Financial Consulting: what it is and how it works

Financial planning is one of the most important pillars of any organization that seeks good performance. We know that one of the best ways to have an effective planning that brings good results is to seek a financial consultancy.

What is financial consulting?

The word consulting comes from “getting advice from”, so financial consulting is the one that will diagnose financial problems, propose solutions and implement a project in order to leverage the client’s results. The first step to carry out a consultancy is the diagnosis made through data analysis and interviews with those involved.

It is the main point of a consultancy, to which it dedicates more time and resources. We can think of the consultancy as a doctor and patient. You go to the doctor and report your problems, he will investigate and diagnose the cause of the problem and indicate the most appropriate solution. So will the financial consultant.

What is the importance of a financial consultancy?

We know that, in order to achieve success in a business or personal enterprise, a good financial plan is necessary. A professional financial consultancy is so important because it can change the way you manage your finances, optimizing your resources, making better investments and, consequently, increasing profitability.

Furthermore, we can understand the direction in which the company is going, and then change course if necessary or stay as it is, if it is getting satisfactory results. The vast majority of organizations are concerned only with observing the cash flow, but these indicators may not represent whether the company is making a profit.

This is another function of financial consulting, analyzing and understanding the profitability of the company. When a good financial consulting company is hired and the participants of the organization are involved, the investment is recovered and there are improvements in the results obtained.Financial consultancy can be either business or personal and can be applied in large and small companies.

The areas of activity of the corporate financial consultant are:

Economic and financial diagnosis: the objective is to show the entrepreneur what happened in the past of the company, analyzing cost, profit and cash flow;
Financial Planning: seeks to plan the future of the company according to the strategies and sales forecasts defined;
Financial Management: seeks improvements in day-to-day management through tools and analysis of financial indicators;
Analysis and Management of Costs: analyzes how the costs of the organization behave, in order to identify, correct inefficiencies and improve management.
Price Formation: identifies the best selling price of the product, considering the costs, contribution margin and the market;
Company Evaluation (Valuation): is a study that aims to define the financial value of a company, analyzing its ability to generate future cash;
Economic-Financial Feasibility Analysis: analyzes risks of new investments according to scenarios and expected returns;
Financial Audit: seeks to review financial statements, the financial system, records, transitions and operations of an entity.

Personal financial consulting Aims to improve financial organization, investment strategy and change personal habits.

The areas of expertise of the financial consultant for individuals are:

Financial coaching: it is a process that helps the client to achieve their personal financial ambitions, seeking reflections on consumption and its consequences;
Budget control: aims to support the person dominate their domestic budget, control and optimize their spending;
Debt management: aims to make people pay off their debts, seeking to solve problems caused by these debts through an assertive planning;
Family financial management: seeks to manage the income and assets of a family from the management of cash, insurance, educational planning, accounting, among others;
Investment Planning: offers support so that the person knows which are the best options to invest the money at the time, and thus get return in the future;
Retirement Planning: seeks to assess and plan complementary ways to ensure the future financial peace of the client, analyzing what can be done now.

Profile of a financial advisor

There are two types of consultant: the external consultant and the internal consultant. In the following, we will present the characteristics of each one.

External financial advisor:

You are a person who does not hold a position in the company.