Reprint From
The Bond Buyer

The Technical Consultant’s Growing Importance In the Complex World of Public Finance
By Stanley P. Stone

Asa result of the many intricate financial structures and complex regulations that have evolved during the past two decades in public finance, demand has grown dramatically in the industry for professionals with strong technical skills.

Today, the structuring of tax-exempt financing often requires specialists with sound mathematical and computer skills as well as solid investment barking expertise. At many municipal investment barking and financial advisory firms, the technical work is done exclusively by in-house personnel who have been hired primarily for that purpose.

At other barking and advisory firms, some or all of the technical work is subcontracted to outside technical consultants. Depending on the size of the public finance department and its client base, one approach may be preferable to the other.

The purpose of this article is to elaborate on the rationale for hiring technical consultants, to review what qualities to look for in such individuals and to provide guidelines for best utilizing their talents and capabilities.

Reduced Operating Costs

The cost of maintaining a full-service public finance department can be substantial – a fact that is particularly important in today’s cost-sensitive business environment. Moreover, the use of in-house personnel for complex computer modeling, research or other intricate technical work often represents a significant opportunity cost to many public finance departments.

This is due to the numerous hours which must be devoted to accomplishing these tasks, thus requiring substantial professional time be taken away from other areas of the business. By retaining a technical consultant to prepare the intricate analytical reports as the need arises, the department manager does not need to hire full-time technicians, and can more effectively utilize his or her staff on other professional assignments.

Additionally, in those instances where the underwriter or advisor can pass along the technical consultant’s fee as a cost of issuing the securities, the services of the technical consultant are obtained at no cost to them.

Improved Reporting

In an attempt to contain costs while providing their barkers with technical support, some public finance managers have purchased commercial software and have hired relatively inexperienced individuals to “run the numbers” for their financings. While this approach may be adequate to complete many of the less intricate tasks, it is often inadequate for accomplishing many of the more complex public finance transactions.

This is because the computer software used to structure complex financings relies heavily on input from individuals with good banking experience. Unfortunately, at many firms, the banker assigned to run the numbers is often inexperienced and seldom has colleagues he can turn to for detailed training and advice. Moreover, by the time a promising young professional manages to acquire the expertise needed to produce a first-rate analysis, he is often assigned away from many of his responsibilities in the quantitative area to work instead on other aspects of the business.

Consequently, the detailed analytical work at many public finance departments is frequently prepared by individuals with little or no seasoning, thereby impeding the efforts of the other professionals in those departments. The technical consultant, who earns his livelihood by preparing complex technical reports, can often prepare such reports with greater accuracy and in far less time than it takes his client.

Also, because of his broad experience in analyzing and structuring complex transactions for bankers and advisors, the technical consultant can often contribute valuable knowledge, state-of-the-art technology, and insight to the structuring of most complex financings – or responses to requests for proposals.

Thus, in many instances, the technical consultant can enhance the accuracy and completeness of an intricate analysis while relieving his client of having to devote many hours to reinventing the wheel to solve a particularly complex problem – or having to share the transaction with another firm that has the requisite in-house technical capability.

Backup and Support

In addition to providing his expertise, the technical consultant also provides the underwriter or financial advisor with backup and emergency support in the event of a sudden and unexpected increase in workload, or the unavailability of in-house people due to staff reductions, illness, vacations, and leaves.

Thus, the underwriter or financial advisor can enjoy a more secure relationship with his or her municipal clients knowing that they can draw upon the resources of an experienced technical consultant to augment the capabilities of the existing staff. Perhaps the most important qualification for a technical consultant in public finance is his professional experience as an investment banker or financial advisor.

Firms seeking to retain a technical consultant should require that any prospective technical consultancy firm have on its staff one or more individuals with at least 10 years experience as a banker or advisor to municipalities.

This will help ensure that the consultant possesses the experience and maturity to deal effectively not only with the financial aspects of any assignment – including the rating, distribution, and sale of tax-exempt securities – but also with the political realities common to most municipal transactions.

Record of Service

Another important credential of a technical consultant is his record of service as a consultant to underwriters and financial advisors. How long has he been in business? On what types of transactions has he been engaged? In how many successful deals has he participated? How many references is he willing to provide?

It should be noted that some technical consultancy firms do not provide complete listings of their clients or the financings for which they have been retained. This is because some or all of their clients have retained them on the condition that they will not make known their relationship with these clients.

To honor this promise of confidentiality, the technical consultant cannot reveal the names of his clients or the transactions he has worked on. Accordingly, direct contact with references provided by a technical consultant may furnish the best indication of his record of service.


Any technical consultant must be responsive to his clients and provide them with thorough, accurate service in a timely fashion. The consultant should be reachable on short notice and be able to respond to requests as they arise, for the circumstances surrounding a transaction may change suddenly, particularly during volatile markets.

While this may seem elementary or intuitive, the speed with which the consultant responds to a clients requests is crucial to his relationship with that client.

The client cannot work effectively unless he is completely confident that his technical consultant is readily available and has the necessary resources – including support staff- to respond to his needs no less quickly than the client could if he had the in-house personnel to respond to the same request. When selecting a technical consultant, a visit to his offices is highly recommended to ensure that he does have the resources readily available to provide the requisite services.

Conflicts of Interest

From time to time, a technical consultant may be asked by more than one client to work on the same proposal. Thus, it is important for the client to know the technical consultants policy when situations like this arise, particularly if the consultant also serves other underwriters and financial advisors in the same geographic area.

The client also should have a clear understanding with the technical consultant as to how the consultant intends to protect the clients proprietary ideas, information, and work product.

Best Utilization

The single best way to utilize the services of a technical consultant is to treat him as if he was a member of the department and integrate him fully into each transaction for which he is retained.

It is important to bring him into each transaction at an early stage, provide him with sufficient background information, consult with him frequently and keep him fully informed as to the progress of each transaction by providing him with copies of all relevant documents and time schedules.

It is also important to provide the consultant with sufficient time to complete his work thoroughly. All too frequently clients underestimate the time required by the consultant to complete his work, often expecting him to prepare solutions to complex financings on very short notice. By affording the technical consultant sufficient time in which to analyze each request and complete the requisite analysis, the consultant is better able to provide each client with the uppermost level of his professional service.


Public finance managers seeking to reduce costs and increase efficiency can do both by periodically retaining the services of a technical consultant to prepare their intricate analytical reports.

The consultant, who is experienced in preparing such reports, can often prepare them more accurately, completely, and efficiently than his client – and relieved of the necessity of having to prepare these reports, the client can concentrate his time and resources on other, more profitable, aspects of the business.

The technical consultant also provides valuable backup support in the event of work overloads or loss of personnel. Professional experience, record of service, and responsiveness to requests are the essential qualities to look for in selecting a technical consultant.

Clients can make the best use of the consultant by integrating him fully into each assignment, keeping him informed as to the progress of each transaction, and providing him with sufficient time to complete each task thoroughly.