An investment consultant plays an important role for the financial planning community. An investment consultant helps customers develop and put into place investment plans and build and maintain their individual portfolios. As with all other financial consultants, investment consultants work closely with their client’s investments and monitor them as their goals change over time to accordingly adjust their holdings. But how do they do this?
Investment consultants are registered investment consultants with the SEC or Securities and Exchange Commission. An SSI is required to file annual disclosure reports with the Commission that contain certain financial information including their name, address, place of employment and the nature of their business. Also included in these reports is a summary of the firm’s activities for the year that ended on the date of the report. The summary provides a detailed account of the performance of investment consultants, the investments they advised and the returns they received. This information allows the Commission to track record of the consultant’s performance. The Commission makes these reports available to the public through its web site or can be obtained directly from the Commission’s web site.
There are also third party specialists in the financial services world who are not investment consultants. These include Certified Financial Planner (CFP) and Brokerage firms. A CFP is a person who has completed the education requirements to become a financial planner and is licensed by the state to provide financial advice to individuals. Brokers, on the other hand, are licensed by the state to engage in the profession of brokerage. In addition to these professionals, there are many insurance agents, estate planners, and mortgage brokers who also hold financial consulting licenses.
All investment consultants and managers must abide by the rules and regulations of the Securities and Exchange Commission (SEC). This is where the rules and laws regarding investment consultants and management are written. For instance, it is illegal for an advisor to trade in his own accounts. Also, an advisor cannot give legal or financial advice in any way.
The only qualifications required of an investment consultant are a bachelor’s degree or a master’s degree in business, finance, or accounting from an accredited college. Some states do require additional licenses, but these may vary from state to state. Those who do not have a bachelor’s degree can still become licensed as an investment consultants by completing the FSM Education Program. The FSM Education Program is accredited by the National Association of Boards of Certified Financial Advisors (NABCF) and is designed to prepare students for the licensing exam.
The United States Department of Labor does not currently regulate investment consultants. There are currently twelve states and the District of Columbia that have varied laws concerning investment consultants. Many states allow investment consultants to choose their own employers, whereas many states limit this choice to firms with which the consultants have already signed contracts. This can make selecting the best investment consultants in the United States a difficult task for those interested in becoming an investment consultant.