The History and Role of a Financial Consultant

The History and Role of a Financial ConsultantThe History and Role of a Financial ConsultantFinancial consultant is a somewhat bygone title thats been replaced by financial advisorat mostfinancial services firms. The job used to be known colloquially among the general public as a brokerorstockbroker and the more formaljob titleusedby mostsecurities brokerage firms welches account executive or registered representative. The position has also been known as an account executive, registered representative, and financial consultant. Details, Responsibilities, and Specialization Back in the days when financial consultants were commonly found in financial services firms, theirjob duties were similar to what they are today. All thats really changed is the title. Financial consultantscounsel clients on investment opportunities and this requires staying up to the minute with fluctuations in the market. They have to be excellent salespersons, selling themselves, their firms, and their inves tment ideas. Some financial consultants serve only individuals while others serve only businesses such as retail chains or institutions. Compensation Packages Compensation is typically by commission, but some financial consultants also earn salaries and are additionally compensated through bonus programs and profit sharing. Overall, pay can range from as little as $36,111 a year for those who are just starting out and havent yet established a significant client base to upward of $161,401 a year for more experienced consultants. As in most professions, compensation tends to increase with the size and stability of the firm with average compensation falling in the neighborhood of about $57,000 across all firms. The job requires dedication and a significant time commitment. Most financial consultantswork in excess of 50 hours a week and working 80 hours a week is not uncommon. A Little History Most leading securities brokerage firms had launchedwhat today would be called a rebra nding of this position by the 1980s. They sought to upgrade its reputation and the title financial consultant was a popular choice at many firms. The goal was to replace the old image of the transaction-driven salesperson with a new one of a highly-trained financial professional who offered valuable investment advice and counsel to clients. Financial advisor started gaining in popularity by the early 1990s as yet another rebranding exercise. Many firms believed that this title conveyed the image that they wanted to project even more so than financial consultant. It seemed to be an obvious evolution given that the advisory role was a key part of the consultant image. Merrill Lynch Comes on Board Interestingly, retail securities brokerage industry leader Merrill Lynchwas the last of the major firms to make this change. Its compliance departmentwas very powerful and very cautious back in those days. Merrill Lynch feared that using the title financial advisor could have severe legal and regulatory ramifications by implying that the holders of that title would be subject to more stringent fiduciary standards. The looser suitability standardtraditionally guided the actions of brokers, account executives, and registered representatives. Indeed, various business and financial publications such as The Wall Street Journal, Barrons, and Forbesregularly editorialized that the financial advisor title carried such an implication. The media called for a fiduciary standard to be imposed upon its holders. As it turned out, Merrills fears turned out to be unfounded, and it eventually renamed its financial consultants as financial advisors. The Chartered Financial Consultant (ChFC) designation is a credential forfinancial planners.