Advisory vs. Consultancy: What's the Difference?
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Advisers and consultants may seem similar, but they often have different roles and can benefit companies in different ways. Both types of professionals are responsible for providing expertise to businesses, but their goals and project types can vary. If you're considering hiring someone to provide expert advice to your business, it's important to understand the difference between advisers and consultants so that you can make the best possible decision for your company. In this article, we explain what advisory and consultancy are and explore the key differences between the two.
What is advising?
Advising is the practice of assisting a client in improving their systems and processes over time. Advisers often work with the same company long term, and they may take on leadership roles within the company. Sometimes, companies think of advisers as mentors because they are usually very experienced in their industries. Advisers typically aim to give their clients direction to help them achieve their major goals and overarching purpose. Small businesses or startups may find hiring an adviser especially useful to gain advice from an expert and get help creating a strategy for long-term success.
Advisers can specialize in many different industries, and common advisory jobs include financial advising, business advising and IT advising. Some of the most typical responsibilities of advisers can include evaluating company operations and market research, monitoring accounts, preparing reports and identifying potential opportunities. Advisers may also work to design new strategies and help companies implement them.
What is consulting?
Consulting is the practice of providing a business or group of people with advice and expertise on a topic in exchange for payment. Often, clients present a specific problem to a consultant, and then the consultant works to help solve the problem. Hiring consultants can be beneficial to businesses, especially if they can contribute skills or expertise that the business does not have internally. Consultants may also be useful for businesses facing specific challenges, such as social media engagement or resource management.
Consultants can come from a variety of backgrounds, but most have at least a bachelor's degree. Consultants are usually equipped with skills in problem-solving, creativity, communication and more so that they can give advice regarding companies' projects and other issues. Many consultants are self-employed, but they can also work for consulting firms. Some common areas of consulting include business consulting, healthcare consulting, human resources consulting and IT consulting.
Read more: What Is a Consultant?
Advisory vs. consultancy
Advisers and consultants can provide expert advice to businesses, and they both use similar skills, like communication, problem-solving and management. As a result, people sometimes use the terms "advisory" and "consultancy" interchangeably. However, there are a few important differences between the two:
Duration of working with companies
One key difference between advising and consulting is the length of time the professional works with the client. Typically, advisers work with their clients over long periods of time, while consultants tend to work with their clients on a short-term basis.
Because advisers usually work with companies for more extended periods of time, they often focus on a company's long-term goals and strategies as well as high-level issues. Consultants, however, typically concentrate on short-term projects or specific issues and then leave the company once they have resolved the problem.
Types of projects
Advisers and consultants also specialize in different types of projects. Advisers typically work on ongoing, long-term projects and predict problems before they come up. As a result, these professionals often influence a company's long-term success.
In comparison, consultants usually work on specific projects or problems and offer their specialized expertise to create solutions. For example, your company could hire an IT consultant to provide assistance as you implement a new IT system.
Therefore, if your company is facing a specific problem, hiring a consultant might be the best choice. However, if you want advice on a long-term project or overarching goal, then hiring an adviser could be a better option for your company.
Advisers and consultants can both work for businesses either internally or externally, but their work environments often differ. Advisers tend to work collaboratively with company employees—potentially even taking on leadership roles—to develop strategies and evaluate the company over time. Because of this, advisers usually maintain an ongoing relationship with their clients.
Consultants, however, typically work independently, although they can also work as employees for consulting firms. Consultants meet with companies frequently over short periods of time to come up with solutions to problems. Rather than maintaining an ongoing relationship with clients, consultants may choose to work with a company for only a single project.
Consultants and advisers also differ in their overall goals. A major difference between these two types of professionals is the way that they approach problems. Often, advisers aim to spot or define problems, while consultants aim to create specific solutions to problems.
Furthermore, advisers usually stay with the same company long term and advise on broad problems they find within the company over time. Advisers may also focus more on strategies than consultants do because they want to help companies create long-term plans for success.
In comparison, the goal of consultants is to resolve specific problems or help companies complete smaller projects, and they typically end their partnership with companies once they meet these objectives.
Relationship with clients
Another difference between consultants and advisers is the formality of their relationships with clients. Typically, when they need consulting services, companies hire professional consultants who consult for a living, so the relationship between the company and the consultant is often relatively formal and professional.
Comparatively, the relationship between companies and advisers can be friendlier and less formal. Your company can hire a professional adviser, but your adviser could also be a mentor, an industry expert or a peer you call when you need guidance. The type of relationship that is best for your company depends on your company culture and specific goals.
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