What to Expect from Your Investment Consultant: Service Models
While there are multiple ways investment consulting firms can be organized, two broad categories encompass the majority of service models:
- Lead consultant – A lead consultant approach typically revolves around a central point of contact at the firm. The lead consultant will be present for live meetings, calls, and emails.
- Team – A team approach creates multiple points of contact, typically organized by functional specialty. The firm personnel present at meetings may vary depending on the nature of the discussion.
The two service models have relative strengths and weaknesses. The lead consultant format brings simplicity to the relationship but also contains risk if the lead advisor is less than responsive or leaves the firm. A team approach requires effort to connect with the proper person but also provides more depth and accessibility.
Investment consultants can provide additional value beyond managing portfolios. Here are two categories of additional services to consider when evaluating an investment consultant:
- Understanding of nonprofits – Firms that have experience with and a focus on serving nonprofit organizations will have a better understanding of these organizations. These investment consultants are better equipped to grasp a nonprofit’s mission and values along with the purpose of the investment assets. Furthermore, the consultants are likely to appreciate their fiduciary responsibility.
- Donor interaction – Investment consultants willing to have direct interaction with major donors can be invaluable in closing large gifts and maintaining existing donor relationships. Consulting firms may also provide donor interaction tools explaining the organization’s investment program and guiding choice of investments (when the donor has influence over invested assets).
These additional services may seem more “soft” than “hard” in nature. A consultant’s assistance in securing a major donation can effectively pay the consultant’s fees for a number of years. Ultimately, donors are more likely to direct gifts to organizations that display fiscal responsibility.
In the fourth and final post of the series, we will discuss key types of investment reports nonprofits should receive and different investment consulting fee arrangements.
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About the Author
Winters Richwine is Chief Operating Officer and a Principal of Cornerstone Management. In this role, he develops and implements firm initiatives regarding process and efficiency and supports the portfolio management and charitable trust tax teams.Sign up for e-news and alerts