What Does an Investment Consultant Do?

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  • Written By: A. Leverkuhn
  • Edited By: Andrew Jones
  • Last Modified Date: 27 November 2019
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Investment consultants are professionals with specialized knowledge about financial markets and investment opportunities. Their role is to help clients to invest money, whether these clients are individuals with wealth, or companies looking to reinvest profits. Investment consulting helps investors to form strategies and to be informed about the risks that they are taking with their money.

For those who are employing investment consultants and services, the question of what these consultants do is critical. Clients want to understand how these professionals earn their money. The answer is in the complexity of markets and the long-term management that it takes to profit from many kinds of modern investments.

The job of an investment consultant is fundamentally different from the job of a broker. A broker is a professional who simply executes trades and investment transactions for a client. A broker may act on client requests, whether these are for simple stock purchases, option purchases, or more exotic investment transactions. A consultant does more than just help with transactions.

The investment consultant is generally responsible for informing the client about any risks of a particular investment as opposed to the potential payouts. The consultant will help a client to compare the risks of diverse investment opportunities. Consultants may help clients diversify their holdings in order to minimize risk.


In helping clients with investments, an investment consultant often refers to the long term. These professionals use specified periods of time to help individual clients craft investment plans that have the best chance of paying off, regardless of market conditions or volatility. The consultant can also help inform a client about the tax burden of any particular investment, in order to help that clients use investment opportunities that will minimize tax burden and maximize the net returns or gains of an investment.

Some investors question whether it is necessary to employ an investment consultant. Different investors have their own philosophies about where they are putting their money. Generally, an investor will look at the fees or commissions requested by the consultant, and balance this against the perceived value of the assistance that professional money managers can provide. For consultants who are hired by an investor, their job becomes one of accountability and responsibility, where they have a duty to help maximize the gains of their client, and not just to use the incoming money for their own purposes.


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Post 3

@Sunshine31 - I think that even if you hire an investment consultant you should stay on top of the market and keep an eye on your money because if you don’t the investment consultant might make mistakes that you will regret later.

They might not pull out of a stock in time and you will face larger than average losses. That is what happened to a friend of mine and she is now looking for another investment consultant. Just because someone else is managing your money doesn't mean that you take your eye off the ball.

Post 2

@Comfyshoes - I know what you are saying, but you probably get better returns when using an investment consultant that has been in the business for a while. If you get a great investment consultant they could be worth the weight in gold.

I think that the best way to find someone that you can trust is to ask your friends and family for a referral because this way you know that the person has a track record and have made money in the past.

Some people like going with financial planners that are paid by the hour because they feel that since they don’t have any financial gains from any of the products that they recommend they will be more forthcoming and some people prefer this type of arrangement.

Post 1

I think that some people like doing their own investments and don’t necessarily need investment consultants. I know that that could be a lot of work and you really have to know what you are doing because some investments can be difficult to understand.

I think that that is where people get into trouble because they try to invest in things that they don’t understand and lose a lot of money. I really like handling my own investments because I only invest in real estate and mutual funds that I understand.

I try to stay away from exotic investments that are really trendy like gold. I don’t understand commodities so I stay away. I also know when it is time to sell and when it is time to buy more of an investment. I try to follow my instincts when investing.

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