Which Financial Professional Can You Give You The Best Financial Advice For Your Money?

People ask this question all the time. Which is better for me? Is a Financial coach better for me? A financial planner, or financial advisor? What is the difference between a Financial Coach vs Financial Advisor? What is the difference between a Financial Coach vs Financial Planner?

KEY POINTS

The key difference between a financial coach vs financial planner, and a financial coach vs advisor – is the problem they each are trying to help you solve. Here are the three most common financial consultants:

• A Financial Advisor typically manages your investment portfolio for you. They may sell you annuities or other insurance policies. Typically a Financial Advisor is investment advice focused, earning a commission and/or fee’s. It is common for a financial advisor to have a minimum asset level for a new client, and will charge a fee based on client assets under management or a percentage of assets.
• A Financial Planner will understand what your financial goals are, figure out where you are and the best way for you to get to where you want to go. A financial planner can assist in the creation of a comprehensive retirement plan, and assist in putting it into action.
• The key focus of a Financial Coach, or a Money Coach, is the education to empower you to make financial decisions on your own. Financial coaching focuses on behaviors, encouraging you to become your own best advocate for your financial well-being.

Choosing between a financial coach vs financial advisor, and a financial planner may seem daunting at first.  Don’t be intimidated, there is no such thing as the perfect answer when it comes to personal finances. And often times, people won’t choose between a financial coach vs a financial advisor – they will hire both!

In brief, a personal financial coach is constantly focused on you: your education and decision-making process, as well as removing the roadblocks that are preventing you from achieving your financial objectives.

SUMMARY

Managing our daily finances is difficult, yet we never learn this in school.  And rarely are even taught by our parents, and instead seek our personal finance education from finance professionals.

A Financial Coach gives practical advice on a variety of finance and investment-related concerns and actions. A coach can help you with the day-to-day money decisions that many people struggle with. Financial coaches offer basic financial consultations on topics such as bill payment, credit card debt relief, saving, and retirement assets.  A coach will work with their client to identify and change the financial habits and limiting money stress that are limiting their ability to create wealth. Their objective is to guide the client with his or her total long-term wealth planning strategies.

Many view a Financial Coach as a cost-effective alternative to a financial advisor or financial planner. 

There is no such thing as a right answer when it comes to finances. Financial education should come from unbiased sources, and in my view – financial advice is best when not mixed with investment product sales. 

The Difficulties Of Managing Your Own Investments, Money and Finances

For most people, managing their finances is a difficult task.  For many, it’s also not the most exciting subject.  However, there are many hurdles you’ll face on a daily basis if you want to stay on track to meet your financial goals. And they’re a formidable foe on their own.

Seeking help may seem to be the best approach towards getting your finances back on the right track.  But, who should you turn to for help in organizing, managing, and planning your finances? 

Do I Need a Financial Advisor?

Study after study shows Americans are falling behind financially and with their retirement savings.  These figures would not exist if standard financial advice was adequate, but unfortunately they do. 

• Only 36% think their retirement savings are on track, according to the Federal Reserve.
• So 64% of Americans are just flat out not prepared for retirement.

EVEN WORSE – 48% DON’T CARE!!!

This goes back for over 30 years, when in 1992 half of Americans didn’t have enough saved for retirement

And continues today… 

“nearly half of employees are concerned with their household’s financial wellbeing”

In a recent study by the  Employment Benefit Research Institute (EBRI)

Financial Literacy

• Only 34 percent of respondents could answer at least four of five basic financial literacy questions. 
• This drop in scores appeared most pronounced among younger Americans. 
• Test your knowledge on topics such as mortgages, interest rates, inflation and levels of risk tolerance with the Financial Literacy Quiz below.

Financial Literacy Quiz

Which is Better For Me? A Financial Coach, Financial Planner, or Financial Coach

The terms “financial coach” vs “financial advisor” and “financial planner” are often used interchangeably.  Let me help explain the key differences, so that you can decide which makes the most sense for you.

What Is The Difference Between a Financial Coach vs Financial Advisor?

