Financial consulting is a distinct branch of services within the accounting and planning world. Service providers typically work with businesses, non-profit organizations, and government agencies to help them think in the long term about how to invest their financial resources. Individuals also sometimes avail themselves of financial consulting services.
What makes financial consulting special versus the services that an accountant, a bookkeeper, or even a wealth manager might provide? Learn about four distinguishing features of the field.
Financial consultants are generally focused on business practices as opposed to the broader planning work that's done in nearby fields. In particular, they're very good at assessing the financial impact of business plans.
A company that's looking for unbiased advice about the various problems a business plan might run into may engage a financial consultant to help them break the issues down into their constituent pieces. Working from the information they've gained, the business and the consultant will then refine the plan accordingly.
Much of the work of a financial consulting firm operates at a fairly high vantage point. They often look at issues related to government regulations and industry trends, especially on a long timeline. If you're worried about what the regulatory and industry environments might be like 5 years down the road, a consultant can advise you. They'll help you try to envision what the future holds and build your plans around specific scenarios.
Another distinguishing feature of financial consulting services is risk assessment. Rather than just looking at how money might go into a project, a consultant will help you consider what scenarios might blow up along the way.
They can help you differentiate mainstream risks from tail risks so you can be prepared for common scenarios and low-probability ones that could blow your business off course. For example, a company with import-export exposure in East Asia may need to have plans to cover low-probability scenarios involving natural disasters, wars, social upheaval, and regime changes. These aren't easy to predict, but you need to stay out in front of them because they can crater your entire business if handled poorly.
With all of these concerns in mind, the goal is to mitigate risks by keeping the company as healthy as possible. This may include directing clients toward investment vehicles to hedge their risks. It may also involve some degree of restructuring of a company's investment portfolio to make it more resilient to economic and social shocks.
For more information, reach out to a local financial consulting service.