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How to choose between a Fee vs Commission-based Finance Consultant

Different financial consultancies may offer different payment options for their services. Here is what you need to be aware of when choosing between them.

Finance consulting

Financial consulting is the process of advising businesses to optimise the management of their finances by analysing their assets, debts, income, and expenses. The objective of financial consulting is to drive profits, increase shareholder value, and improve capital efficiency.

A financial consultant will achieve this by offering services in the following areas:

Financial analysis

Budgeting and forecasting

Financial planning

Funding and capital structure

Cash flow management

Cost management

Risk management

Financial compliance

Financial training

Financial consultants may offer either a fee-based or commission-based structure as payment options for their services. The following information will be useful to organisations when choosing between them.

Choosing between a Fee vs Commission-based Finance Consultant

Fee-based consultant

A fee-based consultant offers services based on a fixed fee. This is usually based on the percentage of assets under management (AUM) or they may charge an hourly rate, offer a retainer plan, or suggest a subscription model.

One important detail about fee-based financial consultants is that they have a fiduciary duty to their clients. This means that they are bound by law to put their client’s interests first.

If your business has a consistent need for financial consulting services, a fee-based consultant may be the better choice for you.

Commission-based consultant

A commission-based consultant gets paid through commissions based on either financial transactions or products. While they may seem like the cheaper option between the two, properly verifying them is vital.

Why? Unlike fee-based consultants, commission-based consultants have no fiduciary duty to their clients. This is usually because commission-based consultants are employed at major firms and their primary duty is to their employer. There may be potential for them to lead you astray in your financial decisions.

A commission-based consultant may be the better choice if your business is looking for consultancy services that do not require consistent advisory.

Set yourself up for success with Kronos Group’s finance consultancy services

Kronos Group is a collective of consultancy experts that offer consultancy services related to procurement, finance, project management, and spend optimisation. We have lent our expertise to businesses all over the world with our offices based in Belgium, France, and Italy.

Kronos Group’s finance consulting services include:

Finance advisory

Finance transformation

Finance training

Finance outsourcing

Operations consulting

If you are looking for guidance in organising your finance functions to support long-term business growth, contact our team of expert finance consultants and set yourself up for success.

How to choose the ideal finance consultant for you

While there is no definitive answer for who is better between fee-based and commission-based consultants, it is generally a good idea to consider your portfolio when deciding on which type of consultant to go for.

If your portfolio is relatively small and you do not require much active management of your financial assets, a commission-based consultant may be the most cost-effective approach for you.

If you have an extensive portfolio of assets that require active management and monitoring, investing in a fee-based consultant can ensure that you get the best return on investment.

With this information in mind, you may be ready to choose your financial consultant. We have put together an infographic on the “Best Practices for Choosing a Finance Consultant”. You can access the infographic by clicking the button below.