Investment consulting refers to providing professional advice to investors or companies regarding their investment strategies and decisions. It covers a wide range of services, including asset allocation suggestion, portfolio optimization, risk management, performance evaluation etc. The investment consulting industry has developed rapidly in recent years, with many consulting firms emerging. This article will provide an overview of what is investment consulting, including the definition, services, business models and career development.
definition and main services of investment consulting firms
Investment consulting firms are professional advisory institutions that provide personalized investment solutions to institutional clients like pension funds, endowments, sovereign wealth funds as well as high net worth individuals. Their main services include: strategic asset allocation design, manager selection, portfolio construction, performance measurement, risk management and investor education. The goal is to help clients achieve optimal risk-adjusted returns that match their investment objectives.
three main business models of investment consulting industry
There are generally three types of business models in the investment consulting industry: 1. Independent investment consultants that only provide advisory services without managing money; 2. Affiliated consulting arms of big financial institutions like banks and brokerage firms; 3. Bundled providers that offer both investment advisory and money management services. The independent model focuses the most on customization while the bundled model provides a one-stop solution.
career and remuneration in investment consulting sector
The major positions in investment consulting include analyst, consultant, principal and partner. The career path usually starts from analyst after undergraduate studies, gets promoted to consultant after 2-3 years, then to principal and partner levels. The salary ranges from $80k+ for junior roles to several millions for C-suite leaders in top consulting firms. Bonus constitutes a major part of the compensation.
In conclusion, investment consulting refers to providing professional advisory services on investing activities, with goals like optimizing asset allocation and improving portfolio returns. It has become an important supporting industry for the asset management sector.