifying what will best serve the client.

That is our commitment. It sees us through the hard work necessary to do the job right and invariably lets us look back on a career serving others and take pride in a job well done. Click here to learn more about how we offer objective, fee-only financial advice.

Understanding Annuities

Financial Guide


Recent Posts

Ready to Talk?

Let’s schedule a time to learn about your needs and retirement plans.

Ready to Talk?

Let’s schedule a time to learn about your needs and retirement plans.


Download our

Financial Planning Guides

Understanding Annuities

We are committed to helping families make wise decisions among all the competing priorities they face.

Saving for College

The sooner you start saving for college, the better positioned you will be to greet that big day with enthusiasm, not dread.

Preparing for Retirement

Retirement should be as active and rewarding, and you shouldn’t have to worry about your situation.