• A Financial Advisor manages the wealth for you, that you’ve already accumulated
• A Financial Coach helps you learn to accumulate wealth AND invest it yourself.
• Many view a Financial Coach as a cost-effective alternative to a financial advisor
• Others feel that a Financial Coach like myself complements the services given by their financial adviser.
• Many use a Financial Coach for an unbiased, second opinion if they are doing their own finances.
• In short, because a financial advisor and a financial coach are so different, they often complement each other rather than be mutually exclusive.

Will A Financial Advisor Help With Budgeting?

Managing our finances is difficult.  Yet we never learn this in school, and rarely are taught by our parents.  So how do we learn how to manage our finances?

Instead of learning about finances, many tend to meet with a financial advisor. Here are the most common issues people tell me that they encounter:

• A financial advisor will not set up a budget or help you get out of debt.
• They are attempting to sell you insurance.  Lots and lots of annuities and insurance.
• If you have a large portfolio, all they are interested in is charging large fees to manage the portfolio for you.
• If you don’t have a large enough portfolio and/or can’t afford an advisor, they don’t even want to meet with you.

So you went to a financial advisor to do the right thing and they either couldn’t help you, didn’t want to help you, or tried to sell you something you didn’t want or need. That can be extremely frustrating. Now don’t get me wrong: I’m a fan of financial advisors. In fact, as I previously stated, I previously owned a financial planning practice myself.

The problem was, I could only take on a limited number of clients per year due to time constraints.  We all only have a certain number of hours in a week.  Oftentimes, I would let the potential client know that they were better served by working with a Financial Coach vs Financial Advisor instead .

So, what’s the difference between a financial coach vs financial advisor vs financial planner?

In the simplest form:

• A Financial Advisor manages your investments for you and may sell you annuities or other insurance policies.  Many times they earn a commission, and manage your portfolio where you give them discretion.  Typically a Financial Advisor is investment and money manager focused.
• A Financial Planner typically looks at your financial situation in reverse of a Financial Advisor.  A good Financial planner will understand what your financial goals are, figure out where you are and the best way for you to get to where you want to go.  Sort of like a “Financial GPS”.  What you want to achieve is what determines which investments they will advise.  The investments are insurance are something a financial planner will offer on a commission based, fee only, or combination approach.  Most financial planners will manage your investment portfolio for you as well.
• A Financial Coach will almost always NOT sell you investments, insurance or any other commission based vehicle.  The key focus of a Financial Coach is the education to empower you to make financial decisions on your own.  As opposed to just handing everything over to them for the advisor to do for you.  

Financial coaching focuses on behaviors, encouraging you to become your own best advocate for your financial well-being.  The way we interact with and our relationship with money is shaped by our actions and the beliefs that underpin them. Personal financial well-being is made up of 80% emotions and behavior and the remaining 20% is the numbers.  Consider it this way: financial coaching lays the groundwork for your finances; financial planning builds on that solid foundation and assists you by demonstrating how to best put your money to work for you.

What Does a Financial Advisor Do?  

As the name implies, a financial adviser is trained and licensed in skills linked to finance, such as establishing specialized investment strategies, money management, and financial planning perhaps. 

Certified financial planners, registered investment advisors, and other financial professionals will be registered and monitored by the securities and exchange commission. These professionals will typically focus on investing. They are well-versed in investment jargon and can help you decide which investment is best for you by providing sound investment advice.

They can also assist in the long-term management of those investments by giving advice on specific investments to buy and/or sell.

What Does a Financial Planner Do?

While Financial Coaches will discuss your long-term financial goals, planners will go over the investments that they believe are suitable for you. Most will focus not just on your money management, but will likely discuss estate planning with you and be fee based. Financial Planners do not aid with educating you on your finances, or help you get started with savings, budgeting or debt repayment.

What Does a Financial Coach Do?

A Financial Coach gives practical advice on a variety of finance and investment-related concerns and actions.  A financial coach will focus on the motivational and behavioral components of your attitude toward your own money mindset, addressing questions like “how to” and “why.” Financial coaching keeps you focused on your objectives and promotes your financial well being while also safeguarding you from common pitfalls.

A financial coach can examine your overall financial life picture to identify where we might focus our efforts in order to make your financial goals a reality.  We can help you with the day-to-day money finances that many people struggle with. A coach can provide financial education for day-to-day spending and assist you in developing healthier money habits.  You can learn the ability to earn, manage, and grow your money.  

Financial coaches offer basic financial guidance on topics such as saving money to start to build wealth, credit card debt relief, building an emergency fund, and retirement investment. Financial planners offer more in-depth advice and may propose and sell financial products, which most (but not all) are licensed to do so.

As a Financial Coach, I Won’t Try to Sell You Anything.

I don’t sell insurance, annuities or make stock recommendations. 

I guess education is the only thing I sell. In fact, I started this company particularly to meet the growing need for financial education among individuals and business owners who want a distinct service to help them manage their own finances.

If we’re a good match, the first thing we’ll do is make a financial action plan together.  Once you have a financial plan in place, we now have something to work with in order to achieve our financial objectives.

Most of my coaching clients want to work with me for a longer period of time after developing a financial action plan because they want someone to assist and guide them along the road.

The first phase is usually the same, and it’s referred to as an introductory meeting. It will take 20-30 minutes to discuss you, your financial situation, and financial goals. I’ll let you know if, and how, I think that I can help you. We will both determine if we’re a good match to work together.

Is a Financial Coach Worth It For Me Now?

Is Financial Coaching Worth it For Everyone? A Financial Coach is invaluable for many people, but is a financial coach worth it for everyone?.  Financial Coaching is definitely not for everyone.  There are a few disadvantages to working with a financial coach. Before you hire a financial coach, consider the following: Choosing the right coach … Continue reading

Does a Financial Advisor Have a Conflict of Interest?

Certainly, providing financial advice while also selling financial/investment products (life insurance, ETFs, annuities, mutual funds) can be a conflict of interest. 

Have you ever wondered why your advisor’s plan only includes investments that he or she can sell you? It’s not an accident. Financial education should come from unbiased sources, and financial advice should not be mixed with investment product sales. It’s a developing trend that I hope has peaked.

But a good, ethical financial advisor or financial planner can absolutely be unbiased as well.  You can go to 10 Financial advisors, and get ten different opinions.  So which one is right?  None, and all of them.  That’s because there is no such thing as a right answer when it comes to our day to day finances.  This is why it is so important for you to have a foundation of knowledge.  To help you better understand your options.  To help you make good financial decisions.  And not worry if they were the best or right decision.

A financial planner can assist in the creation of a comprehensive  financial plan,  and assist in putting it into action. They take an active role in ensuring that their clients.  It is necessary to have a  plan that makes sense for your financial situation, stage of life situation and personality.  They will work with clients to develop goals, create a plan, and implement the plan. 

Financial coaches are perfect for those who operate better with a team or who want more external accountability to achieve their goals than others.

The main distinction between a financial coach vs financial advisor is the problem they are trying to solve.

A Financial Coach will work with their client to identify and change the financial habits and money goals that are limiting their ability to create wealth.

A Financial Coach will have no vested financial interest in the products or investments that their clients pursue. Their objective is to guide the client with his or her total financial plan.

In fact, be wary of any coach who gives you specific investment advice. The SEC strictly regulates this type of advice, which requires specific official level of training and licensing.  99% of financial coaches will not give you specific investment advice nor manage your portfolio for you.

Financial advisors, on the other hand, focus on determining which financial products and investments will help you reach your goals. The relationship is more transactional in this case.

That isn’t to say that a financial planner won’t have the clients best interest at heart. It just means that their relationships, and the advisor’s compensation, are based on the products sold to the client. In addition, a financial advisor also has legal, ethical and fiduciary responsibilities – which requires continuing education and licensing.

Related Reading: a Forbes article What Kind of Advisor Do You Need

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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.